Insights from economic- epidemiology Ramanan Laxminarayan Resources for the Future, Washington DC

Economic Epidemiology Mathematical conceptualization of the interplay between economics, human behavior and disease ecology to improve our understanding of –the emergence, persistence and spread of infectious agents –optimal strategies and policies to control their spread

Economics  Measuring health outcomes  Provides a single metric to compare costs and benefits both contemporaneously and over time.  Incorporating behavior  Can alter conclusions reached by purely epidemiological models by incorporating behavior.  Comparing public policies  Increases relevance for application in the real world.

Overview n Individual response and disease n Incentives of institutions (to invest in hospital infection control) n Optimal allocation of resources between two regions (or hospitals)

Individual response and disease n Vaccinations –Insufficient incentives to vaccinate prevent attainment of herd immunity thresholds n Drug resistance –Insufficient incentives to make appropriate use leads to ineffective drugs and increasing prevalence n Testing –Private testing behavior adds to public information on disease prevalence

Rational epidemics n Prevalence response elasticity –Hazard rate into infection of susceptibles is a decreasing function of prevalence (opposite of epidemiological model predictions) –Application to HIV –Application to Measles

Geoffard and Philipson, Int. Econ. Rev., 1996

Blower et al, Science, 2000

When should governments intervene? n Disease prevalence increases adoption of public programs n Impact of public program may be zero if prevalence has already reached an individual’s threshold prevalence n Paradoxically, the role of government subsidies is lowest when prevalence is highest since individuals will protect themselves regardless

Philipson, NBER, 1999

Public price subsidies n Can price subsidies or mandatory programs achieve eradication? –Increase in demand by folks covered by the program lowers the incentives to vaccinate for those outside the program n Do monopolistic vaccine manufacturers have an incentive to eradicate disease? –Market for their product would disappear with eradication Geoffard and Philipson, Int Econ Rev, 1997

Disease Complementarities n Incentive to invest in prevention against one cause of death depends positively on probability of dying from other causes n Intervening to prevent mortality not only prevents a death but also increases incentives for the family to fight other diseases

Dow et al, Am Econ Rev, 1999

Does the theory fit the facts? n Do individuals actually observe prevalence? n Why don’t we see prevalence responsiveness at work everywhere? n Importance of observational learning (herd behavior)?

Stoneburner and Low-Beer, Science, 2004

NNIS Data, 2004

Optimal infection control Infection dynamics are given by Equilibrium prevalence is given by Smith, Levin, Laxminarayan (PNAS, 2005)

Objective Minimize costs of infection control and infections Smith, Levin, Laxminarayan (PNAS, 2005) Local minima, if they exist, are solutions to

Smith, Levin, Laxminarayan (PNAS, 2005)

The focal institution decides how much to invest in HIC by minimizing the net present value of discounted costs of HIC and hospitalization: Smith, Levin, Laxminarayan (PNAS, 2005) Strategic interactions with other hospitals

Implications for policy n Dutch experience: frequency of MRSA infections is < 0.5% after an intensive ‘‘search-and-destroy’’ campaign, compared with 50% in some areas n In Siouxland (Iowa, Nebraska, S. Dakota), an epidemic of VRE was reversed n Regionally coordinated response to epidemic n Does this explain higher prevalence of ARB in areas with high concentration of health care institutions?

Rowthorn, Laxminarayan, Gilligan Submitted

Allocating resources Expenditure on drugs is subject to the budget constraint Finance is not transferable through time. Problem is to choose F ₁ and F ₂ so as to minimise the following integral Rowthorn, Laxminarayan, Gilligan Submitted

Optimal allocation n At low levels of infection in both populations –Preferentially treat population with higher transmission coefficient because of greater economic value associated with greater potential to prevent secondary infections n At high levels of infection –Preferentially treat population with lower levels of infection since the higher probability of re-infection in high infection populations reduces the economic value of treatment Rowthorn, Laxminarayan, Gilligan Submitted

Closing thoughts n Epidemiological models take little or no account of economic constraints or incentives faced by individuals or institutions n Economic models mostly ignore the spatial and temporal dynamics of disease.