Dictionary of Health Economics

Alan Earl-Slater

• Publisher: CRC Press
• Year: 2018
• ISBN:
  9781315348490
• Edition: 1
• Topic: Medicine
• Subtopic: Public Health, Administration & Care

Comprehensive, concise and easily accessible, this is the first health economics dictionary of its kind and is an essential reference tool for everyone involved, or interested in, healthcare. The modern terminology of health economics and relevant terms used by economists working in the fields of epidemiology, public health, decision management and policy studies are all clearly explained. Combined with hundreds of key terms, the skillful use of examples, figures, tables and a simple cross-referencing system between definitions, allows the often complex language of health economics to be demystified.

P

Paasche index

A method of calculating a single number from a set of numbers. It is calculated on the basis of old and new weights (volumes) and old and new prices. The Paasche index (PI) is calculated as follows:

$\text{PI}=\frac{\text{Sum}{\text{P}}_1\times {\text{W}}_1}{\text{Sum}{\text{P}}_0\times {\text{W}}_0}$

The Laspeyre price index needs data on old weights (W₀), old and new prices (P₀ and P₁ respectively) whereas the Paasche index needs data on old and new weights (W₀, W₁) and old and new prices (P₀, P₁). Weights can be established by using quantities traded: W₀ = Q₀, W₁ = Q₁ See Fisher’s index; Index number; Laspeyre index.

PACT

First established in 1988, Prescription Analysis and CosT (PACT) is a system of providing information (based on prescriptions dispensed in the NHS) on what a general practitioner (GP), working in England or Wales, has prescribed in a period (e.g. the last three months). PACT provides information on the GP’s practice and shows how they compare with more aggregated information (e.g. at primary care group, health authority or national level). PACT standard reports are automatically sent to every GP to whom the data refer. More detailed information is sent to GPs on request. PACT information is also provided to health authority medical advisers and has been used in prescribing analysis.

A standard report includes: information on practice prescribing costs; how these compare to health authority and national costs; the number of items the practice prescribes; prescribing data by therapeutic group (e.g. gastrointestinal, cardiovascular, respiratory, central nervous system, endocrine, musculoskeletal and joint disorders); own dispensing (if the doctor is allowed to prescribe and dispense medicines, e.g. in a GP practice in a rural area); the practice’s profile (e.g. patient list size, number of patients over 65 years of age); prescribing attributed to the GP’s trainees or deputies. PACT allows GPs to view and review their prescribing practice; monitor the influence of practice policies (e.g. their use of restricted lists); and compare their performance with others. One main disadvantage of PACT is that it does not provide any diagnosis information; therefore we do not know exactly what the medicine was prescribed for. See ASTROPU; DDD; General Practice Research Database; STAR-PU.

Paradox of value

Exists where some goods and services essential to life have a lower market value than other goods and services which are not deemed essential to life. For example, water is essential to life but has a low market value, whereas diamonds are not essential to life but have a high market value. See Marginal analysis.

Paradox of voting

The situation whereby in a system of majority voting, individual preferences cannot be fully reflected in community preferences. If Mrs Green votes for A,B,C, Mr Brown for B,C,A and Ms Red for C,A,B then any majority voting system cannot reflect all individuals’ preferences. Sometimes called Arrow’s impossibility theorem. See Priority setting; Transitivity.

Pareto efficiency

A situation is said to be Pareto efficient if it is not possible to make someone better off without making someone else worse off. In a Pareto-efficient situation two types of efficiencies occur: technical efficiency (inputs are being used in the most efficient way) and allocative efficiency (outputs provide the highest possible utility). Sometimes called Pareto optimal. See Pareto improvement; Pareto optimal.

Pareto improvement

Occurs when someone is made better off and no one is made worse off. See Equilibrium; Pareto efficiency; Pareto optimal.

Pareto optimal

Occurs when it is not possible to make someone better off without making someone else worse off by a reallocation of incentives or resources. Sometimes called Pareto efficiency. See Pareto efficiency.

