Professor Giampiero Favato is the Head of the Department of Accounting and Finance and the Director of the Institute of Leadership and Management in Health at Kingston University London. He began his career in the pharmaceuticals industry, working his way up through the corporate finance, economics and business development divisions within Eli Lilly, first in Italy and then at their corporate headquarters in Indianapolis, USA. In 1998 he moved to Schering-Plough as Director of their Primary Care Business Unit, and completed an MBA at the University of Chicago. When Schering-Plough entered into a joint venture with Merck Sharp & Dohme (MSD) in 2001, Professor Favato was given a senior leadership role. This coincided with him beginning a DBA at Brunel. In 2002 he returned to Italy, where he became Managing Director of the MSD-SP partnership. In total, he has more than five years of US corporate experience in Fortune 100 corporations dedicated to life science. Professor Favato moved into academia in 2006. Since then he has published widely in the field of health and financial economics.
FORTHCOMING PAPERS:
1. F.S. Mennini, G. Baio, A. Marcellusi, A. Capone, G. Favato, M. Drummond, B. Jonsson, P. Zweifel, Bayesian modelling to assess the effectiveness of a vaccination strategy to prevent HPV-related diseases: the BEST study. ACCEPTED BY MEDICAL CARE
2. Baio G, Capone A, Marcellusi A, Mennini FS and Favato G. Economic burden of papillomavirus-related diseases in Italy.
Abstract: Objectives: The GIOVE Study was aimed to the achievement of allocative efficiency of the budget allocated to the prevention of human papillomavirus (HPV)-induced diseases. An ex-ante determination of the most efficient allocation of resources between screening and multicohort quadrivalent immunisation programmes was followed by the ex-post assessment of the allocative efficiency actually achieved after a 12-month period.
Design: A bound optimisation model was developed to determine the ex-ante allocative efficiency of resources. The alternatives compared were the screening programme alone and the quadrivalent immunisation with access to screening. A sensitivity analysis was carried out to assess the uncertainty
associated with the main inputs of the model. Subsequently, a cohort of girls with a complete recorded vaccination history were enrolled in an observational retrospective study for 18 months to ensure full compliance with the recommended schedule of vaccination (0, 2, 6 months) within a 12-month time horizon.
Setting: Basilicata region, in the south of Italy.
Participants: 12 848 girls aged 12, 15, 18 or 25 years.
Intervention: Immunisation with quadrivalent anti-HPV vaccine.
Outcome measures: The vaccination coverage rate was considered to be the indicator of the best achievable benefit, given the budgetary constraints.
Results: Assuming a vaccine price of V100 per dose, a vaccination coverage rate of 59.6% was required for the most effective allocation of resources. The optimal rate of coverage was initially in favour of the multicohort strategy of vaccination against HPV (72.8%62%). When the price paid for the quadrivalent
vaccine dropped to V85 per dose, the most efficient coverage rate (69.5%) shifted closer to the immunisation rate actually achieved during the 12-month observation period.
Conclusions: The bound optimisation model demonstrated to be a useful approach to the ex-ante allocation and the ex-post assessment of the resources
allocated to the implementation of a multicohort quadrivalent anti-HPV vaccination programme.
Abstract: The total cost of HPV-related diseases accounts for â¬200â250 million of which â¬210 million is absorbed by the prevention and treatment of precancerous lesions and cervical cancer. Although both available HPV vaccines are below the threshold value for economic convenience (â¬9,569 and â¬26,361 per QALY-gained for the quadrivalent and bivalent vaccines, respectively), at this point in time long-term economic models developed for Italy seem to indicate the quadrivalent vaccine as the most cost-effective option. Recent publications by official bodies, including the World Health Organization and the Supervisory Authority for Public Contracts in Italy, recommend that the decision-making process be based on both the quality of goods and services as well as the best achievable price.
Abstract: Abstract
Background: The predicted ageing rate of the Italian population is one of the highest worldwide and this condition is expected to produce a growing increase in pharmaceutical expenditure. The objective of this study was to assess whether or not off-patent drugs could counterbalance the economic effects generated by
the aging of the Italian population in the next ten years.
Methods: On the basis of the predicted ageing rate of the Italian population for the period 2008-2018, the average annual cumulative increase of pharmaceutical expenditure and potential savings generated by the future loss of patent coverage have been considered in order to identify the year of the Breakeven Point.
Results: The economic effect induced by the progressive ageing of population produces an average of 0.94% cumulative increase in local pharmaceutical expenditure per year, corresponding to an incremental pharmaceutical expenditure of about ¤ 116 millions per year. A number of 509 brands (103 active substances) will lose their patent coverage in the next 10 years. Considering both the present legislation and a level of price reduction, after patent expiration, corresponding
to 40%, it is predicted that the Breakeven Point will be achieved at the end of 2011.
Conclusions: In this study, a long term balance between the predictable increase of pharmaceutical expenditure induced by the ageing of Italian population and savings produced by future off-patent drugs was not established. In order to assure the future sustainability of pharmaceutical expenditure, this study
supports the need for the development of new health policy strategies.
Abstract: The recent financial crisis highlights the problems that could arise when risk is mispriced and conflicts of interest are not managed properly. Regulators and public opinion blame modern capital markets for what happened, but there is actually nothing new or mysterious about this crisis. The problem lied in the packaging and transferring of risk through securitisation, where embedded conflicts of interest helped spread the mispricing of risk throughout the world. This paper describes key aspects of the securitisation process, provides real-world examples of typical transactions, highlights the main areas of conflicts of interest and outlines lessons for the future.
