Design of Incentive Programs for Optimal Medication Adherence

64 Pages Posted: 11 Jan 2019 Last revised: 9 Sep 2019

See all articles by Sze-chuan Suen

Sze-chuan Suen

University of Southern California

Diana Negoescu

University of Minnesota - Twin Cities - Department of Industrial and Systems Engineering

Joel Goh

National University of Singapore

Date Written: December 31, 2018

Abstract

Premature cessation of antibiotic therapy (non-adherence) is common in long treatment regimens, and can severely compromise health outcomes. In this work, we investigate the problem of designing a schedule of incentive payments to induce socially-optimal treatment adherence levels in the presence of (a) budget constraints, (b) heterogeneous patient preferences for treatment adherence, which are furthermore (c) unobservable to the social planner. Although similar incentive design problems have been studied in the field of contract theory, a unique challenge in this problem is that any prior commitment that a patient makes to a given level of treatment adherence typically cannot be enforced and contracted upon in practice. Incorporating non-contractibility into the model renders standard contract-theoretic models and analyses inapplicable. Consequently, we had to develop new approaches to handle this problem feature. In an extension, we consider how an additional constraint can be put on the shape of the incentive payment schedule: this constraint is motivated by pragmatic issues of implementing such incentive payments in resource-poor clinics serving a primarily low-income population. We show that the optimal payment schedule can be constructed through the solution of a single convex optimization problem in the base case and a sequence of convex optimization problems in the extension. In our numerical analysis, we conduct a simulation study based on representative data in the context of the tuberculosis epidemic in India. Our simulation shows that using either the base case or extension incentive schedules to encourage treatment adherence would be very cost-effective, although costs may vary widely across incentive schedule functional forms.

Keywords: drug adherence, tuberculosis, principal-agent model, contract design

Suggested Citation

Suen, Sze-chuan and Negoescu, Diana and Goh, Joel, Design of Incentive Programs for Optimal Medication Adherence (December 31, 2018). Available at SSRN: https://ssrn.com/abstract=3308510 or http://dx.doi.org/10.2139/ssrn.3308510

Sze-chuan Suen (Contact Author)

University of Southern California ( email )

United States

Diana Negoescu

University of Minnesota - Twin Cities - Department of Industrial and Systems Engineering ( email )

111 Church St SE
Minneapolis, MN 55455
United States

Joel Goh

National University of Singapore ( email )

NUS Business School
BIZ 1 Building, #02-01, 1 Business Link
117592
Singapore

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