Partial equilibrium analysis

Occurs when individual markets, but not all markets, are assessed for their state of equilibrium. For example, an analysis of the cystic fibrosis market represents a partial equilibrium analysis. See Equilibrium; General equilibrium; Micro economics.

Per capita

A term used to denote calculations based on population numbers. For example, if a primary care group’s expenditure is £60m per annum and there are 100 000 people covered in the group, then healthcare expenditure is £600 per capita. Not everyone in the 100 000 will have used healthcare goods and services while those who have received healthcare may have received different care packages, generated different actual care costs and received different health gains.

More generally, in 1986 healthcare expenditure per capita in the UK was £390 and in 1996 it was £830 in cash terms. Even allowing for inflation, the change in per capita expenditure does not mean that all individuals in the UK are better off in terms of health status in 1996 as compared to 1986.

Perfect competition

An economic concept of a market with the following attributes: all firms are price takers; no firm can affect the market price; a homogeneous product or service is offered; people have perfect information about market conditions; there are no barriers of entry to or exit from the market; and there is free movement of all factors of production. See Barrier to entry; Barrier to exit; Imperfect competition; Imperfect oligopoly; Monopoly; Oligopoly; Perfect oligopoly.

Perfect oligopoly

An economic concept of a market where there are a small number of firms in the market (say seven) each producing indistinguishable goods or services but possibly selling them at different prices. The only dimension on which they can compete, therefore, is price. See Imperfect oligopoly; Monopoly; Perfect competition; Price competition.

Pharmaceutical price regulation scheme

The UK pharmaceutical price regulation scheme (PPRS) is an agreement between the Department of Health and the Association of the British Pharmaceutical Industry (ABPI) conditioning the incentives and rewards in sales of medicines to the UK NHS. It is currently a voluntary agreement and applies to any company supplying medicines to the NHS whether or not they are members of the ABPI. New medicines, those with a new product licence from the Medicines Control Agency, are exempt from the price control element of the scheme for the first five years of their UK market life. Generic medicines, medicines on private prescriptions and nonprescription medicines are also exempt.

The stated objectives of the 1993-98 pharmaceutical price regulation scheme (running from October 1993 to September 1998) are:

1. to secure the provision of safe and effective medicines for the NHS at reasonable prices;
2. to promote a strong and profitable pharmaceutical industry in the United Kingdom capable of such sustained research and development expenditure as should lead to the future availability of new and improved medicines;
3. to encourage in the United Kingdom the efficient and competitive development and supply of medicines to pharmaceutical markets in this and other countries.

The PPRS has four parts. One part regulates the rate of return on capital employed that pharmaceutical companies can keep on their sales to the NHS (the 1993-98 agreed band was 17-21%). A second part conditions price rises of medicines. A third part regulates the amount of pharmaceutical advertising expenditure that can be considered as a cost of supplying medicines to the NHS (9% of sales in the 1993-98 agreement). The fourth part conditions the amount of R & D expenditure that can be attributed to costs of medicines sold to the NHS (20% of sales in the 1993-98 agreement). While there is no robust evidence that the scheme is or is not a success, it is only one of the regulatory instruments used to condition the pharmaceutical market. See Efficiency; Kinked demand curve; Price cap regulation; Reduced form regulation; Reference pricing; Regulation; Yardstick pricing.

Pharmacy-only medicine

One for which no prescription is required, but a pharmacist must either deliver the medicine to the patient (or their agent) or be in the pharmacy when the medicine is given to the patient or their agent (e.g. the patient’s spouse). Pharmacy-only medicines are those which the licensing authorities believe are safe enough to be purchased without the advice or oversight of a doctor, dentist or nurse but which require some professional supervision (by the pha...

Table of contents

• Cover
• Title Page
• Copyright Page
• Preface
• Dedication
• A
• B
• C
• D
• E
• F
• G
• H
• I
• J
• K
• L
• M
• N
• O
• P
• Q
• R
• S
• T
• U
• V
• W
• X
• Y
• Z