Abstract: This paper constitutes a discussion of the trend around the proposition that art can be considered an alternative means of generating a return using structured funds as vehicles for investment. With financial markets in turmoil, art as an alternative asset class is being incorporated into portfolios in the interest of diversification. However, the volatility and illiquidity of the art market makes it hard to compare with more conventional investments. This paper will look at how investors are treating art as an asset class and how it compares to more traditional assets such as equities and bonds. We investigate two art funds, the London Fine Art Fund and The Art Trading Fund, and assess how they operate as vehicles for investment. We look at whether these art funds can be deemed successful, what has made them operate effectively, and their relative risk as an investment class. In summary we find that artâs low correlation with the equities market and desirable risk and reward ratio makes it an attractive investment, but that timing of sales and purchases plus the holding period of an investment are key criterian for generating a return.
Abstract: The key aims of this research are to not only estimate the current number of UK companies that have to be Sarbanes-Oxley compliant, but also how that number will grow over the coming decades, particularly given the impact of the supply chain. This study also examines UK organizations that will need to comply with Sarbanes-Oxley as a cost of doing business, raising capital or for general corporate governance best practice. The number of Sarbanes-Oxley compliant companies in the UK could be between 45,000- 60,000 over the next 10 years. Sarbanes-Oxley compliance could become an international standard of quality in corporate financial disclosures, a sort of ISO-9000 certification of management and reporting transparency. Companies adopting Sarbanes-Oxley may pay a price now, but will exploit an enviable competitive position in the future, making them preferred partners of large corporations, which must comply with Sarbanes-Oxley.
Abstract: Real Options is the term used to refer to the application of option pricing theory to the valuation of investments in non-financial or "real" assets where much of the value is attributable to flexibility and learning over time. A key problem with Real Options is that there are many different approaches and in what follows the different taxonomies that have been identified are reviewed, together with their implications for management use.
Abstract: Background.
The primary objective of this study was to derive cost comparators for the fourteen Anatomical Therapeutic Chemical (ATC) classes of drugs at first level, based on age-sex related weightings. It was hoped to develop an accurate method of analysing prescribing patterns in general practice and to be able to explain individual variations in prescribing cost based on the age/sex distribution of the population and individual clinical needs.
Methods.
Individual cost data were collected for 3,175,691 subjects living in three different regions of Italy (Lombardy, situated in the north, Marche in the centre and Basilicata in the south). The observation period was 12 months (Sep 2004 â Aug 2005).
Results.
The analysis by ATC class showed large variations in prescribing costs for the different age groups in each of the ATC classes for both sexes, and, in some instances, wide differences in prescribing costs by sexes. The largest cost difference between age groups, for both males and females occurred in drugs used for the cardiovascular system. Antibiotics revealed a difference from the general pattern with more prescribing occurring in the youngest age groups compared to other ATC classes. Large differences between the sexes were observed in the older age groups in drugs used for the respiratory system. The ASSET sample was a robust proxy of the actual public spending by ATC, while the therapeutic group age/sex related weightings were unable to explain the large individual variations in individual prescribing costs.
Conclusions.
The outcomes of this study are apparently discordant with the conclusions of the limited published literature on prescribing analysis in general practice, suggesting that the ability to make more accurate comparison of prescribing rates, especially in individual therapeutic groups, should help to provide a more sensitive measure when estimating prescribing costs.
The ASSET model confirmed the validity of demographic adjusted models to quantify the impact of ageing population in terms of resources needed to satisfy long term population prescribing needs. The ASSET age/sex weightings of total prescribing costs should be used as a guide, not as the ultimate determinant, for an equitable allocation of prescribing resources in conjunction with historic utilisation and cost data.
Abstract: Invecchiamento della popolazione e innovazione farmaceutica giocano un ruolo determinante nel governo della spesa farmaceutica pubblica, in un contesto di assistiti che vive più a lungo e reclama il diritto di accesso a nuove terapie sempre più costose. Lâequità di accesso alla terapia farmacologica sulla base esclusiva del bisogno clinico rimane il principio ispiratore dei sistemi sanitari pubblici, sollevando il problema di unâappropriata distribuzione delle risorse in relazione
ai bisogni della popolazione assistita. Questa review prende in esame i contributi della letteratura essenziali allâidentificazione dei fattori determinanti la domanda farmaceutica, con particolare riguardo ai modelli di farmacoutilizzazione
sviluppati in Italia. Il modello ASSET ha incluso per la prima volta le principali determinanti demografiche degli assistiti (sesso ed età ) nella valutazione dei costi relativi alla farmacoutilizzazione, dimostrandosi in grado di migliorare la qualità del processo di distribuzione delle risorse economiche alle Regioni e, in ultima analisi, lâequità di accesso degli assistiti alla terapia farmacologica sulla base esclusiva del bisogno clinico.
Abstract: Major pharmaceutical companies are placing significant emphasis on reducing spiralling R&D expenditures and improving productivity and this paper is directed towards helping this being achieved. Clinical trials cost estimates positively affect the quality of stop/go decision-making in late-stage clinical development. One major quantitative challenge which has been identified is the estimation a-priori of the cost of clinical trials. Prior research on this subject has been based upon a limited sample of drugs in development and depends upon average cost data released by the industry. The contention
here is that the application of parametric cost analysis to pharmaceutical development can help reduce the uncertainty and degree of approximation of cost estimates. By shifting the research objective from proprietary accounting information to simple and publicly available non-cost variables, the parametric model takes cost-accounting for pharmaceutical R&D to a new level of methodological simplicity and statistical significance.
