global health economics: concepts and applications or cool things justin likes about global health...
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Global Health Economics: Concepts and Applicationsor “Cool Things Justin Likes about Global Health Economics”
Justin BerkTTUHSC SOM Global Health Elective1/28/12
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What is economics?
The social science that analyzes the production, distribution, and consumption of goods and services
The study of how people choose to use available resources
The study of behavior
The study of incentives
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An example
or
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My Kingdom for a Horse?
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Supply and Demand Activity
Supplier: You just created a new medical invention: a talking stethoscope. You can set one price for it.
Consumers: 5 of you would be interested in this invention.
1 is willing to spend $501 is willing to spend $401 is willing to spend $301 is willing to spend $201 is willing to spend $10
What price will the supplier set?
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Supply and Demand
Law of Demand – the higher the price of the good, the less people demand the good
Law of Supply – the higher the price of the good, the more items you want to sell.
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Price Demand Supply Revenues
$50 1 5 $50
$40 2 4 $80
$30 3 3 $90
$20 4 2 $80
$10 5 1 $50
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Global Pharmaceutical R&D• 1 country is willing to spend $5B for chronic care lifestyle
technologies
• 50 countries are willing to spend $500M for chronic care lifestyle technologies
• 100 countries are willing to spend $10M for life-saving medicines that cure disease.
You’re the CEO of Pfizer. It costs over $1B to develop a drug.
Where do you allocate your R&D funds?
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Why Health Care Economics is Different
Infinite demand:•Life or death decision
Outcome uncertainty
Information Asymmetry
Moral hazard
Social Externalities
Health care is not health
Third party payers
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Moral HazardPeople insulated from risk behave differently than people exposed to risk.
RAND Health Insurance Experiment4 fee-for service plans:- Free care- 25% co-pay- 50% co-pay- 95% co-pay
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Wealth is Health
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UK Whitehall Study
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Health and Wealth: A Bi-Directional Relationship
Strong Economic Performance
Higher Individual Incomes
Purchasing of health
promoting goods and
services
Improved Health
Economics to Health
Good health
Human Capital
Increases
Individual Productiv
ity Increases
Overall Economic Growth
Rate Increases
Health to Economics
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Top 10 Causes of Death in Low-Income Countries
1. Lower respiratory infections 2. Diarrheal Disease3. HIV/AIDS4. Ischemic heart disease5. Malaria6. Stroke / Cerebrovascular disease7. TB8. Low birth weight / Prematurity9. Birth asphyxia / trauma10. Neonatal infections
We have cures!
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Why are people still dying?
Poverty
Infrastructure
Clean water
No educationWar
Brain drain
Basic resources
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Economic Development is Health
Health care
Politics
Education
Infrastructure
Governance
Foreign policy
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Top 5 Public Health Jobs(that have nothing to do with public health)
1. Teachers• Education improves economy, decreases risky behavior• Most studies suggest more important than race and income
2. Engineers• Drill for water, build roads, develop energy infrastructure
3. Politicians (kinda)• Good governance serves enormous factor for health development• (It’s usually negative.)
4. City Planners• Create walking cities with access to healthy foods etc.
5. Journalists / Writers• Inspire world leaders, increase awareness, mobilize social groups• Martin Luther King, Thomas Paine, Nicholas Kristof, Oprah
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Discussion:Issues in Global Health Economics
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Structural Adjustment Plans
Measures to promote market fundamentalism• Privatization of state-owned industry• Deregulation• Austerity (cutting expenditures)
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Tobacco
Tobacco and smoking have a number of negative effects:• Tobacco smoking kills• Tobacco exacerbates poverty• Tobacco contributes to world hunger by diverting prime
land away from food production• Tobacco production damages the environment• Tobacco reduces economic productivity
Developing world has 80% of tobacco related deaths.
How do you address this?
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Emergency Aid
The village of Williamsville has been hit by a major typhoon. Farm land has been devastated. People are starving.
There are two ways to get food to those in need:• A private farming company operates in the neighboring town
of Simón. They know people are desperate and will pay huge amounts for food and water. They see this as a business opportunity and are willing to cross risky terrain to deliver the goods for high profit.
• A coalition of NGOs and foreign aid can deliver food and water for free.
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Economic Development for Dummies
Need for foreign aid to overcome poverty and enter global marketplace
Foreign aid causes harms. “Searchers” better than “Planners.”
Military interventions to guarantee democracy, International Charters, preferential trade
Development assistance = dependency, corruption, poor governance
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Cool Global Health Business Solutions
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Charity:water• http://vimeo.com/22566556
• Marketing• Recruiting human capital• Financing
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Grameen Bank
Micro-loans to the
impoverished
Promotes entrepreneurship and skill use
Peer pressure within loan
groups
Women receive 95% of loans
Borrowers have company
equity
96% recovery rate
2006: Nobel Peace Prize
2011: government
take-over
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Riders for Health• http://vimeo.com/31962921
• Overcoming infrastructure challenges• Avoids costs through prevention• Improves supply chain logistics• Improves quality and speed of care
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CFWShopsApproximately 20,000 children die each day because they lack access to essential drugs that often cost less than a cup of coffee.
A short list of preventable and treatable diseases accounts for approximately 70% of childhood illness and death.
• Entreprenuers provided blue-prints for a micro-franchise • like McDonald’s
Three-Point Franchise Test• Standardization• Scalable• Economies of scale
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Advocate for Change
Clinton Foundation
• 2007: Deep price reductions for AIDS medications
Green Light Committee (PIH, MSF, CDC)
• proved that MDR-TB could be treated in low-income countries • negotiated mass price reductions from more than $30,000 per patient per
year to less than $3,000.
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How to Save the World
1) Make cool YouTube videos.
2) Small loans.
3) Ride motorcycles.
4) Copy McDonald’s.
5) Yell a lot.
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Cool Resources• EpiAnalysis blog• http://epianalysis.wordpress.com/
• Acumen Fund (non-profit venture capital)• http://www.acumenfund.org/
• Unite for Sight• http://www.uniteforsight.org/
• Partners in Health• http://www.pih.org/
• Global Issues Blog• http://www.globalissues.org/article/588/global-health-overview
• Quora• http://www.quora.com/