Question

Traders from the faraway nation of Chplandia have brought infected goods to market in the capital of Pcoria. As a result, a new infectious disease called chpitis is spreading through the Pcorian population. Chpitis is not fatal, but leaves victims severely disfigured for the remainder of their lives. Throughout this problem, assume no discounting of future years.A. The Pcorian government surveys victims to determine how burdensome chpitis is. Respondents claim they are indifferent between living six years without chpitis and living ten years covered with chpitis scars. Most respondents explain that they face a major social stigma in Pcoria’s schools and workplaces. What is the implied quality weight q for a year lived in the aftermath of a chpitis infection?B. Now assume that a drug company has developed an ointment that can be used to treat chpitis sores and reduce scarring. Surveys indicate that the ointment, which costs $10,000 for a full course of treatment, can improve quality of life from 0.6 to 0.7 for chpitis survivors. What is the ICER for taking the ointment over doing nothing for the typical chpitis victim (a 20-year-old)? Assume that life expectancy in Pcoria is 70 years.C. Assume that everyone in Pcoria agrees that a QALY is worth $5,000. Will a 20- year-old chpitis victim decide to get the ointment, which costs $10,000? What about a 60-year-old chpitis patient? What about a 69-year-old chpitis patient?D. Suppose that the Pcorian government enrolls all its citizens in the Universal Insurance Program which pays (with 10% coinsurance) for any treatment. So the ointment costs patients only $1,000 out of pocket. Will a 20-year-old chpitis victim still decide to get the ointment? What about a 60-year-old chpitis patient? What about a 69-year-old chpitis patient?

Answer 1

The implied quality weight is 6/10 = 0.6. A year lived with chpitis scars is only 60% as satisfying as living a year in full health.