Abstract: Background. The primary objective of this study was to make the first step in the modelling of pharmaceutical demand in Italy, by deriving a weighted capitation model to account for demographic differences among general practices. The experimental model was called ASSET (Age/Sex Standardised Estimates of Treatment). Methods and Major Findings. Individual prescription costs and demographic data referred to 3,175,691 Italian subjects and were collected directly from three Regional Health Authorities over the 12-month period between October 2004 and September 2005. The mean annual prescription cost per individual was similar for males (196.13 euro) and females (195.12 euro). After 65 years of age, the mean prescribing costs for males were significantly higher than females. On average, costs for a 75-year-old subject would be 12 times the costs for a 25â34 year-old subject if male, 8 times if female. Subjects over 65 years of age (22% of total population)
accounted for 56% of total prescribing costs. The weightings explained approximately 90% of the evolution of total prescribing costs, in spite of the pricing and reimbursement turbulences affecting Italy in the 2000â2005 period. The ASSET weightings were able to explain only about 25% of the variation in prescribing costs among individuals. Conclusions. If mainly idiosyncratic prescribing by general practitioners causes the unexplained variations, the introduction of capitationbased budgets would gradually move practices with high prescribing costs towards the national average. It is also possible,
though, that the unexplained individual variation in prescribing costs is the result of differences in the clinical characteristics or socio-economic conditions of practice populations. If this is the case, capitation-based budgets may lead to unfair distribution of resources. The ASSET age/sex weightings should be used as a guide, not as the ultimate determinant, for an equitable allocation of prescribing resources to regional authorities and general practices.
Abstract: This paper both argues the advantages of Real Options thinking and by means of examples exhibits the types of decision-making calculations that are distinctive to Real Options. However in the process of clarifying the application of Real Options analysis to real decision making, a strong dependency upon scenario thinking is established. The value to decision makers of Real Options depends crucially on the substance and use of the scenarios on which it rests. The distinctive contribution of this paper consists in substantiating this view. By forging a critical link between Real Options analysis and scenario thinking, this paper illustrates how the beneficial application of Real Options to decision making brings it down from the esoteric heights of mathematics, converts it into a technique readily accessible to managers and qualifies it for inclusion in the curriculum of management education. Two cases drawn from personal experience are used to illustrate the approach recommended by the authors.
Abstract: M. BRENNAN, Foreword - A. MICALIZZI and L. TRIGEORGIS, Project evaluation, strategy and Real Options - H. SMIT and L. TRIGEORGIS, Flexibility, strategic options and dynamic competition in technology investments - G. FAVATO, Value migration in the pharmaceutical industry - A. MICALIZZI, Timing to invest and value of managerial flexibility. Schering Plough case study - G. SICK, Real Options in the aerospace industry - J. STONIER and A. TRIANTIS, Natural and contractual Real Options: the case of aircraft delivery options - H. SMIT, Investment analysis of offshore concessions in the Netherlands.
Abstract: This paper intends to provide an evidence based contribution to the policy decision to expand publicly funded access to prescription drugs and its impact on social welfare, defined as the governmental provision of economic assistance to persons in need. The scenario is the Italian National Health System (SSN) in January 2004: the existing prescribing limitations on statins (cholesterol-lowering agents) were relaxed and only a marginal prescription fee was applied, similarly to any other fully reimbursed medicine. Prescribing information on a cohort of 3,175,691 Italian residents was analysed in the study, during a two year period (from January 2004 to December 2005). According to published Italian data, prior to the decision to expand access to statins the percent of treated patients persistent to treatment was in the range of 50 to 60 percent. The objective of the study was to measure the percent of new patients persistent and compliant to statins twelve month after initiating treatment. During the observation period, only 7% of the 33,139 patients enrolled
were persistent and 6% compliant (84% of compliant subjects were also persistent). The total incremental cost sustained by the Italian SSN for the cholesterol lowering treatment of the new patients observed in the study amounted to 4.77 million. Approximately 20% of the total incremental cost was used by persistent and compliant patients, while the remaining 80% was wasted in financing a sub-optimal, clinically inefficient, sporadic use of statins. Expanded access to prescription drugs minimised the impact of income on patients' choices, but it raised additional issues in terms of efficient allocation of public budget, such as rational prescribing and coverage subject to persistence and compliance to therapy.
Abstract: Vaccines for the prevention of pathologies caused by Human Papillomavirus (HPV) are undoubtedly considered among the most advanced forms of biotechnological innovation. At present, two different vaccines are available: the bivalent vaccine, targeting the HPV-16 and 18 strains, and the quadrivalent vaccine, which targets the
HPV-6, 11, 16 and 18 strains. Observing the impact projections analysis, obtainable on the basis of data published in various studies, it is clear that a reduction of ⬠10.0, resulting from the ex-factory price differential of the two vaccines (in favour of the bivalent) hardly compensate for the considerable increase of the expenditure related to the failure to prevent HPV-induced outcomes, such as abnormal Pap-tests, colposcopies, low and high-grade precancerous lesions, in situ carcinomas, cervical carcinomas, vulvar dysplastic lesions, vaginal dysplastic lesions and genital warts. A mere difference in ex-factory price should not be the only determinant of the vaccineâs choice, in the light of the incremental prevention against cervical carcinoma caused by HPV-18 and vulvar carcinoma, and the avoidable risk of onset of genital warts.
