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15.141 Economics of the Health Care Industries
E. Berndt, S. Finkelstein

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The context for medical outcomes assessments and pharmacoeconomic studies and the forces that determine health outcomes. Principles and tools of pharmacoeconomics and their applications to the treatment of illnesses such as hypertension, depression, anxiety, anemia, and gastrointestinal disease. Perspectives of employer, health provider, pharmaceutical firms, and government regulators in the US and abroad.

In this course we focus on economic and management issues facing health care industries.  We begin by emphasizing the limited role medical care plays in affecting individuals’ health status.  After examining the important and distinctive roles of R&D in health care industries such as biotechnology and pharmaceuticals, we examine the design and implementation of clinical trials.  We consider factors affecting the decision to manage clinical trials in-house vs. outsourcing to clinical research organizations.  We then study the FDA application process for establishing the efficacy of a new medication.

Next we distinguish medical efficacy from medical effectiveness, and then introduce economic considerations underlying cost-effectiveness.  We focus on specific principles and tools of economics and their applicability to the treatment of illnesses such as hypertension, depression, anxiety, anemia and gastrointestinal disorders. 

In the second half of the course, we examine how FDA approved drugs are priced and marketed.  Among the issues we will consider are challenges involved in switching a prescription-only medication to over-the-counter status, and pricing issues faced when launching a new drug globally.  We also focus on the increasingly important role of information technology and statistical use of retrospective medical claims data in assessing potential under treatment of selected illnesses, and in generating marketing information concerning cost-effectiveness.

The changing role of traditional and internet-based marketing efforts for pharmaceuticals will be discussed in considerable detail, and particular attention will be devoted to the utilization and health status implications of direct-to-consumer marketing.

In the final class session, we consider public policy aspects, and implications for employers, health providers, pharmaceutical manufacturers and patients; of current proposals for extending prescription drug insurance coverage to Medicare beneficiaries in the U.S.

Course Logistics

We plan to follow the format of the popular fall term elective, “Principles and Practice of Drug Development”.  Each class session will consist of two presentations, separated by a short break.  Typically, but not in all cases, the first presentation on each class day will be made by a faculty member and the second by a distinguished, invited guest from industry or government.

Grading of the subject will be based on three short written assignments covering class presentations and assigned readings, as well as class participation.  These short essays are to be no more than five double-spaced typed pages, and are due on the following dates:

            Essay I:           Due Friday, March 9, 2001

            Essay II:          Due Friday, April 13, 2001

            Essay III:         Due Friday, May 18, 2001

In preparing the essays, members of the class are encouraged to discuss their ideas with others, but the essays themselves must be written individually (i.e., no “team” write-ups are acceptable).  Late essays will not be accepted.


Professor Ernst R. Berndt
Office: E52-452
Tel: 617-253-2665

Dr. Stan N. Finkelstein
Office: E52-390
Tel: 617-253-8014

Course Assistants

Cathy Ly
Office: E52-450
Tel: 617-253-9746

Joanne McHugh
Office: E56-390
Tel: 617-253-5194

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