Postcode lotteries

by Chris Bertram on August 13, 2008

Martin O’Neill has a characteristically interesting piece in the New Statesman, this time on QALYs (Quality Adjusted Life Years) and their role in the National Health Service decision to provide or deny expensive drugs to patients. Read the whole thing, as they say.

I had one quibble with Martin’s analysis. He writes:

Littlejohns [the clinical director of NICE] has released a preliminary ruling, denying access to the drugs Sutent, Avastin, Nexavar and Torisel to patients with advanced metastatic kidney cancer. These patients will, on average, die months earlier than those with the same condition in other countries in Europe where such drugs are available.

But then later in the same piece:

… if such decisions are made locally rather than nationally, we are thrown into the familiar problems of the ‘post-code lottery’. A patient in Nottingham may find herself denied treatment that is provided to someone in Newcastle. Allowing matters of life and death to depend on the good or bad luck of geographical location seems like the very opposite of finding justifiable policies.

Hmm. So in the first-quoted paragraph, Martin presents the supra-national geographical variation as a troubling datum, to which the adoption of a sensible national drug-evaulation policy is a response, whereas in the second, he presents sub-national geographical variation as a decisive reason for rejecting local discretion. But why not say that local variation is OK, just so long as it is backed up by good reasons, or, alternatively, that we should have European (or even global) standards that treat like cases alike?

{ 50 comments }

1

matt 08.13.08 at 3:57 pm

Might it not matter how the funding for the drugs comes about? If the funds for the drugs come from national taxes, but the distribution is based on county (or whatever) decisions, then it does seem unfair to those who help pay for them but don’t have access to them. This would differ from the international case, I’d guess, since not only the access but the funding choices would be made on the “local” (i.e., national) level. Or do you see things differently? (Note that I have no idea how the system in the UK works, so the account I’m giving might not actually fit what happens there.)

2

dsquared 08.13.08 at 4:09 pm

great post Chris – this one has always annoyed me insanely. Anything which has variation, will have variation in a geographical cross-section, and will therefore be a “postcode lottery”.

3

tl 08.13.08 at 5:00 pm

The article also does what virtually no MSM coverage of NICE does, which is to ask why the pharma companies are charging 20+ grand a year for drugs which frequently offer limited marginal effectiveness over the available alternatives.

The rationale for NICE which isn’t much mentioned in the article or post is that of efficiency; if less cost-effective treatments are funded ahead of more cost-effective ones, that’s a waste of NHS money. I’m not convinced the ‘postcode lottery’ issue is actually a major driving force in policy terms, although there is clearly a basic question of fairness here.

I’m not sure that ‘backed up by good reasons’ is a workable constraint here: if a treatment prolongs life or reduces suffering, that will surely always be a good reason – the question is whether the good obtained is worth the cost.

4

tl 08.13.08 at 5:15 pm

Also, re dsquared’s comment: variation in what? There’s regional variation in health, but that’s not what’s at issue here. There’s also variation between the financial situation of different NHS trusts, but that’s an aspect of how the health service is organised, not a brute fact. (In any case, the latter kind of variation is far from eliminated by NICE, but that’s by the by.)

5

pj 08.13.08 at 5:37 pm

I ‘ve never understood the coverage the media give to these sorts of stories. Sure, you can quibble over, e.g., whether the cholinesterase inhibitors for dementia should have been given such restrictive conditions, or whether this or that drug is really cost-effective ([cough] herceptin), or even over the use of QALYs. But the coverage is often more like this line from the article:

“in a society with a publicly funded health service, it is particularly difficult to justify the denial of effective treatment to patients who have paid their taxes, over their working lifetimes, in expectation that they will have access to high quality medical treatment if they fall ill.”

I mean, seriously, how long do you need to think about it, seconds surely, before it is obvious that no health system can write blank cheques, and no health system does (the availability of treatments in the US for those who can afford it is no proof that people actually receive those treatments routinely). If we’re going to spend tens of thousands to extend life by a month or so, what will we spend on extending it a year, hundreds of thousands? And if it extends it by years we’re committing millions of pounds per person affected!