Abstract: In the 2000-2005 five years period, the utilisation of statins showed a threefold increase, from 16.5 to 52.3 DDDs/1,000 weighted residents, while the admissions for myocardial infarction decreased only marginally from 1.40 to 1.30 admissions/1,000 weighted residents. In the same period, the Italian National Healthcare System invested cumulatively over 4 billion euro to fund the prescribing of statins in primary care.This study poses the question about the value of current utilisation of statins in general practice. The objective of the study was to evaluate the percent of persistent and compliant subjects twelve month after initiating statins' treatment in a controlled cohort of over 3 million Italian residents (the "Asset" cohort). Persistence was defined as the rate of subjects without an interval between two consecutive Rx < DDDs prescribed + 30 days. Compliance was defined as the rate of persistent subjects with total number of DDDs prescribed/365 > 80%. Out of the 33,139 patients enrolled, only 7% were persistent and 6% compliant (84% of persistent) The rate of persistent patients rapidly increases by relaxing the time interval between consecutive RXs.A focused emphasis on individual compliance to treatment would significantly increase the expected outcomes and, consequently, the economic value of statins prescribing in general practice.
Abstract: Economic modelling is regarded as one of the most reliable tools for the assessment of the effectiveness of healthcare interventions. Currently, however, the uncertainties related to some specific model parameters selected to predict the economic impact of vaccination strategies, represent a limit which has to be carefully taken into account in the public health decision-making process[1-3]. These parameters include the algorithms simulating the natural dynamic transmission of Human Papillomavirus (HPV) infection (including the progression/regression transition states), the actual vaccination coverage rate, and the duration of vaccine protection.
In the model proposed by M. Jit et al[4] for the economic evaluation of HPV vaccination in UK, genital warts have been exclusively incorporated as events induced by HPV 6-11. Therefore the model ignored other cervical events caused by HPV 6-11 infection, such as abnormal Pap tests, ASCUS (atypical squamous cells of undetermined significance), AGUS (atypical glandular cells of undetermined significance), and LSIL (low-grade squamous intraepithelial lesions). These events should be included in the clinical and economic evaluation: in absence of a primary prevention plan[5-6], therapeutic interventions following LSIL or CIN1 (low-grade cervical intraepithelial neoplasia) could lead to considerable, unnecessary costs. A growing body of evidence shows that a relevant percentage of LSIL (in a range between 10% and 20%) is associated with HPV 6-11: this evidence simply confirms previous observations regarding the significant frequency of HPV 6-11 in women with borderline cytology[7-11]. In the Region of Emilia-Romagna in northern Italy, an observational retrospective cohort study that we primarily designed to accurately estimate the frequency of HPV 6-11 associated with borderline cytology (abnormal Pap tests, ASCUS, and AGUS) is currently ongoing. Early results related to 1,041 women with a mean age of 37.5 years (range 23-65 yrs) indicated that HPV 6-11 overall accounted for approximately 14.5% of all evaluated outcomes.
In Italy, the implementation of a multi-cohort vaccination programme with the quadrivalent vaccine is expected to contribute to further reduce the expenses associated with the management and treatment of low-grade cervical lesions and anogenital warts by approximately 34 million Euro. A significant cost-saving could be realised as early as in the first five years, determined by the prevention of outcomes induced by HPV 6-11[11- 12]. Although the realised cost reduction corresponds to just 26% of the total projected cost-savings, nonetheless it would represent a significant economic resource that could be allocated to other priorities of public health.
In general, the effective allocation of resources in healthcare should not be merely based on the persistent search for the lowest treatment price. The provision of innovative diagnostic instruments, drugs and vaccines should require an objective «spending review» that includes all significant costs, in order to support decision-makers to make economically effective and efficient strategic choices. The World Health Organisation (WHO) recognises the limitations of health care decisions based exclusively on price, eventually leading to anti-economic and ineffective outcomes[13]. The WHO concerns definitely apply to the choice of vaccines, as primary prevention is regarded as a core objective in public health.
References
1. Philips Z, Ginnelly L, Sculpher M, Claxton K, Golder S, Riemsma R, et al. Review of guidelines for good practice in decision analytic modelling in health technology assessment. Health Technol Assess 2004; 8(36): 1-172
2. National Institute for Health and Clinical Excellence (NICE). Guide to the Methods of Technology Appraisal. April 2004. www.nice.org.uk. Accessed June 2006
3. Guidelines for the economic evaluation of health technologies: Canada [3rd Edition]. Ottawa: Canadian Agency for Drugs and Technologies in Health; 2006
4. Jit M, Choi YH, Edmunds WJ. Economic evaluation of human papillomavirus vaccination in the United Kingdom. BMJ 2008; 337: a769
5. Russo JF. Controversies in the management of abnormal Pap smear. Current opinion in Obst. Gynecol 2000; 12: 339-343
6. ASCUS-LSIL Traige Study (ALTS) Group. Results of a randomized trial on the management of cytology interpretations of atypical squamous cells of undetermined significance. Am J Obstet Gynecol 2003; 188: 1383-1392
7. Clifford GM, Rana RK, FranceschiS et al. Human papillomavirus genotype distribution in low-grade lesions: Comparison by geographic region with cervical cancer. Cancer Epidemiol Biomarkers Prev 2005; 14: 1157â1164
8. Evans M, Adamson C, Papillo JL. Distribution of human papillomavirus types in Thin prep Papanicolaou tests classified according to the Bethesda 2001 terminology and correlations with patient age and biopsy outcomes. Cancer . 2006; 106:1054-1064
9. Panotopoulou E, Tserkezoglou A, Kouvousi M, et al. Prevalence of human papillomavirus types 6, 11, 16, 18, 31, and 33 in a cohort of Greek women. J Med Virol 2007; 79: 1898-1905
10. Del Prete R, et al. Prevalence and genotypes identification of human papillomavirus infection in a population of South Italy. J Clin Virol 2008; http://dx.doi.org/10.1016/j.jcv.2008.01.011
11. Costa S, Favato G. Evaluation of the economic impact produced by the prevention of events induced by the HPV 6-11 virus types contained in the quadrivalent vaccine. January 2008. Social Science Research Network (SSRN): http://ssrn.com/abstract=1080113
12. Favato G, Pieri V, and Mills R. Cost-Effective analysis of anti-HPV vaccination programme in Italy: A multi-cohort Markov model. February 2007. Social Science Research Network (SSRN): http://ssrn.com/abstract=961847
13. World Health Organization. Immunization financing, supply and procurement. Posted by: WHO, Geneva, Switzerland, 3 February 2006. http://www.who.int/immunization_supply/en/ Accessed December 2007
Competing interests: None declared
Abstract: A large body of modelling studies has already been conducted to evaluate the cost-effectiveness of different vaccination strategies [1- 6].The cost-effectiveness of the anti-HPV vaccination has already been confirmed, although these studies have considered exclusively one cohort of women at different ages of immunisation plus an eventual additional âcatch-upâ cohort.
