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P8541: Economics of Medical Technologies

CLASS SESSION(S) Tues 5:30 to 8:20 1.5 credits Second half of Fall 2013 semester: 10/22 to 12/10 No meeting on November 5 (election day) INSTRUCTOR Bhaven N. Sampat, Associate Professor 600 West 168th, Room 404 212.305.7293 bns3@columbia.edu TEACHING ASSISTANT(S) N/A COURSE DESCRIPTION The course examines how new medical technologies (in particular, pharmaceuticals) affect the economics of the U.S. health care system, how economic incentives reciprocally affect the processes of medical technology development and diffusion, and the institutions and policies affecting the rate and direction of medical innovation in the U.S and globally. PREREQUISITES P6503 (or Instructors permission) COURSE LEARNING OBJECTIVES After taking this course, students will be able to: Describe the challenges and opportunities new medical technologies create in the United States health care system Explain the market failure theory of public policy, and how it applies to pharmaceuticals Describe the main institutions affecting the rate and direction of biomedical innovation in the United States Apply basic economic theory to explain policy tradeoffs facing major government agencies that affect the rate and direction of technical change in medicine (including the NIH, Patent Office, and FDA) Apply basic economic theory to assess current policy debates surrounding pharmaceuticals and other medical technologies Explore commonly used sources of data about new medical technologies Describe in detail the economics, history, and policies associated with a specific drug ASSESSMENT AND GRADING POLICY Students are expected to attend class and complete the readings. Assessment will be based on weekly answer to reading questions / updates on your case studies (40 percent), class participation (20 percent), and a final 2-3 page policy evaluation (40 percent). The case study project is an essential component of the course. Each student will become an

Department of Health Policy and Management

Spring 2012

expert on the economics of (and history of, and policies related to) a particular drug. Each week, Ill ask you to learn specific things about the technology you choose (related to the themes we are covering in class concurrently) and to post to your Wiki page. (A Wiki will be created for you after the first class session.) COURSE STRUCTURE Most classes will be interactive lectures, though we will often break into small discussion groups to discuss specific questions. Beginning with the second class, we will spend the second half of each session discussion a specific policy application, and discussing what we have learned through our individual case studies. MAILMAN SCHOOL POLICIES AND EXPECTATIONS Students and faculty have a shared commitment to the Schools mission, values and oath. http://mailman.columbia.edu/about-us/school-mission/ Academic Integrity Students are required to adhere to the Mailman School Honor Code, available online at http://mailman.columbia.edu/honorcode. Disability Access In order to receive disability-related academic accommodations, students must first be registered with the Office of Disability Services (ODS). Students who have, or think they may have a disability are invited to contact ODS for a confidential discussion at 212.854.2388 (V) 212.854.2378 (TTY), or by email at disability@columbia.edu. If you have already registered with ODS, please speak to your instructor to ensure that s/he has been notified of your recommended accommodations by Lillian Morales (lm31@columbia.edu), the Schools liaison to the Office of Disability Services.

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COURSE SCHEDULE The Wikispaces page includes links to all readings: HTTPS://HPMNP8541-001-2013-3.WIKISPACES.COLUMBIA.EDU/ Session 1 The Benefits and Costs of Medical Technology; An Overview of the Institutional Landscape Learning objectives Students will be able to Define medical technology Articulate the main arguments in debates about the costs and benefits of new medical technologies Explain the market failure theory of government investment in medical research Describe the current institutions influencing the rate and direction of technical change in medicine No assigned readings.

Session 2 The Economics of the National Institutes of Health Learning objectives Students will be able to Explain the history, financial structure, and organization of the NIH Describe the political economy of the NIH, and key interest groups affected by its activities Apply market failure logic and economic theory to assessing NIH priority setting Discuss how to evaluate the impact of NIH funding, and difficulties in doing so Required Garber, A. M., & Romer, P. M. (1996). Evaluating the Federal Role in Financing Health-related Research. Proceedings of the National Academy of Sciences of the United States of America, 93(23), 12717-12724. Sampat, B. N. (2011). Mission-oriented Biomedical Research at the NIH. Research Policy Funding First. (2000). Exceptional Returns: The Economic Value of Americas Investment in Medical Research: The Lasker Trust. Hughes, Virginia. "The disease olympics." Nature medicine 19.3 (2013): 257-260. Priority Setting from: Varmus, H. (2009). The Art and Politics of Science (1st ed.). New York: W.W. Norton.

