Healthcare economics - Interesting article

SomeDose

...or more specifically, the cost of drugs and who gets access to them. There's a good article in this week's Sunday Times, in which the journalist discusses the reality behind the NHS decision-making process for high-cost drug treatments. To illustrate this, he was granted unprecedented access to a NICE appraisal for a new high-cost drug, lenalidomide (son of the much-maligned Thalidomide) to be used in patients with myeloma. The full article is available here. There will also supposedly be a TV program about it on BBC2 later this month.

It's worth a read, not least because laypeople are often unaware of the economic consequences of allowing unrestricted access to every new drug that comes on the market. It's obviously a very emotive topic, as these decisions typically involve patients with terminal illness. The appraisals, of course, are emotionally detached and decisions are based on the concept of the cost of extending life expectancy (cost-per-QALY) using the drug in question. Statistics really, at the end of the day. It's not a perfect system by any means, and their decisions may appear harsh, but realistically there has to be some kind of fiscal regulation of ever-increasing drug budgets.

Thoughts, opinions etc?

nesf

It's one of the toughest areas of economics in terms of detaching yourself from the people underlying the numbers. In reality not everyone can get perfect healthcare and some kind of triage has to be employed. Comparing health economics to the battlefield healthcare of WWII isn't being overly sensationalist I think.

Short intro for those unfamiliar with health economics:

We have a limited amount of money, drugs and trained "man hours" to dole out. It was ever thus and it's likely to remain ever thus. Figuring out the optimum distribution of said "commodities" means you need to decide on a moral guide, the standard one is Quality Life-Adjusted Years (QALY) in most casts. Or in layman's terms, spend the money in the way that gives the best lifespan of good life quality existence to as many people as possible. Said distribution will almost certainly mean that some individuals will lose out so the majority will benefit and this is repulsive to many but it's not avoidable so if someone can think of a better way to do it I'd be interested to hear it (bearing in mind that it cannot be the individual doctor on the ground because drugs and other specialists don't "grow on trees" and have to be pre-planned to some extent).

Another measure is Disability Adjusted Life Year or DALY. It basically measures every year of healthy life lost due to an illness or whatever. So every year lost due to either death or lived with some form of disability equal 1 point. Illnesses are then scored as to how many DALYs on average each "costs". The idea being that one can then rank illnesses and figure out which cause the most problems in a society. Surprisingly if measured in this way mental illnesses tend to score quite a bit higher than the usual public health enemies No. 1 list of heart disease and cancer. It varies according to the illness, bipolar and schizophrenia obviously on average scoring a fair bit higher than unipolar depression due to the recurring nature of the former and the severity of the average sufferer of the former versus the latter being somewhat worse. From an epidemiology point of view it makes a case for more focus on mental health issues than they already receive but this is debatable since there's no need to insist on a one to one weighting of a year lived with disability and a year lost due to death (which I agree with and which I believe some studies have examined with various weighting according to the degree of disability etc among patients).


To some running a health system with these kinds of tools (and that's what they are when you get down to it) is immoral due to turning patients into statistics or numbers, which I've some sympathy for but which I think is misguided and which anyone who has seriously contemplated the problems with running a health system should at least be able to see why such a system may be necessary.

tallaght01

It strikes me as crazy (though not surprising) that the dept of health doesn't negotiate drug costs with manufacturers.

I know the pharma industry is a very powerful group, but this is madness. If their drug isn't approved, it's bad business for them. I'm sure negotiation would be in everybody's best interests.

But my time in the NHS thought me that you could literally put a load of schoolkids in charge of it, and they'd do as good a job as is being done now.

The NHS is simply poilitical. Matters pertaining to health seem to me to be of secondary concern.

nesf

tallaght01 wrote: »

The NHS is simply poilitical. Matters pertaining to health seem to me to be of secondary concern.

Well, it's one of the arguments against socialised medicine of that kind. You're better off with private hospitals who have a stronger need to negotiate lower costs with suppliers than a bureaucratic monolith like the NHS that isn't driven by such competitive pressures. I'm thinking more of the Dutch rather than American system here with regard to private medicine btw.

tallaght01

Personally, I think the ideals of th NHS are admirable.

BUt I wonder if the argument is against politicisation (is that a word?) of healthcare, rather than socialisation.

When priorities are determined by political goals, care suffers. Socialised health could work, if taken out of the hands of politicians.

I don't have much knowledge of economics, but isn't the central bank out of direct political control?

My (naive) vision for healthcare would be an expert-led system that runs itself without political interference. That way, we could plan for 10, 15 years in advance in terms of population health. Changing priorities and changing budgets constantly only allow for short term planning, which just doesn't seem to have worked for healthcare in the UK.

4 year plans, where the results have to be seen before the next election campaign, just don't make sense to me.

nesf

tallaght01 wrote: »

I don't have much knowledge of economics, but isn't the central bank out of direct political control?

Kind of. Well designed central banks like the ECB and the US Federal Reserve get around political influence by making the term lengths of the heads of the banks much longer than Political term lengths (similar to Supreme court justices), this limits the amount of influence that any one Government can have on the bank/or court.

With something like the NHS this doesn't really work because its funding comes directly from the public purse and it cannot really be self-financing by design. You can attempt something like Harney attempted with the HSE where decision making is taken away from the Minister and given to the head of the system instead but you still can't escape the funding issue (i.e. who holds the purse strings holds the power).

The Dutch system gets around this by universal health insurance provision. The State pays for health insurance but not directly the wages of health care workers and neither does it control or run the insurers. This allows for far less politicisation of the health service while maintaining universal access. Arguably with socialised medicine the goal is the latter and it should not really matter how it is achieved so long as universal coverage is maintained.

EDIT:

Some more details on Dutch Insurance: The insurance covers GP visits, medication and "hospital visits" (i.e. all specialist care, not just literal hospital visits), not just hospital visits as ours does. There's an excess of 150 euro or similar that the insurance holder must pay before claiming insurance, however; all children under a certain age are covered for free and medical care for them does not count towards the excess. Also, it's illegal to not have health insurance and there is community rating so fit and healthy young adults help subsidise the old and sick. The State will give a discount towards, or fully cover the cost of, health insurance depending on your income level. It's a bloody good system and in surveys the Dutch healthsystem tends towards the top rating versus other EU health systems.