Q-1 Given this information, answer the following questions. Cost Effectiveness Current Treatment $100,000 4...
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Accounting
Q-1
Given this information, answer the following questions.
Cost Effectiveness
Current Treatment $100,000 4 life-years gained
New Treatment $250,000 10 life-years gained
A. Calculate the ICER for the new treatment, assuming that the new treatment would replace the old one.
B. In what quadrant is the ICER located in Figure 3-4? Is cost effectiveness analysis relevant?
C. How does the answer change if the cost of the new treatment equals $75,000?
Q- 2 According to Chase (1993), TPA, a heart drug produced by Genentech Inc., costs ten times more at $2,200 a dose than streptokinase, an alternative heart drug sold by Astra AB and Kabi Farmacia AB of Sweden and by Hoechst AG of Germany. A trial of 41,000 heart attack patients found that the TPA treatment saves 1 more life out of 100 than streptokinase does. Assume that a person pays full cost for either drug and chooses TPA over streptokinase. Another otherwise identical person makes the opposite choice. Use the willingness-to-pay approach to calculate the difference in the value of their lives (assume that dosage requirements are the same).
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