I also was confused by the point:

“The calculus of QALYs can also lead to some strange decisions. For example, giving an extra 10 years of healthy life to a 15 year old would be weighed identically to giving 10 years of life to a 65 year old. But, looking beyond QALYs, most people would think it right to favour the younger patient over the older. The QALY approach had no room for these ideas of a ‘fair innings’.”

Because surely a younger person is already getting favoured over the older person by having a much longer life expectancy. Save the life of a 65yr old and you get say 10 QALYs for your money, save a 15yr old and that’s 60+ QALYs.

6

engels 08.13.08 at 5:45 pm

Pj, isn’t O’Neill comparing a treatment that can keep a 15-year-old alive until he’s 25, to one which can keep a 65-year-old alive until he’s 75? The point is that in this hypothetical case–which is different from yours, where both live until they are 75+–QALYs would not favour one over the other but on egalitarian grounds perhaps we would prioritise treating the 15-year-old. (I haven’t read the actual article so apologies if I have misunderstood.)

7

Martin O'Neill 08.13.08 at 5:56 pm

PJ –
Thanks for your comment. I think your objections are based on a couple of slight misunderstandings of what I was saying.
(a) I said that the denial of effective treatments was difficult to justify, not that it is impossible to justify. You’re of course right that health systems aren’t funded by blank cheques. That’s why I say so myself in the article a couple of paragraphs down from the first passage that you quote. But, the prima facie difficulty of justifying the rationing of effective treatments explains why we need fair procedures for doing so, and explains why bodies like NICE have to operate to rigourous normative standards.

(b) The example of the 15 year old and the 65 year old was where the result of some treatment was that each of them would have a life expectancy equivalent to 10 QALYs. (e.g. both are cancer sufferers who would die immediately without the treatment, and who will live to 25 and 75 years, respectively, with the treatment). A cost-effectiveness measure in terms of change in QALYs per unit cost would judge both to be equally worthy recipients. But this leaves no room for the thought that the fact that the older patient was ex ante better off is of moral significance. This is a pretty standard problem for QALY-type approaches.

8

Martin O'Neill 08.13.08 at 5:57 pm

Engels — that was exactly what I meant. You got in seconds before me! Thanks!

9

Martin O'Neill 08.13.08 at 6:01 pm

dsquared — Some complaints about ‘postcode lotteries’ are indeed otiose. In many cases there is no independent objection to regional variation over some variable. But the point about healthcare provision is that there *are* objections to variations in the availability of, say, cancer drugs; for example, if we think that all citizens have a right to an equal bundle of state-funded healthcare. So I don’t see how your criticism hits home in this case.

10

leederick 08.13.08 at 6:20 pm

I think you’ve missed the point here. This isn’t really about Postcode Lotteries. We shouldn’t worry about variation. You’re right – some people are going to die while others live regardless of what policy we choose. What NICE worries about justifying this to people.

NICE has to justify its refusal to fund treatment. They have to answer the question “Spain would let me live, why won’t you”? They can attempt to do this with a national policy. They can say “we think our policy is correct, and we aren’t going to fund you because of reason X”. The Spaniard may unfairly live, but the Englishman will at least have the decency of being given a justifiable reason why he is going to die.

They can’t do that with a local policy. If there are two matched patients and the one in Cornwall gets treated and the one in Yorkshire doesn’t, then one policy must be mistaken. So not only are people unfairly being chosen to live while others die, but the ones for the chop can’t even be given them a good reason why this is so.

11

Martin O'Neill 08.13.08 at 6:20 pm

Chris/Matt — Thanks, both. I think that Matt’s point is well taken. It’s harder to justify variations at, say, PCT level, when (a) funding and (b) democratic accountability, are at the national level.

I also suspect that other problems with devolving rationing decision to PCT level are (a) that the decision-making mechanisms are just too murky at local level, and (b) this needlessly multiplies decision-making bureaucracy. Moreover, within a state, with free movement of people from place to place, there is a sense in which their isn’t really a stable ‘justificatory constituency’ for PCT (as opposed to national) decisions.

