Optimal sequencing of antiretroviral drug cocktails under uncertainty and irreversibility

Mintewab Bezabih and Michael Stolpe

No 1371, Kiel Working Papers from Kiel Institute for the World Economy

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: Real option theory; Cost-effectiveness analysis; Combination therapy; Developing countries; HIV/AIDS (search for similar items in EconPapers)
JEL-codes: D81 H51 I12 (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1371

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