We developed a partially dynamic model capable to simulate the probability of proceeding from one disease stage to the next one. A Markov model was based on a set of data imputed according to defined transition probabilities, which were function of population demographics and time- dependent characteristics of HPV infection An Italian multi-cohort vaccination strategy was estimated to involve in the first year 1,141,232 women in total, to progressively decrease to 295,062 women from a single cohort after a 6-year period. Compared to the control group, the multi- cohort vaccination strategy would induce a statistically significant relative risk reduction of respectively 63.1% (C.I. 95%: 62.4%-63.8%; p<0.001) and 60.3% (C.I. 95%: 58.7%-61.5%; p<0.001) in the 3 cohort and the 4 cohort scenarios [7]
The results of combined assessments supported the cost/effectiveness of a 3-4 cohorts vaccination strategy. In order to optimise the use of public financial resources, a multi-cohort vaccination plan could be considered as promising point equilibrium between the need to accelerate the reduction of the prevalence of cervical cancer and the rational management of healthcare demand. Access to the vaccination plan should give priority to women at an age that is significant in terms of evolution of the disease [8]:
1. Adolescents aged 11 years: they are the primary candidate cohort, because presumably they have not been exposed to HPV. Ideally a preventive HPV vaccine should be administered prior to the first sexual intercourse. In clinical trials, the highest immune response to vaccine was shown in adolescents.
2. Young girls up to 18 years of age: the cohort of age that immediately precedes the peak of HPV infection.
3. Young women up to 26 years of age: they are already included in a wide nationally organized screening programme for cervical cancer, so access to the vaccination programme would offer them an efficient and synergistic primary prevention against cervical cancer. 1
A 3 cohorts vaccination strategy would provide a large proportion of the female population aged 11-25 years with a period of 6-7 years of cost/effective HPV coverage. During the subsequent phases of the vaccination plan, the decreasing costs associated with the treatment of low-grade and high-grade pre-cancer lesions and cervical cancer, as well as the costs of therapies for genital external lesions, would progressively compensate for the cost of the vaccine. When the time that separates the different cohorts elapses, the number of subjects eligible to be vaccinated would be equivalent to the first selected cohort of adolescents aged 11 years.
References:
1. Sanders GD, and Taira AV. Cost Effectiveness of a potential vaccine for human papillomavirus. Emerging Infectious Diseases 2003; 9: 37 -48
2. Kulasingam SL, Myers ER. Potential health and economic impact of adding a human papillomavirus vaccine to screening programmes. JAMA 2003; 290: 781-789
3. Taira AV, Neukermans CP, and Sanders GD. Evaluating human papillomavirus vaccination programmes. Emerging Infectious Diseases 2004; 10: 1915-1923
4. Goldie SJ, Kholi M, Grima D, et al. Projected clinical benefits and costeffectiveness of a human papillomavirus 16/18 vaccine. Journal of the National Cancer Institute 2004; 96: 604-615
5. Barnabas RV, Laukkanen P, Koskela P, et al. Epidemiology of HPV 16 and cervical cancer in Finland and the potential impact of vaccination: mathematical modeling analyses. PLoS Medicine 2006; vol. 3(e138): 624-632
6. Elbasha EH, Dasbach EJ, and Insinga RP. Model for assessing human papillomavirus vaccination strategy. Emerging Infectious Diseases 2007; 13: 28-41
7. Favato, G, Pieri V, Mills R W. Analisi costo-efficacia del programma di vaccinazione anti-HPV in Italia: il modello multi-coorte Markov, Farmaci 2007, Vol. 31 â n2.
8. Ho GYF, Bierman R, Beardsley L, et al. Natural history of cervicovaginal papillomavirus infection in young women. The New England Journal of Medicine 1998; 338: 423-428.
Competing interests: None declared
Abstract: Dear Editor,
The latest available, age-adjusted overall mortality rate for CHD in Italy refers to the year 2002 [1]. For the first time in the last twenty years, the 2002 rate (42.05 deaths per 100,000 inhabitants) showed a significant increase (+1.1%) over the previous year. The mortality rate for CHD grew by 0.8% in men and by 1.4% in women.
Since 1980, the age-adjusted mortality rate for CHD declined by 47.8% in men and 49.1% in women, showing a progressive decline in the average annual reduction of mortality rate. The average annual mortality rate declined by 3.27% in men and 3.81% in women in the 1980s, decreasing to 2.84% and 2.61% in the 1990s.
To better understand the complex dynamics of overall mortality rates, we examined the age-specific mortality data from CHD in 2002. Compared to the previous year, all age groups showed a significant decline in annual mortality rate, with the exception of the elderly population (over 75 years of age) showing a concerning 2.71% increase (1.91% in men and 3.16% in women). The increase in mortality rate seemed to be associated to ageing, growing by 0.16% in the 75-79 age group, by 1.92% in the 80-84 age group and by 6.42% in the population over 85 years. For this group, the 2002 mortality rate (2,316 per 100,000) was higher than the one registered in 1985 (2,199 deaths per 100,000).
