A Million-Dollar Cancer Treatment: Who Will Pay? | Hacker News Reader

A Million-Dollar Cancer Treatment: Who Will Pay?

wsj.com

An issue with how health care is funded in the US, is there is not often a rational consideration of cost. People are balking at the cost of a cancer treatment that costs 1 million dollars. However, if it cures a person and the person lives a good quality life for 20 years, then the cost per quality adjusted life year is around $50,000.

On the other hand, the median cost for traumatic brain injury is around $160,000 (http://n.neurology.org/content/82/10_Supplement/P5.337) with many of the patients dying or having poor quality of life. If you looked at cost per quality adjusted life years, it would probably be a lot higher.

In terms of what cost per quality adjusted life year to target, it seems that the UK NHS targets 30,000 GBP (http://www.bbc.com/news/health-28983924) and there are calls to increase it to 70,000 GBP(https://www.bmj.com/content/338/bmj.b181)

We need to get away from looking at the sticker price for health care, but look in terms of cost per quality adjusted life year before we can have meaningful discussion as to what and how to pay for health care.

When government pays for your healthcare some civil servants who look at you as merely statistics make that call to keep you alive or to let you die. In that sense the money spent is actually controlled.

In USA there is this weird concept that "all lives matter more than anything else" and hence doctors spend millions.

Well it's a concept, but it's applied very hypocritically. It seems mostly about social status. "All lives matter more than anything else but some lives don't matter very much at all" would be more accurate. Some people get millions of dollars in treatment (they're wealthy or have employment with a company with good insurance) while others die slowly for lack of a few bucks for a prescription (they already lost their jobs due to previous illness, mental illness or addiction, or just got unlucky with timing).

Politicians in certain states and in the federal government are doing their best to make sure people without jobs can't get help with affording treatment as well. Frankly to claim that we in the US care more about lives than those in other developed nations with rational disbursement of healthcare funding is just wrong.

Sorry if you weren't implying that, but I think you were.

The person who has lost job or does not have a good job is not likely going to have much of a life either even if he is cured. If he has hope of having a good life he might as well borrow some reasonable money.

This might sound evil but what is really evil here is the US government and FDA that has put regulations which essentially say you will either get best possible treatment or none.

It is not clear to me why the prescription system is so ridiculously regulated. Not clear to me why people having opioids is such a big deal and why we can't have more of health workers giving minor treatment instead of just doctors.

In country like India there will be lot of quacks who are not real doctors and yet serve in villages where no real doctor would work.

That happens in the USA too, except the bureaucrats are in large insurance corporations vs. large government organizations.

Yes and I find it surprising that people demanding socialised medicine in USA somehow think giving complete monopoly to government over medicine will not screw things up.

They look at other countries and see how much better it is? There is a reason why it's in demand ;)

And the above case precisely shows why they might be terribly wrong.

Except for those of the uninsured who are left to die.

>>However, if it cures a person and the person lives a good quality life for 20 years, then the cost per quality adjusted life year is around $50,000.

However, usually cancer strikes older people. http://www.cancerresearchuk.org/health-professional/cancer-s... A computer doing a blind cost benefit might say to let them die, as they will retire and enjoy social security and so on.

By your logic any procedure that prevents death is cost adjusted by how many years the patient lives. It 'proves too much'. If I'm 30 and I suffer a knife wound then you could charge any amount to prevent my death, justifying by averaging over 40 years. All kinds of medical intervention may be necessary to prevent death, but that doesn't mean they shouldn't be affordable.

I think the point is to set an upper bound on how much a government ought to be willing to pay for a given procedure, and to compute that upper bound by counting QALYs and multiplying by their official dollar value.

For example:

Value of stitching knife wound: (40 QALYs) * (30,000 GBP/QALY) = 1.2M GBP

Cost of stitching knife wound: (let's say) 1000 GBP

Decision process:

Is the cost less than the value? 1000 < 1.2M, so yes. Therefore, pay for the procedure.

