It appeared to be very
cost-effective. At some 440 pesos a
dose, about the price quoted by Glaxo, offering a three-dose course to 80
percent of girls would cost just over 42,000 pesos per each healthy year of
life that would be saved by the procedure, according to a 2008 analysis by
researchers at the Mexican national health department. This is less than half Mexico’s gross
national product per capita, and thus considered a good investment by experts
at the World Health Organization.
But because Mexico is
a relatively poor country, these finding produced a conundrum. A universal vaccination plan would cost about
1.4 billion pesos, almost as much as the entire budget for the government’s
series of seven mandatory childhood vaccines. So the government took a Solomonic
approach. It decided to offer the
vaccination program only in poor areas of the country with a relatively high
incidence of cervical cancer, which would cut the total outlay by more than
half. More controversially, rather than
provide the three doses within a period of six to eight months, as suggested by
the pharmaceutical companies, the health ministry chose to provide the third
dose only after five years.
“All our studies of
the vaccines’ effectiveness were based on a plan of three doses – the third
must be taken eight months after the first,” said Miguel Cashat-Cruz, the head
of vaccines for Merck’s Mexican subsidiary.
But Eduardo Lazcano-Ponce, a researcher at the National Institute of
Public Health, said pecuniary interests drove pharmaceutical companies’
protests. “They say it won’t be useful,
but they make no effort to reduce the price of the vaccine.”
The provision of health is awash in such cost-benefit calculations, as governments allocate limited budgets among new drugs and therapies streaming out of the world’s labs. In 2005 New Zealand’s Ministry of Health declined to fund a universal vaccination program against pneumococcal disease that would cost about 120,000 New Zealand dollars for each year of life gained in good health by the inoculation. It approved funding two years later, when the manufacturer proved that a program could be carried out for 25,000 New Zealand dollars per year of life.
The British
government, which since World War II has provided health coverage for it’s
citizens free of charge, has been the trailblazer in systematically applying
cost-benefit analysis to its expenditures on health. It started in the last 1990s, when the
erectile dysfunction drug Viagra appeared on the market and officials at the
National Health Services worried that the new wonder drug would bust the
government’s health budget.
These days, the
National Institute for Health and Clinical Excellence – or NICE – follows a
standard set of guidelines to determine which drugs and procedures will be
covered. Anything that costs less than
£20,000 per year of good-quality life is approved. And except in very rare cases, the health
service will not pay more than £30,000 per year of added life. The practice has spread around the
world. The Canadian Agency for Drugs and
Technologies in Health makes recommendation to the nation’s provincial drug
plan on the cost-effectiveness of new drugs.
From Australia to the Netherlands to Portugal, economic evaluations are
mandatory for the approval of treatments.
The World Health
Organization has developed general threshold for countries around the
world. It deems treatments very
cost-effective when each year gained in good health cost less that the nation’s
economic product per person, cost-effective when such a quality-adjusted life
year costs one to three years GDP per capita, and not worth the investment when
it costs more than that. This metric
would suggest that governments in countries like Argentina, Brazil, or Mexico
should afford treatments if they cost less than $29,300 per QALY in 2009. Their poorer neighbors, like Bolivia and Ecuador, should only afford
interventions costing up to #13,800. The
rich countries in the hemisphere, the United States and Canada, should be
willing to invest up to $120,000 per year of good life gained.
Yet decisions based on
cost-benefit calculations are never easy.
In 2008 it seemed straightforward for NICE to reject paying for Sutent,
Pfizer’s newfangled pill for kidney cancer that cost about £3,189 for a
six-week regimen and usually extended life by less than a year. This meant it generally cost more than the
agency’s £30,000 limit per “quality adjusted” year of additional life.
But the storm of
public protest that ensued was deafening.
A British tabloid, the Daily Mail, called it a “death sentence” for
those suffering kidney cancer. And NICE
backtracked, approving Sutent for some patients on the grounds that “although
it might be at the upper end of any plausible valuation of such benefits, in
this case there was a significant step-change in treating a disease for which
there is only one current standard first-line treatment option.” The investment, in fact, would not be too
large. Fewer than seven thousand Britons
suffered this kidney cancer and Sutent would be suitable for only about half of
those. Moreover, Pfizer also offered to
pick up the tab for the first six weeks.
