Affordability

This box (in the Tables Sheet), allows the user to assess how many people can afford their treatment each year if it is priced at a particular level and funded in a particular way. You can test as many price points and Funding Scenarios as you like. However, typically you use the best solution (in terms of number of custoemrs and total revnenue) from the affordability scenarios (previous section of this manual).

Afford in tables.JPG

To set up the detailed Affordability Analysis do the following:

You can either enter values in the boxes shown above on the Tables set, OR

In the scenarios sheet set price and compliance rate for individual years.

If you set a price and compliance in the ‘Table box’ shown here then the same price and compliance rate will be used for all years and will override any values set in the scenarios sheet.

Running the Analysis

Once the price and funding scenarios have been set click on either of the two buttons in this same section.

  • The one labeled ‘Number with condition and can afford treatment’ (after taking into account the compliance rate) shows the number persons (in 000s if Prevalence data, Persons if incident data) able to buy the treatment under the price/funding scenario.

  • The other button gives the market value assuming all who can afford it, actually buy it and applying the compliance rate.

This will create and display additional rows at the top of the Table as shown below. This example is number of persons that can afford the treatment.

Afford Table detail.JPG

The first three rows show:

  1. percentage of persons who have the condition (diagnosed) and can afford to buy the treatment at the price set for the brand in the box above (or in scenario sheet (Column K) if box left blank) after allowing for compliance rate also set in the box above (or in Column E in Scenario Sheet) and the funding scenario in terms of share of annual household health expenditure, savings and discretionary expenditure devoted to the treatment.

  2. The Gross household income required to be able to afford it under that funding scenario.

  3. The average household income - for comparative purposes.

The next three rows are for guidance and show the total fund available to pay for the treatment per household at the cut off income level for each of

  1. Annual household health expenditure

  2. Available savings and discretionary expedniture

  3. Discretionary expenditure

The next three rows show the amount contributed by each source to paying the price. So given 35% of health expenditure is to be devoted to this treatment cost that means (using the first year shown) 35% of $2,295 = $803

The last two rows show the total funds available and the price set after compliance. The total funds should match or marginally exceed the set price after compliance.