One odd aspect of the UK system is that NICE’s decisions are advisory rather than statutory, with PCTs retaining discretion over final decision-making. That strikes me as an odd position to be in. (This came out in the discussion between Jonathan Waxman (an oncologist and critics of NICE) and Frank Dobson on the Today programme this morning; Dobbo said that, as Minister for Health at the time of NICE’s inception, if he was doing it all again he would have pushed for NICE’s decisions to have full statutory status, with no additional PCT discretion over drug availability. That seems a more stable solution.)

Chris’s suggestion of EU, or even worldwide, rationing is an interesting one. In a sense, the ultimate version of the ‘postcode lottery’ is the difference between national healthcare systems. But there are at least good democratic arguments for individual countries setting their own healthcare rationing decisions, which don’t apply in the same way at PCT level.

No doubt there should be high levels of cooperation within the EU on both (a) drug assessment and (b) purchasing. Anything that would drive down long-run drug prices would be welcome.

12

pj 08.13.08 at 6:27 pm

Martin,

(a) I was more talking about why this intuition seem strong enough that much coverage of NICE takes precisely this approach, rather than accusing you of taking that position.

(b) I understand what you’re saying here, but I was trying to highlight the converse case, that QALYs actually discriminate against older people because they have less life expectancy (and less quality of life too). I suppose it depends how you look at the (rather artificial) idea of an intervention that extends life by a fixed period, because generally, something that extends the life of someone aged 65 by ten-years seems a rather more effective treatment than something extending life by ten-years for a 15-year old, particularly given that quality of life actually falls the older you get (so extended life span may be even longer than 10-years for our older person). 10-years is perhaps an unfortunate number since things like cancer are usually considered cured if you live that long. But if we reduce it to extending life by 1 QALY, similar to the sort of benefit we see with these new expensive chemotherapy compounds perhaps I can see more what you mean.

Interestingly of course, we do in actual fact spend gigantic sums of money to treat babies and children for fairly minimal benefit in many cases whereas we’re pretty conservative in the management of the elderly.

13

pj 08.13.08 at 7:03 pm

Thinking about it, I wonder what discount rate you’d think appropriate for “a ‘fair innings’”? Given the inherent favouring of those with a longer life expectancy by QALYs, wouldn’t a discount rate lead to a focusing of healthcare almost entirely onto babies and young children because if you cure one they have expected QALYs of 80yrs, whereas a 65yr old has 10 QALYs (or less), meaning that your baby has already got 8 times the value of the 65yr old, adding a linear discount that, say, makes a year at 30 worth twice that at 60, we get 20 times the expenditure on the QALYs of the baby. Maybe people would think that was right?

14

dsquared 08.13.08 at 7:26 pm

As far as I can see, local variation and postcode lotteries are the only way that we’re going to discover the answers to the questions raised in your article, Martin. If Yorkshire funds a treatment and Cornwall doesn’t, then Cornwall’s decision is either politically sustainable or it isn’t. If it is, then Yorkshire will end up cutting the treatment, if it isn’t then Cornwall will end up funding it. Regional variation and tatonnement is the only alternative way of deciding these difficult matters from a central planning approach, and I think in this case the central plan has big disadvantages – I don’t see how the central planner can possibly be in an informational situation where he/she could be confident in making big and intrinsically political decisions like this on behalf of everyone. So I think the (implicit) criticism in my guardian post is applicable in this case; any sort of Hayekian approach to this sort of problem (which I’d tentatively argue is the right approach to it because it’s a big and intrinsically political problem of allocating scare resources with limited information; exactly the sort of case where distributed and tacit knowledge works best) relies on regional or cross-sectional variation because it’s the only way that the process can get started. Postcode lotteries aren’t bad – they’re the way in which the whole postal system moves in the direction of the winning postcodes.

Maybe the issue here is that you’re thinking in terms of justifying the decisions to the patients (which I agree would be difficult), rather than in getting a system which produces optimal results.

