Managing Healthcare Costs: UK

The World, a public radio show cohosted by the BBC and the Boston NPR station, had a four part series on rationing health care around the world last week. The radio shows as well as the web material help demonstrate how hard it is to distribute scarce health resources.

The series starts in South Africa, where committees in hospitals determine who gets dialysis and who doesn’t. These committees started by considering “social worth,” but have moved to prioritizing those who would be good candidates for kidney transplants, and who could therefore get off dialysis quickly. If you’re a drinker, or if you’re overweight – well, dialysis could save your life, but it won’t.

The series moves on to the UK, lauded by health policy experts around the world, where the National Institute for Clinical Excellence (NICE) assesses comparative effectiveness and determines how much the National Health Service (NHS) will spend to save a quality adjusted life year (QALY). Right now the number is south of $50,000. If a new drug might help you but would cost more, it isn’t covered. NICE has been successful at pressuring drug companies to lower prices in exchange for access to the NHS market – but its authority to do so expires in 2012. It’s hard to feel good about denying a drug that could save someone’s life.

Next stop is Zambia, which can’t afford HIV drugs for all the HIV patients. The country has long had poor governance, and has a shortage of health personnel and medicines. The main method of rationing in Zambia is the queue. People have to wait a half day for a brief clinician appointment, and another half day for the pharmacist to fill a prescription. Those who cannot wait – perhaps because they are employed or have young children – go without life saving medications.

The final installment is a visit to

India

, where a resourceful pediatrician faced a shortage of ventilators during an influenza epidemic. She fashioned homemade continuous positive airway pressure machines from a few dollars of readily available supplies, and saved many dozens of lives. This is an example where disruptive innovation made an enormous difference. The homemade machines weren’t nearly as good as ventilators for these critically ill children. But the makeshift machines were better than nothing, and the physician improved them “on the fly” during the epidemic.

These stories point out that rationing is painful – and it’s not restricted to poor countries. We already ration care in the US by rationing access. It’s not easy for a Medicaid patient to find a dentist or a specialist in many states, as Medicaid pays very low rates. We might give FDA approval to a $90 a month medicine for cancer, but few eligible patients who don’t have generous insurance coverage will benefit from these medicines. In Arizona, Medicaid beneficiaries are dying because the state will not fund evidence-based transplantations.

We’ll be having more distributive justice conversations in the US, because we won’t be able to afford uniform access to all health care innovations as they are currently priced. The best way to minimize the number of times we refuse to offer useful therapy to patients is to lower the cost of interventions, but we’ll still face a demand for more health care than we can afford.

The January 20 Wall Street Journal included an op-ed from the American Enterprise Institute decrying the potential for a government-funded comparative effectiveness institute.

In this opinion piece, Scott Gottlieb suggests that such a government-funded comparative effectiveness institute
(1) Will not save money
(2) Will use poor scientific methods
(3) Would do research that would be effectively done by the private sector if only the FDA would allow private companies to publicize their comparative effectiveness findings.

My response:
(1) Here are the CBO comments from December, 2007.

Generating additional information about comparative effectiveness and making corresponding changes in incentives would seem likely to reduce health care spending over time—potentially to a significant degree. The precise impact, however, depends on several factors and is difficult to predict. Given the time necessary to conduct the research, to alter incentives in a manner reflecting the results, and to affect behavior through those changes, any potential for substantial cost savings from new research would probably take a decade or more to materialize. Even so, generating additional information comparing treatments would tend to reduce federal health spending somewhat in the near term—but that effect may not be large enough to offset the full costs of conducting the research over that same time period

(2) There is some thought that we might have to settle for research that wouldn’t merit publication in the New England Journal. Question – isn’t some information even if imperfect better than the current state of utter lack of information?

(3) The CBO points out that private parties just don’t have the right incentives to do good comparative effectiveness research. Pharmaceutical and device makers are not likely to be impartial enough (Here’s an example. This article showing that a medicine was ineffective was published in Annals of Internal Medicine 8 years after the completion of data collection. The publication was delayed until long after fluconazole, the drug in question, lost its patent protection). . On the payer side, there is no single health plan (except perhaps Medicare) representing enough of the market to take on this cost.

Comparative effectiveness research is expensive and takes a long time. The UK's National Institute of Clinical Effectiveness faces serious opposition to its efforts to restrict coverage to more cost-effective therapies. (See my previous post on this issue). Doing good comparative effectiveness research could help allocate precious (and not limitless) resources. This research won't happen without government participation, and probably won't have much impact as long as government payers are prohibited from using this information in coverage decisions. I believe we should fund this research through the Agency for Health Research and Quality, and governmental and nongovernmental payers should be able to use this information when designing coverage.

Thanks to Ben Geisler from our class for sending me a link to this article.