Asymmetric information in the regulation of the access to markets

It is frequently argued that the high costs of clinical trials prior to the admission of new pharmaceuticals are stifling innovation. At the same time, regulation of the access to markets is often justified on the basis of consumers` inability to detect the true quality of a product. We examine these arguments from an information economic perspective by setting a framework where the incentives to invest in R&D are influenced by the information structure prevailing when the product is launched in the market at a later stage. In this setting, by changing the information structure, regulation (or the lack of) can thus indirectly affect R&D efforts. More formally, we construct a moral hazard - cum - adverse selection model in which a pharmaceutical firm exerts an unobservable effort towards developing an innovative (high quality) drug (moral hazard) and then announces the (unobservable) quality outcome to an uninformed regulator and/or consumers (adverse selection). We compare the outcomes in regard to innovation effort and expected welfare under two regimes: (i) regulation, where products undergo a clinical trial designed to ascertain product quality at the point of market access; and (ii) laissez-faire with free entry, where the revelation of quality is left to the market process. Results show that whether or not innovation is greater in the presence of entry regulation crucially depends on the efficacy of the trial in identifying (poor) quality, on the probability that unknown qualities are revealed in the market process, and on the preference and cost structure. The welfare ranking of the two regimes depends on the differential effort incentive and on the net welfare gain from implementing full information instantaneously. For example, in settings of vertical monopoly, vertical differentiation and horizontal differentiation with no variable cost of quality, entry regulation tends to be the preferred regime if the effort incentive under pooling is relatively low and profits do not count too much towards welfare. A complementary numerical Analysis shows how the outcomes vary with the market and cost structure. (authors' abstract)Series: Department of Economics Working Paper Serie

Adaptation to poverty in long-run panel data

We consider the link between poverty and subjective well-being, and focus in particular on potential adaptation to poverty. We use panel data on almost 54,000 individuals living in Germany from 1985 to 2012 to show first that life satisfaction falls with both the incidence and intensity of contemporaneous poverty. We then reveal that there is little evidence of adaptation within a poverty spell: poverty starts bad and stays bad in terms of subjective well-being. We cannot identify any cause of poverty entry which explains the overall lack of poverty adaptation

Maternal depression and child human capital: a genetic instrumental variable approach

We here address the causal relationship between maternal depression and child human capital using UK cohort data. We exploit the conditionally-exogenous variation in mothers’ genomes in an instrumentalvariable approach, and describe the conditions under which mother’s genetic variants can be used as valid instruments. An additional episode of maternal depression between the child’s birth up to age nine reduces both their cognitive and non-cognitive skills by 20 to 45% of a SD throughout adolescence. Our results are robust to a battery of sensitivity tests addressing, among others, concerns about pleiotropy and the maternal transmission of genes to her child

Sex and age differences in health expenditure in Northern Italy

BACKGROUND: Little is known about the health care spending distribution across the age and sex gradient in European systems. The aim of the present study is to examine gender and age differences in health care utilization in Lombardy, Italy. METHODS: We analysed administrative data for the year 2010 in Lombardy (the largest Italian region, with about 10 million inhabitant) including spending for inpatient and outpatient services and pharmaceuticals. Data were aggregated across age and sex. RESULTS: Lombardy in 2010 spent around 10.2 billion €, 51% of which for women. Age-standardized per-patient expenditure was however 5% lower for females than for males on average. Per-patient spending on elderly women (>65) was around 75% of the spending on men of the same age group. Further, health expenditure was higher for men for the treatment of chronic diseases. Importantly, the difference persisted after allowance of history chronic conditions. CONCLUSIONS: Our results are in sharp contrast with the US based literature showing that health expenditure in women is greater than in men. This may reflect inadequate attention to health care of women in Ital

Reporting COVID-19 deaths in Austria, France, Germany, Italy, Portugal and the UK

The reporting of deaths associated with the SARS-CoV-2 virus has had a high policy profile during the COVID-19 pandemic. This in turn is related to how deaths are counted. In this paper we focus on six European countries: Austria, France, Germany, Italy, Portugal and the United Kingdom and seek to address the following research questions: How do countries vary in terms of legislative provision, recording of deaths and reporting deaths? And what limits the comparability of data across countries? The methods comprised an analysis of policy documents in each of the six countries. Our findings reveal differences between countries in terms of legislative provision, recording deaths, and reporting deaths. These differences have an impact on the comparability of data on deaths associated with COVID-19 across countries. Our findings suggest that there is a case for data collection and statistics to be harmonised, which would facilitate accurate comparison between countries. However, reporting is also related to testing capacity for COVID-19, so this is not simply a question of comparable data being available, rather a question of the overall functioning of the public health system

Inequalities in the benefits of national health insurance on financial protection from out-of-pocket payments and access to health services: cross-sectional evidence from Ghana