15

Bob 08.13.08 at 7:33 pm

“Given the inherent favouring of those with a longer life expectancy by QALYs, wouldn’t a discount rate lead to a focusing of healthcare almost entirely onto babies and young children”

Wouldn’t anyone living over the QALY upper limit age and then becoming ill be denied any treatment?

16

pj 08.13.08 at 7:57 pm

No, because if you live to 80 your life expectancy is not -5yrs but a few years more, or do you mean if we have a discount rate? In that case I guess there’d be a point where you wouldn’t be denied any treatment but it’d need to add a unfeasible number of QALYs to be cost effective.

17

tl 08.13.08 at 8:42 pm

@ 14 – the whole point of the exercise is to make the decisions not dependent on what is ‘politically sustainable’ (whatever that means in this context). NICE has, by and large, done a pretty good job of this so far. The information required to make the decision consists of: (i) how much does it cost? (ii) how much benefit does it produce? In themselves neither of these are big or political questions.

Where this does start to become an issue, though, is with the putative extension of NICE methodologies envisaged in Martin’s article. Just because we’ve established a common metric for making healthcare funding decisions (and the political will to apply it) doesn’t mean that these can be directly applied to the issue of how to improve the health of the population as a whole. There are technical issues with evaluating the effect of broad social and political factors (although NICE has started to have a go at this), but the main obstacle seems to be that the costs and benefits are distributed much more broadly, so that cost-benefit analyses (even where their results are very encouraging) remain essentially academic. (This point applies even more to Chris’ idea that logically, everyone in the world should be treated equally as regards access to healthcare. There are many obstacles to this happening; uncertainty about the algorithm to be used to define it may be one of them, but it’s not top of the list.)

18

dsquared 08.13.08 at 8:55 pm

the whole point of the exercise is to make the decisions not dependent on what is ‘politically sustainable’ (whatever that means in this context). NICE has, by and large, done a pretty good job of this so far. The information required to make the decision consists of: (i) how much does it cost? (ii) how much benefit does it produce? In themselves neither of these are big or political questions.

I absolutely disagree. “How much benefit does it produce?” is about as political a question as I can think of in context. Martin’s article is all about an attempt by central planning technocrats[1] to construct their version of a means of trading off the lives and health between different individuals, and to try and do so in as justifiable (which, in context, has to mean politically justifiable, in a reasonable sense of the word) a way as possible. I’m saying, skip the technocrat stage and go straight to the politics.

I mean, what we’re literally talking about here is the allocation of public funds to competing claims of life and death. What could possibly be more political than that?

[1] nice non-prejudicial use of language there danny boy!

19

tl 08.13.08 at 9:11 pm

So, because a question is ‘political’ in the sense that it has a bearing on the use of public funds, it should be decided according to who is politically best-connected and has the best lawyers?

The question of what procedure to put in place to facilitate making these decisions is certainly political – otherwise we wouldn’t bother having this conversation at all – but, once the procedure is standardised, the decisions to which it gives rise are not political in anything like the same sense.

20

tl 08.13.08 at 9:15 pm

What I mean is: I quite agree that the decisions made by a body like NICE should be open to public & political scrutiny. But to pretend that the cost-benefit analyses on which those decisions are based are nothing but window-dressing doesn’t strike me as a sound basis for undertaking that scrutiny.

21

soru 08.13.08 at 9:31 pm

If you extend the life of a 15-year-old by one year, there’s pretty much inevitably at least a small chance that they will get cured (perhaps by a treatment discovered during that year) and live another hundred years. The 65-ear-old may have the same median case life expectancy, but the upper bound is a lot lower.

I think that pretty much justifies the intuition that the 15-year old is worth prioritising, if it comes down to that.

22

pj 08.13.08 at 10:09 pm

soru, the problem is that we’re accepting that the debate can be framed in terms of treatments that prolong life* by nice increments like 5-years. Most treatments either cure, or alleviate reduced QOL (and will inevitably benefit younger people as I’ve suggested above)
– cancer treatments for metastatic disease are one of the few cases where we have these limited life prolonging treatments, and the cases where we can construct a nice hypothetical trade off between young people and older adults few and far between. The former will inevitably benefit younger people as I’ve suggested above. You can construct some more fun tradeoffs with common but trivial diseases (small QOL benefit) that are cheap versus rare fatal diseases (large QOL benefit) that costs lots to treat.