Whereas:

Value of expensive cancer procedure on 70-year-old: Let's say 5 QALYs just to make up something, taking into account expected lifespan and QOL and chance of remission, etc, times the same 30k GBP, = 150k GBP.

Cost of procedure: 1M GBP

Decision process:

Is the cost less than the value? 1M > 150k, so no. Therefore, don't pay for the procedure.

I, and a lot of other people, don’t like this thought process. We are quite bad at estimating how much someone has left to live. We are worse at estimating the quality of the life someone will experience. And then that someone may be single, with no family, or have 3 kids still in elementary school. Are you going to consider the quality of life of their dependents. What if that person is about to solve the nuclear fusion, or the Riemann hypothesis, would you pay 1M to keep them alive one more year? Would you let them die after their work is done?

I believe these assessments are made on a general rather than an individual basis. It's not a question of whether treatment should be approved for an individual patient ("death panels") but whether a treatment is sufficiently effective for its cost to be made available.

I think it's reasonable to not be totally comfortable with that. But can you think of a better system?

To address the important scientist point you made, I could see it being in the interest of society to give some people extra special care (e.g. the US president gets top care), although mostly it's hard to value what should qualify someone, as you say. I think in some heartstrings cases we see GoFundMe's and such filling the gap; perhaps that's the proper role for charity in the system?

I was trying to correct what seemed to me to be a miscommunication (I thought my parent post misunderstood something about what GP comment was saying). I wasn't trying to endorse or condemn any particular system for evaluating procedures, in my earlier comment; just pointing out that the system wasn't flawed on its own terms in such an obvious way.

Can anyone from a socialized medicine country explain how this particular treatment would be dispensed in their country? I'm an American and wondering, for example, would government of the Netherlands truly front this $1mm per treatment cost for every cancer patient?

I'm not from such a country, but I do listen to The Weeds (a policy podcast) and they have discussed how it works. Roughly speaking, there are committees that look at the efficacy of new treatments and their costs, and they decide what they will pay for a given treatment. Then the drug maker decides if they will sell it at that price. There are cases where the government will not pay the drug maker's reserve price. For example, there was a period of time where Kadcyla was not available in the UK. Then, after a while, the drug maker decided to reduce their reserve price, and now it seems the Britons can get the drug.

This national pricing leverage is a big part of why drugs are cheaper in countries with national price setting. Socialized medicine is actually less of a factor in this space. What matters is whether a single entity has the ability to set prices for the entire market (or a sufficiently large slice of it).

https://pharmaphorum.com/news/kadcyla-set-regular-nhs-fundin...

This just makes so much more sense than the US's broken system. Is there a corollary to what you describe such that the governments could periodically publish a list of priorities, thus incentivizing private research into a particular categories (certain types of cancers, alzheimers, etc)?

I'm not from an EU country, but I'm familiar with it.

A lot of European countries do a health technology assessment to determine the cost effectiveness. If it's not cost effective, they don't pay for it.

Glybera was approved in the EU and Germany pays for it and it costs $1M.[1] Of course, very very few patients have or will be treated with it.

[1]http://blogs.nature.com/tradesecrets/2015/03/03/1-million-pr...

Simple (yet complex) Solution: don't make health a for-profit business.

Then what's the incentive to spend millions to develop new treatments?

To serve humanity.

Why do people teach? Become soldiers? Priests?

Money isn’t the only motivator.

Those people have to live, eat, and see my family do well. Those people can decide to go do something else, most people are not financially independent.

The money has to come from somewhere, always.

All of these things are true. None of these things require a $1M dose of a drug.

This reminds of s political cartoon I saw earlier this year of two businessmen talking... “We could save thousands of human lives!” “But at what cost?”

What's the incentive to spend billions on infrastructure and trillions on the army?

Those are mostly solved, unevolving problems, meaning their R&D spend is a small fraction of the total budget.