Session 3 The Economics of Pharmaceutical Innovation

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Learning Objectives Students will be able to Identify economic incentives shaping pharmaceutical innovation Describe the current structure of the pharmaceutical industry Discuss the division of labor between the public and private sectors in biomedical research Required Dorsey, E. R., Thompson, J. P., Carrasco, M., de Roulet, J., Vitticore, P., Nicholson, S., et al. (2009). Financing of U.S. Biomedical Research and New Drug Approvals across Therapeutic Areas. PLoS ONE, 4(9), e7015. DiMasi and Grabowski (2012) R&D Costs and the Returns to New Drug Development: A Review of the Evidence in Danzon, Patricia M., and Sean Nicholson, eds. The Oxford handbook of the economics of the biopharmaceutical industry. Oxford University Press. Angell, M. (2004). The Truth About the Drug Companies. The New York Review of Books, 51. Light, Donald W., and Joel R. Lexchin. "Pharmaceutical research and development: what do we get for all that money?." BMJ: British Medical Journal 345 (2012). Sampat, Bhaven N., and Frank R. Lichtenberg. "What are the respective roles of the public and private sectors in pharmaceutical innovation?." Health Affairs30.2 (2011): 332-339. Gerth and Stolberg (2000) Drug Makers Reap Profits on Tax-Backed Research New York Times. UAEM (Universities Allied for Essential Medicines) home page.

Session 4 Value of New Drugs Learning Objectives Students will be able to Discuss different empirical approaches to calculate the value of new drugs Assess the likely effects of different proposals to reduce drug prices and promote greater access to medicines Explain different perspectives on the value of pharmaceutical innovations Required Garthwaite and Duggan (2012) Empirical Evidence on the Value of Pharmaceuticals in Danzon, Patricia M., and Sean Nicholson, eds. The Oxford handbook of the economics of the biopharmaceutical industry. Oxford University Press. Lichtenberg, Frank R. "Are the benefits of newer drugs worth their cost? Evidence from the 1996 MEPS." Health Affairs 20.5 (2001): 241-251.

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Philipson, Tomas J., and Anupam B. Jena. "Who benefits from new medical technologies? Estimates of consumer and producer surpluses for HIV/AIDS drugs." Forum for Health Economics and Policy (Biomedical Research and the Economy). Vol. 9. No. 2. 2006. Towse, Drummond, and Sorenson (2012) Measuring Value: Pharmacoeconomics Theory and Practice in Danzon, Patricia M., and Sean Nicholson, eds. The Oxford handbook of the economics of the biopharmaceutical industry. Oxford University Press Neumann, Peter J., and Milton C. Weinstein. "Legislating against use of costeffectiveness information." New England Journal of Medicine 363.16 (2010): 14951497. Jena, Anupam B., and Tomas Philipson. "Cost-effectiveness as a price control." Health Affairs 26.3 (2007): 696-703.

Session 5 The Economics of Medical Patents Learning Objectives Students will be able to Explain how medical patents work Assess the impact of patenting on medical innovation Describe current controversies in pharmaceutical patent policy in the U.S. and globally Required Grabowski, H. G. (2002). Patents and New Product Development in the Pharmaceutical and Biotechnology Industries: Federal Reserve Bank of Dallas. Kapczynski, Amy, Chan Park, and Bhaven Sampat. "Polymorphs and prodrugs and salts (oh my!): an empirical analysis of secondary pharmaceutical patents." PloS one 7.12 (2012): e49470. Hemphill and Sampat (2013) Drug Patents at the Supreme Court. Science Hemphill, C. S., & Sampat, B. N. (2011). Evergreening, Patent Challenges, and Effective Market Life in Pharmaceuticals. Journal of Health Economics Grabowski, H. (2008). Follow-on Biologics: Data Exclusivity and the Balance between Innovation and Competition. Nature Reviews. Drug Discovery, 7(6), 479488. Session 6 The Economics of Drug Regulation Learning Objectives Students will be able to Identify economic principles shaping the work of the FDA Describe the economics of clinical trials Explain how drugs are currently regulated by the FDA

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Required Chapters 6 & 7: Temin, P. (1980). Taking Your Medicine : Drug Regulation in the United States. Cambridge, Mass.: Harvard University Press. Malani and Philipson (2012) The Regulation of Medical Products in Danzon, Patricia M., and Sean Nicholson, eds. The Oxford handbook of the economics of the biopharmaceutical industry. Oxford University Press Berndt, E. R., Cockburn, I. M., & Thiers, F. (2007). The Globalization of Clinical Trials for New Medicines into Emerging Economics: Where Are They Going and Why?. Paper presented at the Micro Evidence on Innovation in Developing Countries. Ridley, David B., Henry G. Grabowski, and Jeffrey L. Moe. "Developing drugs for developing countries." Health Affairs 25.2 (2006): 313-324.

Session 7 Drugs for Developing Countries Learning Objectives Students will be able to Provide an economic explanation of difficulties in stimulating research on neglected tropical diseases Describe changes in the global intellectual property regime and assess their likely impact on innovation and access to medicines Evaluate new initiatives to stimulate drug development for developing countries Towse et al Drugs and Vaccines for Developing Countries in Danzon, Patricia M., and Sean Nicholson, eds. The Oxford handbook of the economics of the biopharmaceutical industry. Oxford University Press Sampat, Bhaven N., Kenneth C. Shadlen, and Tahir M. Amin. "Challenges to Indias Pharmaceutical Patent Laws." Science 4 (2012): 6. Hollis, Aidan, and Thomas Pogge. "The Health Impact Fund: Making new medicines accessible for all." (2008).

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