Interestingly, I’ve read that people choose to favour those aged 20-40, I’m not sure why but I suspect it is partly selfish, partly about how we see our own life stories – so it is a bit more complicated than simply a ‘good innings’ or potential future lifespan.

* Also we have to remember we’re talking about aggregate effects here, treating X number of people at £Y to get one more person to survive to Z years (thus costing X * Y per person’s life extended by Z-years) – rather than giving this drug to people for X * Y each, and everyone gets Z years more.

23

leederick 08.13.08 at 10:10 pm

Most of these differences are caused by chance, rather than skill. If a PCT gets lucky, has a warm winter and few OAPs get laid up, it will have the money left over to spend on treatments with marginal benefits. If a PCT is unlucky, inherits an old building, the pipes burst and it needs structural work doing, the marginal treatments won’t get funded. This is spectacularly arbitrary. It’s also very inefficient, because chance fluctuations in small budgets mean that either worthwhile treatments don’t get funded or excess funds gets frittered away on things that are useless.

Maybe we can go the Hayekian route, and PCTs can have a fixed budget and employ their own hedgers to manage their exposure. But part of me thinks a national health service, where PCTs are obligated to and able to provide guaranteed services because they’re compensated for the effects of chance from a central pot where risk is shared, is the way to go.

24

Ben 08.13.08 at 11:04 pm

Following on from #23, I think the problem is – in some sense – a lack of arbitrariness here. I hate the way that the media always dress things up as a ‘postcode lottery‘. Part of the problem is that postcodes aren’t distributed by lottery!

Ok, since PCTs cover generally large and (to some extent) heterogeneous areas, unlike say school catchment areas, you don’t have the problem that it results in those who can buy houses in the nice area of town get treatment while those who can’t don’t. The problem is simply one of regional variation.

Contra some of the above suggestions, I see no reason to assume there’s one right answer to these funding decisions, so it may be that different PCTs make different but equally justifiable decisions. (It may also be that even if there is one right answer for each PCT, they aren’t the same – owing to differences in local population).

The way the debate is framed, however, gives a bad name to lotteries. I think that if we couldn’t fund treatment for everyone, and there’s no way to divide it (half a course of treatment does no good), then allocating treatment by a lottery – properly random, not based on postcodes – would be fair.

25

Jack 08.13.08 at 11:53 pm

D^2, how do you skip the technocrat stage? Drug elections? What about political opposition to postcode lotteries?

It isn’t clear that NICE is about making clinincal judgements or political trade offs. Isn’t it rather negotiating prices? The price of a QALY delivered by drug X depends upon the price of drug X and if the price of a QALY is the criterion, it isn’t just NICE but also the drug companies making the trade off and that hasn’t been factored in.

I assume that drug companies are behind most of the “[NICE/Postcode Lottery] will let me die” stories – they are always about drugs not surgical procedures although the latter is were the biggest advances come – but have been puzzled why both are targets. Do they oppose postcode lotteries in particlar cases because they will never be settled by taking stuff away form the winners so change is for the better, but also oppose NICE because it functions as a central price negotiator?

Otherwise why not back NICE, make the price of a QALY an explicit political issue and get the hurdle lowered?

26

engels 08.14.08 at 12:20 am

Pj, I don’t think you’ve really made the case that QALYs calculations unfairly favour the young. What you have pointed out is that where a 15-year-old and a 65-year-old could both benefit from a given life-saving treatment, the 15-year-old is more likely to get it under the system. But of course all this means is that this is the most efficient use of the treatment, in terms of the quality adjusted years of life provided, irrespective of whose they are (and how many each person will be expected to have in total). In that sense, the decision that has been made has been blind to the ages of the patients.

I think there is a real argument to be made that one of the aims of health policy in an egalitarian society should be to reduce the inequalities in health outcomes such as life expectancies. In terms of the QALYs calculations, this would mean adjusting them in order to favour younger patients.