A central pillar of universal health coverage (UHC) is to achieve financial protection from catastrophic health expenditure. There are concerns, however, that national health insurance programmes with premiums may not benefit impoverished groups. In 2003, Ghana became the first sub-Saharan African country to introduce a National Health Insurance Scheme (NHIS) with progressively structured premium charges. In this study, we test the impact of being insured on utilization and financial risk protection compared with no enrolment, using the 2012-13 Ghana Living Standards Survey (n = 72 372). Consistent with previous studies, we observed that participating in health insurance significantly decreased the probability of unmet medical needs by 15 percentage points (p.p.) and that of incurring catastrophic out-of-pocket (OOP) health payments by 7 p.p. relative to no enrolment in the NHIS. Households living outside a 1-h radius to the nearest hospital had lower reductions in financial risk from excess OOP medical spending relative to households living closer (-5 p.p. vs -9 p.p.). We also find evidence that in Ghana, the scheme was highly pro-poor. Once insured, the poorest 40% of households experienced significantly larger improvements in medical utilization (18 p.p. vs. 8 p.p.) and substantively larger reductions in catastrophic OOP health expenditure (-10 p.p. vs. -6 p.p.) compared with that of the richest households. However, health insurance did not benefit vulnerable persons equally from financial risk. Once insured, poor, low-educated and self-employed households living far from hospitals had significantly lower reductions in catastrophic OOP medical spending compared with their counterparts living closer. Taken together, we show that enrolment in the NHIS is associated with improved financial protection but less so among geographically remote vulnerable groups. Efforts to boost not just insurance uptake but also health service delivery may be needed as a supplement for insurance schemes to accelerate progress towards UHC

Maternal genetic risk for depression and child human capital

We here address the causal relationship between the maternal genetic risk for depression and child human capital using UK birth-cohort data. We find that an increase of one standard deviation (SD) in the maternal polygenic risk score for depression reduces their children’s cognitive and non-cognitive skill scores by 5 to 7% of a SD throughout adolescence. Our results are robust to a battery of sensitivity tests addressing, among others, concerns about pleiotropy and dynastic effects. Our Gelbach decomposition analysis suggests that the strongest mediator is genetic nurture (through maternal depression itself), with genetic inheritance playing only a marginal role

Roll-your-own cigarettes in Europe:Use, weight and implications for fiscal policies

Excise duties on roll-your-own (RYO) tobacco, which are generally based on RYO cigarettes containing 1 g of tobacco, are lower than duties on factory-made (FM) cigarettes. This provides a price incentive for smokers to switch to RYO, the use of which is increasing across Europe. To effectively approximate duties on the two types of products, accurate data on the weight of RYO cigarettes are required. We provide updated information on RYO use and RYO cigarette weight across Europe. From a representative face-to-face survey conducted in 2010 in 18 European countries (Albania, Austria, Bulgaria, Czech Republic, Croatia, England, Finland, France, Greece, Hungary, Ireland, Italy, Latvia, Poland, Portugal, Romania, Spain and Sweden), we considered data from 5158 current smokers aged 15 years or above, with available information on daily consumption of FM and RYO cigarettes separately. In Europe, 10.4% of current smokers (12.9% of men and 7.5% of women) were 'predominant' RYO users (i.e. >50% of cigarettes smoked). This proportion was highest in England (27.3%), France (16.5%) and Finland (13.6%). The median weight of one RYO cigarette is 0.75 g (based on 192 smokers consuming exclusively RYO cigarettes). The proportion of RYO smokers is substantial in several European countries. Our finding on the weight of RYO cigarettes is consistent with the scientific literature and industry documents showing that the weight of RYO cigarettes is substantially lower than that of FM ones. Basing excise duties on RYO on an average cigarette weight of 0.75 g rather than 1 g would help increase the excise levels to those on FM cigarettes

Response to COVID-19: was Italy (un)prepared?

On 31st January 2020, the Italian cabinet declared a 6-month national emergency after the detection of the first two COVID-19 positive cases in Rome, two Chinese tourists travelling from Wuhan. Between then and the total lockdown introduced on 22nd March 2020 Italy was hit by an unprecedented crisis. In addition to being the first European country to be heavily swept by the COVID-19 pandemic, Italy was the first to introduce stringent lockdown measures. The SARS-CoV-2 outbreak and related COVID-19 pandemic have been the worst public health challenge endured in recent history by Italy. Two months since the beginning of the first wave, the estimated excess deaths in Lombardy, the hardest hit region in the country, reached a peak of more than 23,000 deaths. The extraordinary pressures exerted on the Italian Servizio Sanitario Nazionale (SSN) inevitably leads to questions about its preparedness and the appropriateness and effectiveness of responses implemented at both national and regional levels. The aim of the paper is to critically review the Italian response to the COVID-19 crisis spanning from the first early acute phases of the emergency (March-May 2020) to the relative stability of the epidemiological situation just before the second outbreak in October 2020

A real world analysis of COVID-19 impact on hospitalizations in older adults with chronic conditions from an Italian region

Healthcare delivery reorganization during the COVID-19 emergency may have had a significant impact on access to care for older adults with chronic conditions. We investigated such impact among all adults with chronic conditions aged >= 65 years, identified through the electronic health databases of two local health agencies-ATS Brianza and ATS Bergamo-from the Lombardy region, Italy. We considered hospitalizations for 2020 compared to the average 2017-2019 and quantified differences using rate ratios (RRs). Overall, in 2017-2019 there were a mean of 374,855 older adults with >= 1 chronic condition per year in the two ATS and 405,371 in 2020. Hospitalizations significantly decreased from 84,624 (225.8/1000) in 2017-2019 to 78,345 (193.3/1000) in 2020 (RR 0.86). Declines were reported in individuals with many chronic conditions and for most Major Diagnostic Categories, except for diseases of the respiratory system. The strongest reductions were observed in hospitalizations for individuals with active tumours, particularly for surgical ones. Hospitalization rates increased in individuals with diabetes, likely due to COVID-19-related diseases. Although determinants of the decrease in demand and supply for care among chronic older adults are to be further explored, this raises awareness on their impacts on chronic patients' health in the medium and long run