The 2002 dramatic change in CHD mortality rate affected the weakest cohort of the Italian society, raising concerns about the equality of the welfare system. Although it is too early to draw any sustainable conclusion, previous research demonstrated that the elderly represent the population subgroup most vulnerable to unequal income distribution [2]. In the past few years, the elderly living on inadequate social pensions found their disposable income progressively sliding well below the threshold of poverty [3]. 7.2% of them admitted they could not afford one complete meal every other day, while 9.6% did not have enough money to pay for heating, clothes or medicines [4].
The 2002 âoddâ mortality rate increase for CHD should provide the opportunity to better understand the difficult life conditions of the elderly and, hopefully, to take immediate social actions in favour of the most vulnerable cohort of citizens.
References
1. The cause of death was determined using the ICD-9 codes 410-414.
Mortality data available at: http://www.iss.it/site/mortalita/Scripts/SelCause.asp
2. Materia E, Cacciani L, Bugarini C et al (2005).
Income inequality and mortality in Italy.
European Journal of Public Health. Vol.15, No4:411 -417
3. Istituto Nazionale di Statistica â ISTAT (2004).
La povertá relativa in Italia. Anno 2003.
Available at: http://www.istat.it/salastampa/comunicati/non_calendario/20041013_00/
4. Istituto Nazionale di Statistica â ISTAT (2004).
I consumi delle famiglie. Anno 2002.
Available at: http://www.istat.it/dati/catalogo/20040330_00/
Abstract: Understanding the determinants of demand for pharmaceuticals is critical for a better assessment of the forces that increase prescribing expenditures. Ageing and technological change play a major role in this context with cohorts living longer that consume increasing amounts of intensive, previously unavailable treatments. The primary objective of the ASSET study (1) was to make the first step in the modelling of pharmaceutical demand in Italy, by deriving a weighted capitation model to account for demographic differences among general practices. The experimental model was called ASSET (Age/Sex Standardised Estimates of Treatment). Individual prescription costs and demographic data referred to 3,175,691 Italian subjects were collected directly from three Regional Health Authorities over the 12-month period between September 2004 and August 2005.
The mean annual prescription cost per individual was similar for males (196.13 euro) and females (195.12 euro). After 65 years of age, the mean prescribing costs for males were significantly higher than females. On average, a 75 year old subject would cost 12 times a 25-34 years old one if male, 8 times if female. Subjects over 65 years of age (22% of total population) accounted for 56% of total prescribing costs.
The ASSET weightings were able to explain only about 25% of the variation in prescribing costs among individuals: the causes of the remaining 75% variation in prescribing costs remained unknown. The magnitude of individual variance was extremely significant: the individual costs value in the ASSET sample ranged between 0 and >40,000 euros. The ASSET sample included the registered persons who did not receive any prescription in the same time period: 808,464 subjects (26% of the total sample) did not receive a prescription, of whom 488,120 males (32% of total males) and 320,344 females (20% of total females).
From a different perspective, the ranking by total pharmaceutical annual cost of the 50,000 individuals included in the randomly drawn sample utilised to test the ASSET model, showed that the first decile of highest spending subjects was associated with 51.4% of total pharmaceutical spending.
The ranking of individual prescribing costs in descending order suggested a possible explanation to the poor ASSETâs power to predict individual prescribing costs: the top decile of subjects in the sample actually used 64.4% of the total pharmaceutical resources, while they should have used just 19% of them according to the age/sex standardised estimates.
If age is a marginal predictor of prescribing cost variance, the analysis of individual cost data for the top decile âhigh spendersâ subjects did not provide additional elements to better identify a priori those individual subjects. Therapeutic needs seemed to have a certain importance as drivers of prescribing costs. 75% of the top decile subjects reported prescribing costs in an individual ATC class higher than 50% of total individual costs. This would suggest the relevance of specific clinical conditions as drivers of unusually elevated individual prescribing costs.
The limited identification of the factors driving unusually high individual prescribing costs represented the major limitation of the ASSET model, and, at the same time provided a valuable opportunity to conduct further research to explore the determinants of large individual variations in individual prescribing needs. Age and clinical needs certainly play a key role in this mechanism of exponential growth of pharmaceutical prescribing, but other factors should be taken into consideration. Our data did not permit to obtain the diagnoses leading to prescription: this also should be an area for further research to determine the potential correlation between the rarity and the severity of diagnosed disease with the cost of treatment. Additional determinants of prescribing demand should have been considered, such as morbidity and mortality ratios, chronic illness rates, deprivation and access to healthcare, together with other relevant socioeconomic determinants, like disposable income and level of education. Differences in prescribing patterns among general practitioners should also further investigated, to determine the relevance of the prescribing effect on individual cost differences.