I can’t really see how a symmetric case could be made that the system ought to be adjusted to favour older patients, as the necessary effect of this would be to increase health inequalities.

27

dsquared 08.14.08 at 12:58 am

it should be decided according to who is politically best-connected and has the best lawyers?

I retrospectively wish I hadn’t apologised for “technocratic central planners” in a footnote.

28

bianca steele 08.14.08 at 1:24 am

In the US (where, of course, there is no equivalent to the NHS, though to some extent the various insurance companies function in a similar way), one preferred method of making healthcare decisions appears to be to leave it up to the patients themselves, who “take responsibility for their own care.” Thus, the decisionmaking is pushed down to the consumer level. The same considerations apply, though with cost sometimes more and sometimes less of a consideration (depending on insurance details).

I’m wondering how D^2’s idea is different from this, or doesn’t devolve to it somehow.

It doesn’t seem very political as stated, but it could be seen as encouraging people to engage politically to fight for their and their neighbors’ interests, to influence how their local decisionmakers operate. But this seems to assume it is always easier to take action on the local than on the national level. It also seems to assume that knowledge is more complete at the local and even the individual level, which seems to me only partly true.

29

cpareader 08.14.08 at 1:26 am

It appears to me that most of the posters here can envision age 65 as part of their own lives and that this affects, however unintentionally, their responses to this issue. Consider substituting ages 75 and 85 in your examples and see what that does. I sincerely believe your comments will be very different.

30

Order of Magnitude 08.14.08 at 4:37 am

A clarification: one QALY is not one calendar year of life. So to argue that the 15 yo living to 25 and the 65 yo to 75 are 10 QALYs is wrong. Calculations of QALE (quality adjusted life expectancy) factor in ‘utility’, such that if you live one year with a utility of 0.8, that is 0.8 QALYs. Age itself entails a disutility, so, at baseline the 15 yo would have a utility of close to 1, whereas a 65 yo would be somewhere at 0.84-0.87 with a pretty big SD (using TTO = time tradeoff). Utilities are _very hard to assess_ and God save us from bureaucrats gessing _our_ life’s utility.

31

pj 08.14.08 at 8:58 am

If you have a treatment that adds a fixed number of years to your life then when you have an appreciable risk of dying the average extension of life will be less than the fixed life extension, and again this will favour the young. As an example, if a 65yr old is assumed to have a 10% annual risk of death then a fixed extension of 5-years comes out as an average life extension of 4-years. So again we favour younger people (who have a negligible risk of death) over older people for the same treatment efficacy.

Pj, I don’t think you’ve really made the case that QALYs calculations unfairly favour the young…all this means is that this is the most efficient use of the treatment, in terms of the quality adjusted years of life provided, irrespective of whose they are…In that sense, the decision that has been made has been blind to the ages of the patients.

That is precisely what I’m saying, QALYs will favour treating a younger person more than an older person for the same effect (whether you think that’s fair or not is up to you), it is blind to age but an inevitable consequence of its construction.

Of course, in reality, the main age factors are the average age of a given illness, I am not aware that nice imposes specific restrictions on an individual’s QALYs such that a given age is declared to be too old to receive a given treatment.

32

chris armstrong 08.14.08 at 9:47 am

An interesting post, Chris. I also agree that replacing ‘some patients will suffer more because of the brute luck of their county of residence’ with ‘some patients will suffer more because counties have (hopefully accountable) decision-making power over budgets’ changes the perspective markedly. I think a simple argument against the influence of ‘brute luck’ misses this point; we need an argument why such devolution is appropriate (or not). That said, as Martin pointed out, the worldwide situation does look much more like a ‘postcode lottery’: you can choose what county you live in much easier than what country, and claiming legitimacy for local discretion over health budgets is far easier than claiming legitimacy for the current global distribution of resources and power…

33

Sam C 08.14.08 at 11:13 am

I’m interested by the differences in justificatory strategy here. Some commenters are contractarians: they think that the problem is one of justifying, to each individual concerned, how communal power and wealth are used. So, the central issue is fairness, which makes it seem natural to focus on ameliorating arbitrary differences (like ‘postcode lotteries’). Other commentators are consequentialists: they think that the problem is one of maximising overall benefit.