For example: in 2016, of the total FY2016 federal budget of $4T, only $145B is committed to R&D (3%) [1]. Compare that to the pharmaceutical industry average of 18% [2].

[1] https://www.aaas.org/fy16budget/federal-rd-fy-2016-budget-ov...

[2] https://www.investopedia.com/ask/answers/060115/how-much-dru...

That seems likely to be misleading, I imagine most of the R&D done for the defense department is done privately via supplier contracts and not directly accountable as such.

The issue with that is that it will seem to work. You know what a treatment costs, and if you mandate every treatment is through a non-profit, all your treatments will be lost cost. However, you do not know about the treatments that you are missing out on because you did not provide enough incentive for them to be discovered and tested. Thus, you will be blissfully ignorant.

Another way to look at this, is the prior to discovery, a treatment for a disease is infinitely costly. No matter how much money you have available to spend, you can't get your disease cured. After discovery, even at the cost of a million dollars per treatment, the cost of the treatment is infinitely less.

Hospital margins are pretty low, so you'd knock what? 5-10% off?

And I also wish more people realized that drug companies are sitting flush either. Lilly posted about a billion in profit this quarter. Gilead posted $4B in losses. Novartis posted about $2B in profit.

That sounds like a lot. It is, to a degree. Do you think they should fund this treatment for free for 2000 people? Because 600,000 people die from cancer every year. Just in the US.

Insurance companies? Anthem made about a billion. State Farm lost $71M. The list goes on.

Hospitals are doing far worse.

You can cut researcher salaries; great, you just impacted the people who are literally doing the research to save peoples' lives. You can cut executive salaries; they mostly get paid in stock anyway, and its not like their job isn't important. You can rely on public research; uh oh, the public just elected Mr. Donald, who called the NHS "broken". #Defunded.

I hate the expediency of some people. Let's look for an easy answer to this problem: Drug companies are greedy! Or... How about this: drug research is fucking difficult, which makes it very expensive. And also: humans are designed to die. There are a billion things on this planet that can kill us, and quite often when drug companies fix one of them, those little asshole bacteria get three times stronger and fight back, or humans discover a new thing to smoke or drink that gives them cancer.

And then the same people who just finished a large milkshake from McDonalds hop online or go to a protest and yell that drugs are too expensive.

Can you defend the huge marketing budgets of the pharma companies? I have to imagine any new-drug-awareness or training for physician roles covered currently by marketing could be filled adequately at pennies on the dollar compared to current marketing spend. Advertising and marketing are largely zero-sum so we should be able to trim quite a bit of fat there without impacting health outcomes (although cable companies and other advertising platforms would take a hit).

Pharmaceutical marketing is pricey because a lot of it is in-person using sale reps. There are a few companies doing pricey DTC TV ads, but it's for s small fraction of all the drugs out there.

I also think people way overestimate how much the average physician knows about new drugs. They don't have time to do it. Talking with a sales rep for 10 mins to get your questions answered can be very efficient.

A few years back a friend told me about his company (pharma) that was selling a drug for hepatitis C. The drug was going to be obsolete when a competitor launched, so they wanted to make sure docs didn't buy a ton of it otherwise they'd be returning it.

What was amazing were the number of doctors who continued to buy it. The sales reps had to go to the office and ask "why are you buying this drug? the new drugs are so much better, it would be unethical to continue to use this drug".

The doctors had no idea the new drug had launched.

I'd knock 100% off and make it non-profit with a socialized healthcare system just like almost every other western country in the world.

A majority in the USA even favor it.

http://www.pewresearch.org/fact-tank/2017/06/23/public-suppo...

There are many western countries without a single-payer (socialized) system. E.g. Germany, Belgium, the Netherlands, France, Austria, Denmark, Ireland, Greece. That said, almost all of them have national price setting, almost all of them have a mandate, and almost all of them are much more generous to the poor who cannot afford insurance.

Most economists would argue that we would not have nearly as much innovation in medicine without a profit motive. Do you think those economists are wrong?