(1) Favato G, Mariani P, Mills RW, Capone A, Pelagatti M, et al. (2007) ASSET (Age/Sex Standardised Estimates of Treatment): A Research Model to Improve the Governance of Prescribing Funds in Italy. PLoS ONE 2(7): e592. doi:10.1371/journal.pone.0000592
Competing interests: None declared
Abstract: In the 2000-2004 five years period, the Italian National Healthcare System invested cumulatively over 3.3. billion euro to fund the prescribing of statins in primary care. In 2004, the annual public cost of statins exceeded 1 billion euro, showing a 3 fold increase compared to 2000. [1]
Based on the Framingham coronary prediction algorithm, the expected return on this considerable investment would be a significant reduction of the Italian populationâs risk for Coronary Heart Disease (CHD). The observed trend of hospital admissions for myocardial infarction over the same five years period seems to confirm the concerns raised by the Majeed et al. about the prescribing of lipid regulating drugs in England. [2]
We examined the utilisation of statins and the number of hospital admissions for acute myocardial infarction in Italy from 2000 to 2004. The relatively short period of observation (5 years) was determined by the availability of comparable data from public sources [1,3]. Statinâs utilisation was measured in DDDs (Defined Daily Doses), while hospital admissions referred to Disease Related Group (DRG) 121, 122 and 123 to avoid double counting of diagnoses. Both units of analysis were standardised over 1,000 residents. To account for ageing population, the 2000-2005 Italian resident population obtained by the National Institute of Statistic (ISTAT) was weighted using the ASSET age/sex weightings. [4]
In the 2000-2005 five years period, the utilisation of statins showed a threefold increase, from 16.5 to 52.3 DDDs/1,000 weighted residents, while the admissions for myocardial infarction decreased only marginally from 1.40 to 1.30 admissions/1,000 weighted residents.
Several caveats prevent the inference of any definitive conclusion from this analysis:
a. While the Framingham algorithm is based on a 10 years risk assessment, the observation period of analysis was significantly shorter;
b. While we adjusted for ageing population, the impact of other important cardiovascular risk factors, such as cigarette smoking habit, blood pressure and diabetes, was ignored.
c. We used hospital admissions for acute myocardial infarction as a proxy of Coronary Heart Disease: angina pectoris and coronary disease admissions were ignored to avoid double counting.
With all the possible cautions in mind, we believe that it would still be appropriate for healthcare administrators and policy makers to question the value of current utilisation of statins in general practice. More specifically, a limited patient compliance would definitely reduce the contribution of lipid lowering agents to the reduction of the economic burden of Coronary Heart Disease. Italian data on compliance to statinsâ treatment are controversial. A recent study based on the average annual exposure to statins calculated from a single Local Healthcare Authority (Pavia), concluded that over 70% of patients stayed on treatment for longer than 180 days per year. [5] According to a similar study, performed in an entire Regional Healthcare Authority (Umbria), the median persistence on statin treatment was just 5.3 months, while only 49.6% of patients renewed their prescription for consecutive years. [6]
A focused emphasis on individual compliance to treatment would significantly increase the expected outcomes and, consequently, the economic value of statins prescribing in general practice.
[1] Agenzia Italiana del Farmaco AIFA. Lâuso dei farmaci in Italia. OSMED reports 2000-2004. Available online at: http://www.agenziafarmaco.it/aifa/servlet/section.ktml?target=&area_tematica=ATTIVITA_EDITORIALE§ion_code=AIFA_PUB_RAP_OSMED&cache_session=true
[2] Majeed A, Aylin P, Williams S, Bottle A, Jarman B (2004). Prescribing of lipid regulating drugs and admissions for myocardial infarction in England. BMJ, 2004 329:645, doi: 10.1136/bmj.329.7467.645
[3] Ministero della Salute. Rapporti annuali sui ricoveri ospedalieri, 2000-2004. Available online at: http://www.ministerosalute.it/programmazione/sdo/sezDocumenti.jsp?label=osp.
[4] Favato G, Mariani P, Mills RW, Capone A, Pelagatti M, et al. (2007) ASSET (Age/Sex Standardised Estimates of Treatment): A Research Model to Improve the Governance of Prescribing Funds in Italy. PLoS ONE 2(7): e592. doi:10.1371/journal.pone.0000592
[5] Lucioni C, Mazzi S, Cerra C et al (2006), Uno studio di Drug Utilisation delle statine nella recente prassi terapeutica italiana. PharmacoEconomics-IRA. 8(1): 3-17
[6] Abraha I, Montedori A, et al (2003), Statin compliance in the Umbrian population. European Journal of Clinical Pharmacology. Vol. 59 Numbers 8- 9.
Competing interests: None declared
Abstract: The Italian public healthcare service is rapidly evolving from a state centric model to one based upon the equilibrium of central governance of demand and regional funding. The state has exclusive power to define the basic level of coverage, which must be uniformly provided across the country, while each Regional Health Authority (ASSR) is responsible for funding its cost. Equity of access based upon clinical need alone remains the central principle of the national healthcare system, raising the issue of an equitable distribution of resources in proportion to the population needs.
Large differences in disposable income per capita can be observed among Italian Regions: the families living below the threshold of poverty varies from 3.9% in Emilia-Romagna to 28.9% in Sicily (1). An efficient distribution of healthcare resources, based on weighted capitation models, would account for a number of determinants of patients demand for health, ignoring the long-term impact of income inequalities on the Regional supply of healthcare services. Underprivileged patients would have access to the basic level of coverage, but the total amount of healthcare available to them would be largely dependent on the Region where they live. Regions with higher income from local taxes would necessarily supply a higher amount of better quality healthcare service. The principle of social solidarity recognises large historical inequalities, allowing Regions with lower per-capita income to spend more on welfare. As an example, in 2006 the annual average per-capita public pharmaceutical spending in Emilia-Romagna was â¬188, while in Sicily was â¬302, showing a 61% difference in favour of the Region with the higher poverty rate (2). Patients with severe chronic conditions are allowed to migrate to centres of excellence located in a different Region. The migration rate of cancer patients from Emilia-Romagna to other Regions was only 6%, compared to 16% from Sicily (3).
