Kiel Working Papers, Kiel Institute for World Economics
No 1371:
Optimal Sequencing of Antiretroviral Drug Cocktails under Uncertainty and Irreversibility
Mintewab Bezabih and Michael Stolpe
Abstract: This paper develops a real options approach to the optimal
sequencing of antiretroviral drug cocktails for HIV/AIDS patients in
resource-poor settings. The analysis focuses on the implications of
endogenous resistance mutations in the virus that reduce or eliminate the
effectiveness of individual drugs within a cocktail when lack of laboratory
equipment prevents these from being identified. Using a model with two drug
cocktails, we show that the first-line therapy should be introduced later
than in the case without resistance mutations and that the second-line
therapy should be introduced earlier. We go on to discuss implications for
comparative cost-effectiveness analyses.
Keywords: HIV/AIDS, Real option theory, Cost-effectiveness analysis, Combination therapy, Developing countries; (follow links to similar papers)
JEL-Codes: D81,; H51,; I12; (follow links to similar papers)
25 pages, October 2007
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