Premium policy? Getting better value from the PBS

Overview: Poor implementation of a policy to get better value for PBS spending is costing government $320 million a year and raising questions about pharmaceutical industry involvement in drug pricing. The therapeutic group premium policy, introduced in 1998 to stop the government wasting money on over-priced drugs, has been so watered down that it is broken, and taxpayers are paying for the failure. The policy applies only to a small number of interchangeable drugs that are equally effective and safe for most people. The government puts these drugs into therapeutic groups. In each group the government pays the price of the cheapest drug. Drug companies can accept that price, or pass on the extra cost to patients. The policy is a good way to get value for PBS spending, but the removal of drugs from therapeutic groups and the way prices are compared means that it rarely has much impact. The way the policy operates was devised with the close involvement of Medicines Australia, the pharmaceutical manufacturer lobby group. A joint working group drawn from the Health Department and Medicines Australia established the rules for calculating price gaps after dumping the recommendations of an independent review. Seeking the advice of drug company lobbyists gave the foxes a big say in the design of the hen house. As a result Australia has only four therapeutic groups and just two drugs within them are subject to a small premium. Germany, by contrast, has 30 equivalent groups and in the Netherlands nearly every drug is in a group. The failure of the policy is a further reason why Australia should establish an independent drug purchasing agency, like New Zealand’s PHARMAC, to negotiate better drug prices and administer the therapeutic group premium policy. Fixing this policy and keeping vested interests out of policy making would save millions of dollars for both government and patients. Unlike many health-spending decisions, this choice is easy. It’s time the government made it

Knowledge Diffusion, Supplier's Technological Effort and Technology Transfer via Vertical Relationships

This paper studies the effect of knowledge diffusion on the incentives for developed countries(DC)' firms to undertake costly technology transfer to their developing countries(LDC)' suppliers whose cost of production varies inversely with their technological effort. When the incumbent supplier's cost of improving efficiency is high, upstream (or, respectively, downstream) diffusion of knowledge to potential input (final output) producers encourages (discourages) technology transfer as it increases upstream (downstream) competition. However, and in sharp contrast to existing literature, when technological effort is less costly, upstream (downstream) knowledge diffusion discourages (encourages) technology transfer by reducing (increasing) the incumbent supplier's technological effort.technology transfer; technological effort; developing countries; knowledge diffusion; buyer-supplier

Spaced Out Monopolies: Theory and Empirics of Alternating Product Releases

An oft-neglected pattern of behavior occurs when firms time the release of their products so that they are not released on the same date. The practice is potentially collusive, so there may be legitimate antitrust concerns. This paper presents a model of this behavior, the alternating periods monopoly (APM). A comparison of the APM with other sustainable methods of collusion shows the conditions under which the APM is preferred. I develop an empirical test to detect the APM, and use data from the baseball card industry to investigate the possible use of an APM.Noncooperative strategies, alternating periods monopoly, duration analysis

Sin taxes in differentiated product oligopoly: an application to the butter and margarine market

There is policy interest in using tax to change food purchasing behaviour. The literature has not accounted for the oligopolistic structure of the industry. In oligopoly the impact of taxes depend on preferences, and how firms pass tax onto prices. We consider a tax on saturated fat. Using transaction level data we find that the form of tax and firms' strategic behaviour are important determinants of the impact. Our results suggest that an excise tax is more efficient than an ad valorem tax at reducing saturated fat purchases and an ad valorem tax is more efficient at raising revenue.

‘I see the future’: Associations between innovation and resources in the case of an exporting Western Australian regional family firm

Purpose – The purpose of this study is to investigate the associations between the resources of a Western Australian regional family firm exporting to Asia and innovation through the lens of the theory of innovation and the resource based view (RBV) of the firm. Design/methodology/approach – In-depth, un-structured telephone and face-to-face interviews were conducted with five members of the firm, including the co-owner. A visit to the business facilities complemented the data collection process. Findings – The importance of tangible and intangible resources, such as forward thinking or investments in technologies, human capital and research is clearly illustrated; these resources positively influence innovative practices. Associations between the findings and the theoretical frameworks were identified. For instance, the imperfectly imitable and non-substitutable attributes comply with the RBV of the firm, and the hypothesised four dimensions of innovation. Importantly, the significance of strategic partnering emerges as an extension of these attributes. Originality/value – This study addresses some knowledge gaps, first, contributing to the body of research on family firms’ adoption of innovation. In addition, the study contributes to the literature on regional Western Australian family firms operating internationally. This state makes a significant contribution to Australia’s economy, and its close geographic proximity to various important consumer markets highlights future opportunities for family firms in international trade. Despite such potential, research on global family firms operating in this state has been almost non-existent