The social solidarity principle is pushing the public cost of healthcare to exceed the 10% threshold of the Italian Gross Domestic Product, and it is possibly economically inefficient. In return, a socially responsible allocation of public healthcare funding can minimise the negative impact of income inequalities on mortality rates. This valuable outcome has been achieved by the Italian health service, since poverty and mortality at Regional level show an extremely weak correlation (r-square = 0.094). Life expectancy at birth is almost identical for Emilia-Romagna and Sicily, respectively 77.5 and 76.7 years, in spite of the large difference in per-capita disposable income, supporting the relevance of solidarity in public healthcare funding.
References.
(1) ISTAT, Italian National Institute of Statistics (2007), Consumi e povertaâ, Anno 2005. Available online at: http://www.istat.it/
(2) AIFA, Agenzia Italiana del Farmaco (2007), Lâuso dei farmaci in Italia. Rapporto OSMED 2006. Available online at: http://www.agenziafarmaco.it/wscs_render_attachment_by_id/111.272708.118250656748298dd.pdf?id=111.251385.1182344815039
(3) Balzi D, Geddes M, Lispi L (2002), La âmigrazione sanitariaâ per tumore della mammella fra le regioni italiane. Available online at: www.ministerosalute.it/programmazione/resources/documenti/migrazionesanitaria.doc
(4) ISS, Istituto Superiore di Sanitaâ (2007), La mortalitaâ per causa in Italia: 1980-2002. Available online at: http://www.iss.it/site/mortalita/
Competing interests: None declared
Abstract: Despite the apparent relevance of Real Options to business decisions, they have had limited impact generally, and one problem frequently expressed is that Options Theory is regarded as being notoriously arcane and many discussions that go beyond the conceptual level get trapped in the mathematics. This is unfortunate because Real Options are best understood as a way of thinking and need to be positioned correctly alongside an approach that creates coherent stories about possible future outcomes, which is the territory of scenario analysis.
Abstract: This brief case study focuses on the valuation of the potential synergies leading to the share premium offered by Nike to acquire the control of UMBRO.
Abstract: Written immediately after the financial scandal involving the entire Governance of Banca Popolare Italiana (BPI) in 2006, this paper tries to answer the most frequently asked question by small, individual investors: are financial options a fair bet for anyone? Restated in a more general form, this question better reflects the deepest concerns raised by the BPI scandal: is it even conceivable that options' value can be manipulated by bankers in favor of few institutional investors? What is the asymmetry in the option pricing algorithm that would allow an unequal distribution of risk, and consequently of pay-offs, among investors? Are financial options a transparent and credible investment choice for a small investor?
Notes: JEL Classifications: G21, G14, M41
Working Paper Series
Abstract: Giampiero Favato, Professor of Accounting and Finance, recognises the danger that we have all become more risk averse since the financial crisis. However, he says it is important that we learn how to deal with risk, drawing on the recent success of the movie âThe Kingâs Speechâ to illustrate his argument.
Abstract: A quantum of leadership
Vision and implementation represent the essence of modern leadership. Visual thinking identifies novel sources of competitive advantage which only a series of well orchestrated actions can turn into value.
One dimension without the other cannot stand. Vision without action is just managerial hedonism, while mere implementation leads organisations to cynicism and denial.
Both dimensions are essential to the sustained success of any organisation and they are not seen as distinct states or modes. Modern leaders should foster both organisational capabilities at the same time, creating an atmosphere which does not privilege one over the other, having some properties of both.
This approach could have the same impact that quantum mechanics had on classical physics, challenging the status quo on the basis of stakeholders' wealth creation.
Abstract: What would be the marketing implications for drug firms if they
adopted a âLong Tailâ strategy, whereby they sold large quantities of the
usual blockbusters but generated more volume from niche products?
This article discusses the evolving world of pharmaceutical marketing, in
which:
â social computing is transforming the healthcare industry;
â âcyberchondriacsâ are a new segment of consumers; and
â Direct To Patient marketing is emerging as the new e-strategy, and an
effective online customer acquisition programme is an innovative
solution.
Abstract: The design of highly complex engineering systems, such as those of the
US space programme, require appropriate methods of estimating and
managing project costs. Taking the example of NASAâs use of parametric
cost analysis (PCA), this article explains how NASA implemented the
approach and the challenges they faced in creating user-friendly
estimating models.
It goes on to explore how PCA might be applied to drug research and
development (R&D), and why designing for cost is essential to the
engineering process.
Abstract: When it comes to cost management processes, which are best practice
and why is it important to avoid developing initiatives in isolation? The
key points are that:
â various diagnostic models assessed include activity based costing
(ABC), parametric cost analysis (PCA), price-led costing (PLC), designto-
cost (DTC) and cost as an independent variable (CAIV); and
â an integration framework for these management systems is essential,
to clarify communication and strengthen links between entities.
Integrated systems reduce cost, risk and increase customer satisfaction.
Abstract: New technologies are questioning whether conventional research
and development (R&D) models are capable of driving top line
growth. Taking the specific example of the pharmaceutical industry,
where both R&D costs and potential rewards are high, this article
looks at the changing patterns of innovation, and uses Roche and
Procter & Gamble as case studies.
It assesses which company was the most successful in recognising the
impact of technology discontinuity on existing innovation models.
Abstract: One never-ending debate on Wall Street is whether passive or active investing offers
the best returns to investors. Passive investing, used by firms such as Dimensional Fund
Advisors and Vanguard Group Inc, is a financial strategy in which a fund manager
makes as few portfolio decisions as possible to minimise transaction costs and capital
gains tax. One popular method is to mimic the performance of an externally specified
index â called âindex fundsâ. This is neatly summed up by the advice to an index fund
manager: âDonât just do something, sit there!â By contrast, an active investment strategy
attempts to out-perform the market through picking and trading securities or through
asset allocation. An active investor expects to exploit inefficient areas of the market.
