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Economics of Health Care & Pharmaceuticals

Spring 2010 MBA Course

B8299-002: Economics of Health Care & Pharmaceuticals

TR - A Term, 02:15PM to 03:45PM
Location: URI 332

Instructor: Frank Lichtenberg


The health care system involves the interaction of three main types of agents:

  • Consumers/patients
  • Health insurers/managed care organizations (public & private)
  • Providers of medical goods and services, including
    • Physicians
    • Pharmaceutical & medical device companies
    • Hospitals

We will provide a framework for understanding the economic factors underlying the health care system and the interaction of its agents.  For several reasons, standard economic models are not adequate to understand markets for health care.  For example, it is difficult for the consumer/ patient to evaluate the quality of the services received.  Costs are uncertain, and insurance reduces the incentive of the consumer/patient or physician to seek the most economical means of treatment.

We will focus primarily on the structure and economics of health insurance and the demand for health care, pricing of drugs and hospital services, cost-benefit analyses employed by payers and consumers of health care products and services, mechanisms used for paying physicians and its impact on the provision of care, and the role of information in the selection and provision of medical goods and services.