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Denmark is considering a variety of options for adopting the chickenpox (varicella) vaccine. Currently, about 1.25% of the Danish population of 5.5 million people get the disease each year–all of them 6years old. (We assume here for simplicity that only 6 year olds can get chickenpox). 

Widespread vaccination can reduce the chances of chickenpox by 98%, but efficacy depends on how many others also have received the vaccine. The information on efficacy is in Table 1 (the part in bold):

Percent of 6 year olds vaccinated 0 1-25 26-50 51-70 71-80 81-90 91-100

Reduction in chickenpox cases 0 15% 35% 60% 75% 88% 98%

While in general chickenpox is an inconvenient but not life threatening disease, children with chickenpox should not attend school for an average of one week when they have chickenpox. However, we assume that one per 100,000 chickenpox cases will result in permanent loss of hearing of the child. 

1. Calculate the number of people in DK who will get the chickenpox each year without the vaccine (assume population does not change). How many will lose their hearing? 

2. Calculate the number of people in DK who will get chickenpox, and the number who will lose their hearing, each year with vaccination rates in each of the 6 ranges in Table 1. 

Assume that a week of illness with chickenpox is valued at 0.01 QALYs for the child, and that a lifetime loss of hearing for a 6 year old is worth 0.15 QALYs per year for 70 additional years. 

3. Calculate the undiscounted QALY loss associated with chickenpox, and the discounted QALY loss associated with chickenpox when the discount rate is 3%. 

The government is considering two mutually exclusive vaccination programs. With program A, vaccination rates will reach 71-80%. With program B, vaccination rates will reach 91-100%. 

4. Calculate the undiscounted and discounted QALY losses associated with these 2 programs, when the discount rate is 3%.

Programs A and B are perfectly divisible and have constant returns to scale. The following information is available on costs (the part in bold):

The average value of a working day in Denmark is estimated to be 1600 DKK in wages, with a standard deviation of + or – 800 DKK.

Anti-itch ointments and treatments cost an average of 600 DKK per case of chickenpox, with a standard deviation of + or – 150 DKK. 

The direct medical cost of implementing Program A for one year in terms of vaccines administered is 4,000,000 DKK. 

The direct medical cost of implementing Program B for one year in terms of vaccines administered is 7,000,000 DKK. 

5. Calculate cost-effectiveness ratios for Programs A and B for one year in Denmark. 

6. Using these results, what price-per-effect limit on QALYs (if any) would result in the choice of Program A? Program B? No Program? A recent study has valued QALYs at approximately 100,000 Euros each. If the Danish government were to use this as a guide, what Program, if any, should be adopted? 

7. Explain how you might use the information above to define the cost-effectiveness ratios in a sensitivity analysis. Be specific about why you are changing a value as you calculate cost-effectiveness ratios that illustrate good sensitivity analysis. Does it change any of your answers to (6)? NOTE: This question has a significant subjective element to it. Please be particularly clear in your explanations of what you are doing and why.