chapter  3
13 Pages

Value of Treatment Heterogeneity for Infectious Diseases

ByRamanan Laxminarayan, Martin L. Weitzman

From an economist’s perspective, the treatment of infectious diseases is fun-damentally different from the treatment of noninfectious conditions such as arthritis, cardiovascular disease, or cancer. Unlike the case of noninfectious or chronic diseases, two social externalities-one positive and the other negative-inherently characterize the treatment of infectious diseases. Take the case of antibiotics (although the situation can be generalized to antivirals and antimalarials as well). On the one hand, antibiotic treatment cures the patient, thereby preventing the disease from being transmitted to other individuals. On the other hand, drug treatment selects in favor of harmful mutations or organisms that are resistant to the drug, increasing the likelihood that the drug will be less effective in the future. Because the individual patient fails to take into account either of these externalities when deciding to seek treatment, a Pigovian tax or subsidy of treatment could in principle correct for

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externality (depending on whether its impact on overall social welfare is negative or positive).1