Healthcare Economics & Financial Management 2

Q1. Use diagrams to show supply and demand for a drug to treat Tuberculosis, assuming a competitive market. Show and explain the effect on equilibrium price and quantity of the following (answer all parts): a) A change in technology that reduces the cost of manufacturing the drug; b) Introduction of a generic substitute for the drug that offers the same risks and benefits at lower price. c) A significant proportion of patients develop drug resistance. d) An increase in the patient co-payment for all PBS medications. Q2 Provide examples of following out-of-pocket costs faced by consumers (answer all parts): i. Co-insurance ii. Deductible iii. Exclusions iv. Flat rate benefit