Addressing Resource Variability Through Resource-Driven Adaptation

Software systems execute tasks that depend on different types of resources. However, the variability of resources may interfere with the ability of software systems to execute important tasks. Resource variability can occur due to several reasons including unexpected hardware failures, excess workloads, or lack of materials. For example, in automated warehouses, malfunctioning robots could delay product deliveries causing customer dissatisfaction and, therefore, reducing an enterprise’s sales. Moreover, the unavailability of medical materials hinders the ability of hospitals to perform medically-critical operations causing loss of life. In this thesis, we propose to address the problem of resource variability through resource-driven adaptation, using task models as input for adaptation decisions. The thesis presents the following contributions: • SPARK: a framework for performing proactive and reactive resource-driven adaptation based on multiple task-related criteria. The framework supports different types of depletable and reusable resources that could face variability. SPARK assists with four types of adaptation, namely: (i) execution of a similar task that requires fewer resources, (ii) substitution of resources by alternative ones, (iii) execution of tasks in a different order, and (iv) cancellation of the execution of tasks. • SERIES: a task modelling notation and editor tool that enables software practitioners to create task models that serve as input for SPARK. SERIES supports the representation of task priorities, task variants, task execution types, resource types, and properties representing users’ feedback. SPARK was evaluated in terms of the percentage of executed critical task requests, the average criticality of the executed task requests in comparison to the non-executed ones, overhead, and scalability through two case studies concerned with a medicine consumption system and a manufacturing system. The results of the evaluation showed that SPARK increased the number of executed critical task requests during resource variability. Additionally, the results showed that the time it takes to prepare and apply adaptation plans does not add significant overhead that hinders the ability of software systems to execute tasks in a tolerable waiting time. Furthermore, SPARK was shown to be scalable since the abovementioned time increases polynomially relative to the input size (number of tasks and task variants). SERIES was evaluated through a user study with twenty software practitioners. The results showed that software practitioners performed very well when explaining and creating task models using SERIES. These results were reflected in the task modelling activities that the participants performed as well as in their positive feedback regarding the usability of SERIES and the clarity of its semantic constructs. Overall, we conclude that the research presented in the thesis contributes to addressing resource variability through resource-driven adaptation. We also provide suggestions for future work that can extend this research

Factor substitution in rice production function: the case of Vietnam

Vietnamese rice production has achieved remarkable success over the last couple of decades. This is due to land and market reforms, known as ‘Doi Moi’. There were noticeable changes in policies, such as land and production systems, which were transformed from a collective to an individual contract system in the 1980s. Vietnam made progress in rice production through the legalisation of the privatisation of farm properties and a huge investment in irrigation systems. The country not only ensured its domestic demand, but also started exporting rice and gradually became the second largest exporter in the world. An estimate of the Constant Elasticity of Substitution function (CES) for Vietnam’s rice production is essential for the government to design effective policy on agricultural production. This study makes the first attempt to estimate the nested CES model for Vietnamese rice production in 2012. The paper finds that the elasticity of substitution of Vietnam’s nested CES model lies between 0.44 and 0.46. The results indicate the weak substitutability between land and the capital-labour composite in the nested CES model. This also suggests that it is impossible to take labour as the substitutable factor for land and capital

The Welfare Impact of Reducing Choice in Medicare Part D: A Comparison of Two Regulation Strategies

Medicare’s prescription drug benefit (Part D) has been its largest expansion of benefits since 1965. Since the implementation of Part D, many regulatory proposals have been advanced in order to improve this government-created market. Among the most debated are proposals to limit the number of options, in response to concerns that there are “too many” plans. In this paper we study the welfare impact of two feasible approaches (of similar magnitude) toward limiting the number of Part D plans: reducing the maximum number of plans each firm can offer per region and removing plans that provide doughnut hole coverage. To this end, we propose and estimate a model of market equilibrium, which we later use to evaluate the impact of regulating down the number of Part D plans. Our counterfactuals provide an important assessment of the losses to consumers (and producers) resulting from government limitations on choice. These losses must be weighed against the widely discussed expected gains due to reduced search costs from limiting options. We find that the annual search costs should be at least two thirds of the average monthly premium in order to justify a regulation that allows only two plans per firm. However, this number would be substantially lower if the limitation in the number of plans is coupled with a decrease in product differentiation (e.g., by removing plans that cover the doughnut hole). For validation purposes, we also assess the impact of a recent major merger, and find that our model performs very well out of sample.Medicare Part D, regulation, number of plans, product differentiation, discrete choice

Models of higher-order, type-safe, distributed computation over autonomous persistent object stores

A remote procedure call (RPC) mechanism permits the calling of procedures in another address space. RPC is a simple but highly effective mechanism for interprocess communication and enjoys nowadays a great popularity as a tool for building distributed applications. This popularity is partly a result of their overall simplicity but also partly a consequence of more than 20 years of research in transpaxent distribution that have failed to deliver systems that meet the expectations of real-world application programmers. During the same 20 years, persistent systems have proved their suitability for building complex database applications by seamlessly integrating features traditionally found in database management systems into the programming language itself. Some research. effort has been invested on distributed persistent systems, but the outcomes commonly suffer from the same problems found with transparent distribution. In this thesis I claim that a higher-order persistent RPC is useful for building distributed persistent applications. The proposed mechanism is: realistic in the sense that it uses current technology and tolerates partial failures; understandable by application programmers; and general to support the development of many classes of distributed persistent applications. In order to demonstrate the validity of these claims, I propose and have implemented three models for distributed higher-order computation over autonomous persistent stores. Each model has successively exposed new problems which have then been overcome by the next model. Together, the three models provide a general yet simple higher-order persistent RPC that is able to operate in realistic environments with partial failures. The real strength of this thesis is the demonstration of realism and simplicity. A higherorder persistent RPC was not only implemented but also used by programmers without experience of programming distributed applications. Furthermore, a distributed persistent application has been built using these models which would not have been feasible with a traditional (non-persistent) programming language