Statistics

It is statistics problems based on the article that you are supposed to read. The article is attached.
Questions
The exam questions refer to the article “K. A. Schulman and Suresh Balu and S. D. Reed. Specialty Pharmaceuticals for Hyperlipidemia – Impact on Insurance Premiums. N Engl J Med 2015; 373:1591-1593 October 22, 2015”

http://www.nejm.org/doi/pdf/10.1056/NEJMp1509863

Q1: (20%) Explain (and show calculation) the authors’ claim that “annual cost reduction [due to drug] would be at most $600”?

Q2: (20%) What are the factors (indicated in the article) that need to be accounted for before attempting to calculate the cost of the drug that will be supported through health insurance premiums?

Q3: (30%)
Calculate the additional cost (to support Alirocumab and Evolocumab) per individual in the insurance pool. For this question, in addition to the data listed in the article use the following assumptions:
– the pool of insurance consists of US population between 40 and 64 years of age (https://en.wikipedia.org/wiki/Demography_of_the_United_States)
– Out of pocket cost rate is 10% (applied to the cost after 25% discount negotiated by insurance)
a) What is the annual cost of Alirocumab therapy after 25% discount negotiated by insurance
b) What is out-of-pocket cost to be paid by beneficiary patient
c) What is the size of insurance pool
d) How many patients are eligible for the drug
e) What is the premium per person needed to support the drug

Q4: (30%)
Assume that the (status quo) rate of cardiovascular event is constant at 7% (annual chance of having cardiovascular event). When a cardiovascular event occurs, there is 60% chance that person dies (hence 40% chance that person will survive). The article cited the clinical evidence that the drug can reduce the rate of cardiovascular events by 50%.
a) Use two-state Markov model to calculate status quo life expectancy (for the sake of simplicity assume that the only reason of death a cardiovascular event).
b) What is the improvement of life expectancy (the life expectancy thanks to the drug less the status quo life expectancy)
c) Use the list price for the drug, calculate the expected life-time cost of the therapy?
d) Assume that each saved life year worth $50,000 (for example https://en.wikipedia.org/wiki/Cost%E2%80%93utility_analysis). Is the drug cost effective compared with the status quo?

Submission: 1 Word document (if you have graphics include all of them in the Word doc)

Statistics

It is statistics problems based on the article that you are supposed to read. The article is attached.
Questions
The exam questions refer to the article “K. A. Schulman and Suresh Balu and S. D. Reed. Specialty Pharmaceuticals for Hyperlipidemia – Impact on Insurance Premiums. N Engl J Med 2015; 373:1591-1593 October 22, 2015”

http://www.nejm.org/doi/pdf/10.1056/NEJMp1509863

Q1: (20%) Explain (and show calculation) the authors’ claim that “annual cost reduction [due to drug] would be at most $600”?

Q2: (20%) What are the factors (indicated in the article) that need to be accounted for before attempting to calculate the cost of the drug that will be supported through health insurance premiums?

Q3: (30%)
Calculate the additional cost (to support Alirocumab and Evolocumab) per individual in the insurance pool. For this question, in addition to the data listed in the article use the following assumptions:
– the pool of insurance consists of US population between 40 and 64 years of age (https://en.wikipedia.org/wiki/Demography_of_the_United_States)
– Out of pocket cost rate is 10% (applied to the cost after 25% discount negotiated by insurance)
a) What is the annual cost of Alirocumab therapy after 25% discount negotiated by insurance
b) What is out-of-pocket cost to be paid by beneficiary patient
c) What is the size of insurance pool
d) How many patients are eligible for the drug
e) What is the premium per person needed to support the drug

Q4: (30%)
Assume that the (status quo) rate of cardiovascular event is constant at 7% (annual chance of having cardiovascular event). When a cardiovascular event occurs, there is 60% chance that person dies (hence 40% chance that person will survive). The article cited the clinical evidence that the drug can reduce the rate of cardiovascular events by 50%.
a) Use two-state Markov model to calculate status quo life expectancy (for the sake of simplicity assume that the only reason of death a cardiovascular event).
b) What is the improvement of life expectancy (the life expectancy thanks to the drug less the status quo life expectancy)
c) Use the list price for the drug, calculate the expected life-time cost of the therapy?
d) Assume that each saved life year worth $50,000 (for example https://en.wikipedia.org/wiki/Cost%E2%80%93utility_analysis). Is the drug cost effective compared with the status quo?

Submission: 1 Word document (if you have graphics include all of them in the Word doc)