How much would you pay for 6 more months of life?

healthcare costs

 The British government has been trying to answer that question, or rather, a variant: How much should they pay for 6 more months of your life? By explicitly framing the question, let alone answering it, the government has put itself at the nexus of 4 ongoing controversies in medicine: Should medical care be rationed? How much is longer life worth? Does evidence based medicine accurately give us the answer? Should governments deal with drug companies that price drugs without reference to their actual cost?

The United Kingdom came down on the side of rationing healthcare years ago. They were honest enough with themselves, and the people of their countries, to acknowledge that there was not enough money to support unrestricted healthcare for all. Forced to choose between providing unlimited healthcare for some vs. limited healthcare for all, those chose healthcare for all. Both the government and the people understood that the annual healthcare budget was finite, that paying for expensive treatments would reduce money available to meet the needs of everyone else, and that a transparent, rational method must be found to make the necessary decisions. Everyone agreed in theory; in practice there has often been tremendous public outcry.

In an effort to create a transparent, rational basis for limiting care, the British government formed the National Institute for Health and Clinical Excellence (NICE). NICE evaluates all forms of medical care through a very extensive review process, solicitng the opinions of all possible stakeholders in every decision. NICE routinely produces voluminous reports reviewing the scientific literature and issuing guidelines for virtually every aspect of care. For example, the NICE guideline for the care of healthy women during childbirth (excluding pregnancy, excluding high risk women) runs to 332 pages and includes review of 628 separate scientific studies.

Almost every decision of NICE carries some element of controversy, but none more than decisions about expensive treatments that lengthen life but do not cure the terminally ill, the elderly, or those unfortunate enough to have rare diseases. NICE is explicit about the criteria. According to an article in The New York Times:

… Any drug that provides an extra six months of good-quality life for £10,000 — about $15,150 — or less is automatically approved, while those that give six months for $22,750 or less might get approved. More expensive medicines have been approved only rarely. The spending limits represent the health institute’s best guess for how much the nation can afford.

Not surprisingly, many state of the art medications exceed that price. The newest treatments for diseases as diverse as multiple sclerosis, advanced renal (kidney) cancer, and Alzheimer’s disease are not covered. The public outcry has been fierce.

No one disagrees with the fundamental principle of rationing healthcare. No one is challenging the evidenced based claims that the drugs provide only limited extension of life for extraordinary cost. The decisions are acknowledged to be both moral and rational based on the agreed upon criteria. They are challenging the decisions as “heartless.”

Bruce Hardy, interviewed for the New York Times article, is an example:

When Bruce Hardy’s kidney cancer spread to his lung, his doctor recommended an expensive new pill from Pfizer. But Mr. Hardy is British, and the British health authorities refused to buy the medicine. His wife has been distraught.

“Everybody should be allowed to have as much life as they can,” Joy Hardy said in the couple’s modest home outside London.

…A clinical trial showed that the pill, called Sutent, delays cancer progression for six months at an estimated treatment cost of $54,000.

Initially, NICE held firm on its decision to refuse payment, even though only a relatively small number of people need the drug.

Given that fewer than 6,000 people per year in England and Wales are diagnosed with kidney cancer, “Why put ourselves through so much heartache for very little money?” Andrew Dillon, the institute’s chief executive, asked in a September interview. “The answer is that if we don’t apply the same criteria even to small groups of patients, there’s little value to what we do at all.”

In the face of increasing political pressure, NICE has recently backed down. Guess who was among the first to report the turn around: the Pharmaceutical Business Review.

The National Institute for Health and Clinical Excellence in the UK may lift the ban on certain kidney cancer drugs reversing its earlier decision to ban four drugs on the NHS – Sutent, Nexavar, Avastin and Torisel.

Previously, the National Institute for Health and Clinical Excellence (NICE) has refused to approve the kidney cancer drugs as they cost more than $70,000 a year per patient. However, the public outcry against its decision and availability of new data regarding the effectiveness of the drugs has forced NICE to overhaul its previous decision…

Pfizer and Roche, the makers of Sutent and Avastin, are also believed to be in talks with NICE regarding a new a pricing arrangement that would see the NHS paying for a drug if it extended a patient’s life by an agreed time. However, if the patient experienced no benefit and died, the pharmaceutical company would refund the cost.

The decision of NICE to pay for the drugs is a victory for the patients. However, it is also a financial bonanza for the manufacturers. It is a bonanza that many believe the drug companies do not deserve, because it is their extortionist pricing policies that led to the problem in the first place. The Times article offers a shocking example:

…Take the case of Celgene, the maker of Revlimid, a drug for multiple myeloma, a bone-marrow cancer, that in a preliminary ruling on Oct. 28 the institute said was too costly.

Celgene’s first big seller was thalidomide, a decades-old medicine now used as a cancer treatment, which is so cheap to manufacture that a company in Brazil sells it for pennies a pill.

Celgene initially spent very little on research and priced each pill in 1998 at $6. As the drug’s popularity against cancer grew, the company raised the price 30-fold to about $180 per pill, or $66,000 per year. The price increases reflected the medicine’s value, company executives said.

In 2005, the company introduced Revlimid, a derivative of thalidomide that is supposed to be less toxic, but may be no more effective. Celgene priced it at about $260 per pill, or $94,000 per year.

The drug company, Celgene, was already making a large profit when it marketed the treatment at $2,2000 per year. Then it arbitrarily chose to increase the cost of the treatment to $66,000 per year, at the highest price it thought the market would bear. Who was willing to pay for such a massive and arbitrary price increase? The government of the US was willing to pay, because George W. Bush and cronies had forced through an addition to the Medicare bill of 2007 explicitly barring price negotiations with drug companies. Bush made it clear to the drug companies that the US government would pay the highest price that the company could dream up.

These irresponsible give-aways have put tremendous pressure on everyone else. Drugs are deliberately and exorbitantly overpriced for the US market, making them unaffordable for countries whose goal is to provide healthcare, not to line the pockets of drug company executives. The unwillingness of the British government to pay, backed by the evidence based reports of NICE, has led drug companies to negotiate with the British National Health Service.

Though political pressure forced NICE to back down on its refusal to pay for Sutent and similar drugs, it did not back down completely. It negotiated a performance based pricing structure for the drugs. If the medication does not provide the promised benefit, the British government will not have to pay.

What are the lessons for the US? First and foremost, as the largest purchaser of drugs in the US, if not the world, the US government must be liberated from its absurd inability to negotiate with drug companies. That will go a long way to making treatments more affordable, and therefore more available, to everyone. Second, we have no choice but to ultimately follow the British in their attempt to ration and rationalize the provision of healthcare. There is simply not enough money to provide everything to everyone. We may choose to make different decisions and create different cut off points than the British have done, but we will not be able to avoid answering the difficult question: How much should we pay for 6 more months of your life?

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