(Aside: which is Dsquared? Is he a consequentialist who adds a Hayekian, distributed-knowledge account of how best to maximise benefit? Or is he a ‘public reason’ contractarian, who thinks that actual political negotiation – rather than a hypothetical contract – is the way things get justified to individuals?)

Isn’t this the fundamental dispute about rationing healthcare: what are we trying to do? Are we trying to act such that every individual can be shown that the system treats her fairly? – which seems to mean, at least, that she’s not treated differently from someone who is not different from her in any relevant respect. Or are we trying to produce the best results overall, even at the cost of sacrificing some for the sake of others?

34

dsquared 08.14.08 at 11:51 am

I’m a consequentialist, but one trying to address seriously the fact that I don’t actually know what the objective function is that I’m trying to maximise, and helping myself to a gob of Austrian economics in the hope of patching this hole in my theory.

35

Nich Hills 08.14.08 at 11:53 am

While it’s critical to consider the impact NICE can have on the patients of the NHS and the taxpayers who fund it, what of the drug companies.

If DrugCo knows that NICE will recommend against a product costing UKP20,000 per QALY will this affect their behaviour? Is the NHS sufficiently large to be a price-maker rather than a price-taker? Will DrugCo reduce their prices to get in under the NICE price-cap. Will DrugCo adjust their research strategies (and executive remuneration ) to ensure that all their products naturally fall under the price-cap.

Or will DrugCo practice market segmentation and charge a lower price for UK sales than elsewhere?

36

pj 08.14.08 at 12:34 pm

Alternatively, Nich, will they increase prices to fall just a little under the NICE threshold because they now know what the NHS is willing to pay.

37

engels 08.14.08 at 12:38 pm

I retrospectively wish I hadn’t apologised for “technocratic central planners” in a footnote.

Maybe you should take the gloves off and up to it “unelected, unaccountable pen-pushers”?

38

Rob 08.14.08 at 1:01 pm

“I think that if we couldn’t fund treatment for everyone, and there’s no way to divide it (half a course of treatment does no good), then allocating treatment by a lottery – properly random, not based on postcodes – would be fair.”

This seems to me obviously wrong, at least if there is to be no rationing and standardising process that occurs first. Let’s say we have a fixed budget, and we run a lottery the winner of which gets to pick a medical treatment until we run out of money. Inevitably, we are going to end up treating trivial complaints before serious ones. That strikes me as clearly unfair: it is not fair that part of a limited medical budget goes to fund, say, laser eye surgery to correct slight short-sightedness when someone could be cured of some life-threatening disease instead. So, for the claim to be true, it has to be the case that some process of rationing and standardisation goes on. It has to be lotteries amongst like cases, but that requires decisions about what like cases are, and there have to be decisions about which sets of like cases to fund and how much to fund them. Otherwise, we will get objectionable cases of people being funded for trivial interventions when the money could provide others with vital and cost-effective care. Under that set of circumstances, lotteries could be fair, but that’s the set of circumstances we have, effectively, where an arbitrary factor, under certain constraints, sets what care is available. So I don’t see why ‘the postcode lottery’ maligns lotteries either.

39

engels 08.14.08 at 1:15 pm

Maybe one way into this issue to to think about what you yourself would do if you were given the choice between insuring against a life-threatening medical emergency that could strike you (with equal probability, let’s say) at the age of 20 or at age of 60. If you were in a position to insure against either, but not both, and the insurance you were able to buy would cover the costs of life-saving treatment, which policy would you choose? Is the choice a difficult one or a straightforward one?

40

dsquared 08.14.08 at 1:31 pm

Have to do a lot of tinkering with that example, because obviously in the one case the insurer would get 20 years of premiums and in the other case, 60 years.

41

engels 08.14.08 at 1:49 pm

I suppose I was thinking of an arrangement where I insure against the possibility of a one-off event in exchange for a one-off payment…

42

sg 08.14.08 at 3:01 pm

I don’t think age of the patient can be considered because it would breach the NHS charter of equal healthcare according to need. Unless one could somehow redefine “need” to include the number of life years (adjusted or unadjusted) remaining to a person, which would be playing fast and loose with the spirit of the charter.

