Optimal Intertemporal Curative Drug Expenses: The Case of Hepatitis C in France

Abstract

We study intertemporal tradeoffs that health authorities face when considering the control of an epidemic using innovative curative medical treatments. We set up a dynamically controlled susceptible–infected–recovered (SIR) model for an epidemic in which patients can be asymptomatic, and we analyze the optimality conditions of the sequence of cure expenses decided by health authorities at the onset of the drug innovation process. We show that analytical conclusions are ambiguous because of their dependence on parameter values. As an application, we focus on the case study of hepatitis C, the treatment for which underwent a major upheaval when curative drugs were introduced in 2014. We calibrate our controlled SIR model using French data and simulate optimal policies. We show that the optimal policy entails some front loading of the intertemporal budget. The analysis demonstrates how beneficial intertemporal budgeting can be compared to non-forward-looking constant budget allocation.

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Replaces

Pierre Dubois, and Thierry Magnac, “Optimal Intertemporal Curative Drug Expenses: The Case of Hepatitis C in France”, TSE Working Paper, n. 23-1402, January 2023.

Reference

Pierre Dubois, and Thierry Magnac, “Optimal Intertemporal Curative Drug Expenses: The Case of Hepatitis C in France”, Journal of Health Economics, vol. 94, n. 102861, March 2024.