> Most economists would argue that we would not have nearly as much innovation in medicine without a profit motive. Do you think those economists are wrong?

I mean it's not like it's some thought experiment, you can look at the number of NMEs that offer significant clinical benefits over existing treatments before and after Bayh Dole.

I think:

Most economists? That feels like a claim in need of a citation, or revision.

Most economists aren’t medical doctors or pharmaceutical researchers.

How many of the most useful medical breakthroughs were government funded?

>> we would not have nearly as much innovation in medicine without a profit motive

> Most economists? That feels like a claim in need of a citation

The usual best place for finding out what economists think is the IGM Economics Experts Panel[1]. I mention it because it's a great resource to be aware of, but they haven't addressed this question, though it's covered in textbooks. I checked the Mankiw textbook on Principles of Microeconomics[2], which if I'm not mistaken is the world's most popular one. In the introduction, it says that people tend to supply things when the returns are high:

"Incentives are crucial to analyzing how markets work. For example, when the price of an apple rises, people decide to eat fewer apples. At the same time, apple orchards decide to hire more workers and harvest more apples. In other words, a higher price in a market provides an incentive for buyers to consume less and an incentive for sellers to produce more. As we will see, the influence of prices on the behavior of consumers and producers is crucial for how a market economy allocates scarce resources."

That becomes a background assumption for discussion of incentives in the rest of the book. For example, when talking about externalities, it notes that the patent system increases the incentive to innovate:

"Research into new technologies provides a positive externality because it creates knowledge that other people can use. Because inventors cannot capture the full benefits of their inventions, they tend to devote too few resources to research. The federal government addresses this problem partially through the patent system, which gives inventors exclusive use of their inventions for a limited time."

[1] http://www.igmchicago.org/igm-economic-experts-panel

[2] https://en.wikipedia.org/wiki/Greg_Mankiw#Textbooks

Alexander Flemming.

Dr. Howard Florey and Ernst Chain deserve most of the credit for the development of Penicillin. They received the Nobel with Flemming and did most of the work in getting Penicillin out of the lab.

I don't think relying on wonderful accidents is a practical way to go about medical innovation.

http://www.who.int/mediacentre/news/releases/2015/mtct-hiv-c...

Works in other systems where there is no profit motive.

Because they benefit from the massive amount spent on medical innovation in the U.S.

Then maybe it's time we renegotiated that deal so other countries (esp wealthy ones) pulled their weight.

Who's "we" and what would that look like?

We're talking largely about private companies operating in a global market (esp. when dealing with wealthy countries). If a US buyer is willing to buy $1000 and a UK buyer says we're not paying more than $100, should the pharmaceutical company be banned from selling to the UK at that price? No one is forcing the pharmaceutical companies to sell to UK here. If they feel it's in their interest to accept the $100 then surely they should be free to do so.

Agreed!

The fact that Cuba managed to do a thing isn't the same thing as proving equivalence between for-profit and non-profit healthcare systems re: innovation.

It's exactly what was asked for. There's no profit margin, yet they were the first in the world to come up with a vaccine. Sounds like a good example of innovation to me?

I think you're mixing up different news reports. Cuba reduced their mother-child HIV transmission using five generic antiretrovirals that were invented in the USA and Canada: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2688320/

I'm not sure what would be a perfectly comprehensive metric for health innovations by country. Drug patents might be sort of close[1], but maybe Cuba doesn't apply for patents on principled grounds. For Cuba, it would be helpful to know the ratio of the USA using drugs or other innovations developed in Cuba versus American ones used in Cuba. I hear that drug development can cost billions of dollars[2] so I'd be surprised if Cuba could afford it, but maybe they've done it. Anyone know of any new drugs invented in Cuba?

[1] e.g. https://www.americanactionforum.org/weekly-checkup/new-drug-...

[2] https://www.scientificamerican.com/article/cost-to-develop-n...

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