Another part of the ‘postcode lottery’ not addressed very often is that there is no apparent reason why the lottery exists, and to the best extent one is able to assess these things, healthcare received is not necessarily closely related to the level of need in the area. So it may actually really be a ‘lottery’, and this is generally not good. It’s a sign either of inequality in an unobserved variable (and British researchers still haven’t clearly established what that variable is, though it’s almost certainly got an element of wealth to it…) or local inefficiencies, also so far relatively unexplained. Neither situation is commendable, though as a research exercise once we have pinned down the causes the local variation will be very useful in enabling us to improve efficiency, as I think Daniel was observing in his article on rape clearance rates.

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Jaybird 08.14.08 at 6:11 pm

Why don’t you just raise taxes on the wealthiest to ensure that more people get the care that they need?

44

pj 08.14.08 at 7:55 pm

Shh, we don’t talk about that.

45

elliottg 08.15.08 at 2:00 am

Shh, what we aren’t talking about is the fact that NICE is making ridiculously easy decisions. No reasonable policy (constructed by central planning technocrats or ad hoc local pol) would embrace the prices the drug companies want to charge for minimal benefit. $150,000 and up prices for QALY are simply unsustainable. What is needed is negotiating power, not a metric. Only a national program can provide the right level of power to counter the “your money or your life” message that the drug company implicitly sends. It’s really simple to reverse a NICE decision by showing better efficacy or lowering the price. The drug companies have decided it’s easier and cheaper to drum up the fear that the NHS penny pinching is gonna kill people.

46

Fr. 08.15.08 at 11:16 am

Martin – Thanks for an excellent discussion on NICE and QALY. I think there is a problem with your health care expenditure figures, though (see New Statesman comment #2).

You might want to check the last issue of the JRSM (J Roy Soc Med) for an editorial on NICE that conveys some identical opinions regarding the negativity bias carried by the media towards NICE.

47

John Quiggin 08.15.08 at 9:01 pm

I wrote a paper on the fair innings principle a few years back.
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V8K-49YD4HB-1&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_version=1&_urlVersion=0&_userid=10&md5=12045e2069034cdaf249bae687505c25
You can make a plausible argument that someone facing death at 15 is disadvantage relative to someone facing death at 65, and so if we can provide an extension of life to only one of them, the young person should get it. But it turns out to be quite tricky to apply this principle in a consistent way.

48

Ben Saunders 08.15.08 at 11:31 pm

Re: Rob (#38)

I’m talking here about a specific case, we’re you’re limited to a set number of treatments smaller than the number of needy patients (perhaps due to supply or organs or drugs, that cannot be increased in the short-term); not allocation of money.

Even so, I would agree that other criteria may come in to play – e.g. QALYs, ‘fair innings’, whether need is self-inflicted, etc. All I’m saying is that at the end of the day, when you can’t treat all of the equally needy/deserving cases, you need some method of allocation. In that case, I think a lottery would be fair but, despite a long tradition accepting the fairness of lotteries for such distributions, the media fuss around ‘postcode lotteries’ teaches people to think that lotteries are a bad thing.

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sg 08.17.08 at 8:48 am

The Guardian/ Observer have an interview with Sir Michael Rawlins of NICE today. He appears to be endeavouring to set some facts straight about the pharmaceutical companies and their attitude towards NICE…

50

derrida derider 08.19.08 at 1:40 am

elliotg’s right. Having the purchaser at a sub-national level makes it easy for the drug companies to play games to push up prices.

Australia does not have an NHS but it does have a national pharmaceutical subsidy scheme, which is easily big enough to simulate the effect of a single puchaser so as to appropriate drug company rents. The (pre-subsidy) prices of drugs on the Australian PBS are about the cheapest in the developed world. We still get those drug-company sponsored “life saving drug denied to war veteran by heartless bureaucrats” stories in our tabloids, but they don’t have much political effect.

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