It’s hard to overcome
the belief that we are entitled to all the health care we need. During President Obama’s push to reform
American health insurance, the White House reminded its allies never to use the
dreaded word “rationing.” Democrat Max
Baucus, who as chair of the Senate Finance Committee was one of the leading
legislators crafting the bill, said: “There is no rationing of health care at
all” in the proposed reform.
Of course, rationing
is pervasive across the American healthcare system. For starters, in 2009, 46 million American
lacked health insurance. A study of
victims of severe traffic accidents who landed in hospital emergency rooms in
Wisconsin found that those without health insurance received 20 percent less
care than the insured. They were kept
only 6.4 days in hospital, on average, compared to 9.2 days for those with
insurance. And hospitals spent on
average $3,300 more on the insured than the uninsured. The uninsured, of course, were 40 percent
more likely to die. The study found that
if hospitals treated the uninsured equally to the insured, each life saved
would have cost $220,00, which amounts to about $11,000 per additional
year. This is a bargain compared to Sutent;
well within the limits imposed by Britain’s NICE.
Nonetheless, Obama’s
political tactics made sense in the face of accusations from American
conservatives that the government wanted to take over the decision of who lived
and who died. The president got a
foretaste of the oppositions tactics when a White House proposal to study the
relative effectiveness of new drugs and therapies, to decide which were most
worthwhile, drew a furious reaction. An
editorial in the Washington Times
compared the proposal to a program called Aktion T-4 put in place in Nazi
Germany to euthanize elderly people with incurable diseases, critically
disabled children, and other unproductive types.
The rhetoric was
effective because it tapped into the belief that life is priceless, and when it
comes to matters of life and death we should spare no expense. As Joy Hardy, the wife of a British cancer
victim who was temporarily denied Sutent by the NHS said: “Everybody should be
allowed to have as much life as they can.”
The belief has burned the United States with a uniquely inefficient
healthcare syste. In 2009 health care
consumed 18 percent of the nation’s income.
And without any mechanism to ensure cost-effectiveness, it could swallow
more than a fifth of the economy by 2020.
Yet all this spending does not buy better health.
Somehow Americans have
a lower life expectancy at birth than the Japanese, French, Spanish, Swiss,
Australians, Icelanders, Swedes, Italians, Canadians, Finns, Norwegians,
Austrians, Belgians, Germans, Greeks, Koreans, Dutch, Portugese, New
Zealanders, Luxembourgeois, Irish, British, and Danes. We achieve this while spending, collectively,
much more on health care than any of them: about $6,714 a year for every
American. In Japan, by contrast,
health-related expenditures amount to about $2,600 per head, and in Portugal to
only $2,000. What’s more, allocating
health care by patients’ ability to pay rather than an analysis of the costs
and benefits of treatment ensures that the American distribution of health, and
life, is as inequitable as one can get in the industrial world. More than half of Americans who earn less
that the average income report not being able to get needed health care due to
its cost. This compares to fewer than
10 percent of the British or the Dutch.
Americans are
inveigled by a powerful mirage: that markets don’t ration. In 2007, the Congressional Budget Office
issued a report about how the nation might bring spiraling health care costs
under control by measuring the cost-effectiveness of medical treatments, as
several other countries do. The report
warned that putting a price on life might be politically tricky in the United
States. “Many people find the notion
uncomfortable if not objectionable,” noted the CBO, incompatible with “the
sentiment that no expense should be spared to extend a patient’s life.” The invisible hand of the market is as
ruthless in denying health care to the needy as the most coldhearted central
planner. Our willingness to acknowledge
life’s price does not mean it doesn’t have one.
Excerpted from Eduardo Porter’s The Price Of Everything: Solving The Mystery of Why We Pay What We Do (2011), pages 54-58.
