Abstract

Health economics is one of the essential needs in establishing the basis for a better healthcare services and medicinal product development. The concept of health economics also deals with the system of financing health care system. Many economists believe that understanding the discipline and ethics in health economics are important intervention tools for medical professionals. In economics’ terms, health care services are consumption and investment goods (Kominski, & Stoller, 2013). Health care service is an essential element in improving the quality of life (QOL). Perhaps, it is important to understand and if necessary differentiate health care services from other economics’ goods. The level of societal-value attached to health economics provides the basis for rational and equitable decision making process in the field. Thus, allowing health professional to attain optimal health services. In the process, the public will gain tremendous health benefits while minimizing costs associated with health care services or medicinal products.

Health Care through the Eyes of the Economist

Health economics is a branch of economics which deals with concepts associated to efficiency, effectiveness, consumable-value and behavior in the production and consumption of health care goods. In general, health economists tend to study the functional discipline of health care systems. The discipline and ethics of health economics are invaluable assets in clinical and biomedical fields. The fundamental principle of health care systems and services provide medical needs to improve the quality of life (QOL), and achieve health outcome-reach whenever possible. These principles are core public benefits derived from quality, safe, and efficacious medicinal products and health care services. Quality health care services add value in the system by improving health condition through appropriate and effective health interventions. In recent reports, about 25% of health care services was deemed unnecessary (Phillips, 2005). In addition, medical experts indicated that only 10-15% of health care interventions have been shown to improve health status while 70-80% lacks sufficient evidence in determining the effectiveness of the health care services, in question (Phillips, 2005).

In the process of creating and facilitating better health care services, it is imperative to differentiate health care services from other economics’ consumable goods and services on the basis of essential needs. Other economics’ goods and services have correlative relationship with demand, supply, and price. The economics of demand, supply, and price (cost) are under the limiting factor of scarcity of resources, which can be manipulated or fixed, depending on “wants.” In contrast, health care goods are “needs” and not necessarily “wants.” Hence, the application of laws of demand, supply, elasticity and inelastic principles of goods and services, in health care service must be applied judiciously and cautiously to maintain accessible and equitable public health care services (Kominski, & Stoller, 2013).

The health needs of sick patients are under the inelastic demand curve, and in desperate need of medical care. On the other hand, most preventative medical care measures are under elastic curve of health care demand (lots of options are available) (Kominski, & Stoller, 2013). Perhaps, in health care system, time is critical, and the “needs” for medical care is important because health care services deal with the essence of quality of life and not luxury or materialistic wants. Although in health care services, a component of health care service such as “product innovation” is a scarce or limited product, however, health care services must not be a scarce public goods when the care is available.

In most clinical development process, the amount of innovation scarcity is staggering. Only 1 out of every 5000-10000 new chemical entity may be approved for marketing purposes. The financial burden in clinical research development for medicinal products from product development phase through the clinical trials involve a tremendous amount of capital investment. Thus making health care services very costly and time consuming processes (Whitmore, 2004). Furthermore, the strict regulatory processes and standards associated with health care services, for a very good reason, creates additional restrictions with the intention in fostering “good clinical practices” (GCP) and “good manufacturing practices” (GMP). The GCP/GMP process encourages and facilitates quality product design in order to minimized costs associated with defective medicinal products/health care services; which follows the factorial rule of 1-10-100 (Whitmore, 2004). The factorial cost of 1, is the cost associated in preventing faulty error in products. The 10 factorial correlates with correcting a product defect before the product’s entry in the marketplace, and the factorial value of 100 is the cost associated with a defective product when recalled from the marketplace (Whitmore, 2004). In fairness, most consumable products have lower defective cost than medicinal products or health care services.

In a clinical trial and regulatory approval process for health care products; quality, safety and efficacy assessment of any product is usually based on a risk-benefit assessment. The ICH guidelines require that the benefits derived from a given investigational product outweighs the risks. The guidelines do not primarily assess health care products based on invested costs. The evaluation technique’s intent is invested in protecting the public well-being by all means. The ICH guidelines establish high ethical-integrity plain in evaluating health care services for public benefit and better policy-decision making process. The evaluation of private-cost is also essential in health care services. Thus, establishing acceptable common ground between private cost and public benefits in research and development process within institutions highly motivated by potential profitable milestone in a given product makes the process lucratively incentives in encouraging re-investment in new projects that may be of great benefit to society. However, using only private-cost in assessing product development will undermine scientific innovation and public well-being. Most importantly, supporting health care services are not absent of government and private grants, and institutional collaborations, when possible. These are some of major factor play a role in health economics, a process that makes public health care services affordable to all.

References

Kominski, G., & Stoller, S. (2013). Health economics principles. Retrieved from https://class. waldenu.edu/webapps/portal/frameset.jsp?tab_tab_group_id=_2_1&url= %2Fwebapps% 2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id %3D_2651615 1% 26url%3D.

Phillips, C. J. (2005). Health economics: An introduction for health professionals. Malden, MA: Blackwell Publishing.

Whitmore, E. (2004). Development of FDA-regulated medical products: Prescription drugs, biologics, and medical devices. Milwaukee, WI: ASQ Quality Press.