Society For Risk Analysis Annual Meeting 2016

Session Schedule & Abstracts

* Disclaimer: All presentations represent the views of the authors, and not the organizations that support their research. Please apply the standard disclaimer that any opinions, findings, and conclusions or recommendations in abstracts, posters, and presentations at the meeting are those of the authors and do not necessarily reflect the views of any other organization or agency. Meeting attendees and authors should be aware that this disclaimer is intended to apply to all abstracts contained in this document. Authors who wish to emphasize this disclaimer should do so in their presentation or poster. In an effort to make the abstracts as concise as possible and easy for meeting participants to read, the abstracts have been formatted such that they exclude references to papers, affiliations, and/or funding sources. Authors who wish to provide attendees with this information should do so in their presentation or poster.

Common abbreviations

The Economics of Health, Drugs, and Difficult Bugs

Room: Marina 6   8:30 am–10:00 am

Chair(s): Nellie Lew

W1-D.1  8:30 am  Protecting Patients from “Innocuous Drugs”: Medical Marketplace vs. FDA. Abdukadirov S*; Mercatus Center, George Mason University

Abstract: Since 1962, the FDA required all new drugs to demonstrate efficacy in order to receive approval for marketing. The agency justified its precautionary approach by claiming that patients did not have the necessary expertise to evaluate the effectiveness of new drugs and would likely become victims of snake oil peddlers without FDA regulations. Yet, the last few decades saw the rise of alternative sources of medical expertise capable of filtering out ineffective drugs from the market. Thus, the competing sources of medical expertise provide us with two competing regimes for efficacy testing. The centralized precautionary approach relies entirely on FDA regulators to remove ineffective drugs from the market. In contrast, the decentralized market-based approach relies on the distributed expertise and local knowledge of patients, physicians and insurance companies to achieve the same result. This paper examines the costs and benefits of each approach.

W1-D.2  8:50 am  As Software Eats the World, What Happens to Risk Regulation? Thierer AD*; George Mason University

Abstract: As a noted venture capitalist recently quipped, “software is eating the world,” and that includes the world of food, drugs, medical devices and their regulation. The underlying drivers of the modern computing and Internet revolution—microprocessors, software, sensors, networked technologies, wireless geolocation, and other digital devices and applications—are poised to upend the health sector and its regulation. Smartphones, fitness tracking devices, 3D printers, and virtual reality technologies are just some of the specific applications that consumers are already using in a decentralized—and sometimes largely unregulated fashion—to better their health or improve their capabilities. How should policymakers account for the risks associated with this bold new world of highly personalized health, where medical treatment decision-making is increasingly democratized and decontrolled? Traditional approaches to risk regulation may no longer work in light of new technological realities. This paper will consider how the FDA and other medical experts could reorient their focus away from strict preemptive risk controls and toward improved risk education and health literacy instead of, or in addition to, traditional regulatory efforts. The goal would be to better inform a citizenry that is empowered to make many of their own health decisions to ensure that they better understand the relative risk trade-offs associated with their newly-acquired technological capabilities and opportunities. The paper will also explore how over time this approach might improve resiliency among citizens as they increasingly engage in “learning by doing”—even with the risk that potentially entails.

W1-D.3  9:10 am  Behavioral Responses to Health Information and Warnings. Lew N*, Lavaty R, Wolff C, Peckham J, Wood D, Muth M, Karns S, Brophy J; U.S. Food and Drug Administration

Abstract: One of the most common risk-reduction strategies used by the Food and Drug Administration (FDA) to achieve its public health mission is to ensure that relevant health information and warnings about FDA-regulated products be disclosed to consumers and healthcare providers. Informational approaches, such as warning labels and nutrition labeling, are often used as a more flexible regulatory alternative to “command-and-control” approaches for addressing risks. From a social welfare perspective, informational strategies may be more efficient than “command-and-control” approaches in reducing risk because they reduce information asymmetry and allow individuals to decide for themselves how to best proceed. While informational approaches have the potential to be effective in promoting public health goals, compared with bans and other more restrictive types of regulatory approaches, their effects on actual behavior and consumption decisions are inherently more difficult to predict and to quantify ex-ante. We develop and apply a theoretical model of consumer response to predict the behavioral change brought about by healthcare information and warnings. In this model, we first estimate the effect of new health information about a product on consumers’ willingness to pay for that product. We then estimate the change in the equilibrium price and quantity demanded for the product. The model takes into account consumers’ absorption of new risk information, the change in perceived health cost or benefit of consuming a product, and spillovers to consumers who are not the target of the health information treatment. Disclaimer: The findings, interpretations, and conclusions expressed in this presentation are those of the authors in their private capacities, and they do not represent the views of the Food and Drug Administration or RTI.

W1-D.4  9:30 am  Calculating the Expected Net Present Value (ENPV) for the Development of a Rapid Point-of-Care Diagnostic (POC) Device for C. Difficile and Carbapenem-resistant enterobacteriaceae (CRE). Jessup A, Sertkaya A*, Wong H; HHS Office of the Assistant Secretary for Planning and Evaluation and Eastern Research Group, Inc.

Abstract: The problem of antimicrobial resistance is a serious threat to global health. Although development of new antibacterial drugs will help with this problem, resistance can develop easily if the drug is overused or misused. Rapid point-of-care (POC) diagnostic tests can play an important role in guiding appropriate antibacterial drug treatment as they allow clinicians to identify patients who need antibacterial drugs, and if so, which drugs might be appropriate. Additionally, rapid POC diagnostic tests can also be used to identify patients who have a resistant bacterial cause for their disease and allow for appropriate therapy and proper actions to prevent transmission to other patients. However, the potential of these rapid POC diagnostic tests to foster appropriate use has not been fully realized. Given the potential public health impact of rapid POC diagnostic tests, it is important to understand the factors that may lead to the success of a new test so that proper incentives may be put in place to spur innovation. We develop a decision-tree model to estimate the private and social returns to developing a rapid POC diagnostic test for detecting C. Difficile and Carbapenem-resistant Enterobacteriaceae (CRE), two bacteria of major public health significance. Using the model, we then examine the level of public sector incentives needed to stimulate the development of a rapid POC diagnostic test for detecting C. Difficile and another for detecting Carbapenem-resistant Enterobacteriaceae (CRE).

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