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Putting a price on life: the future of health care in America

The New York Times recently published a brief article on the cost of health care and the growing trend toward using economic statistics as a rationing device--if only to force manufacturers to reduce prices.  It focused on the National Institute for Health and Clinical Excellence (NICE) which was created by the British government to study this issue, and on a particular kidney cancer patient who was denied coverage for the drug Sutent because the cost ($54,000.00) was considered excessive given that it would buy the terminal patient only six months of life.  Although an industry-supported advocacy group spokesman compared NICE to a group of "terrorists", the NICE approach has apparently secured a nascent compromise that will make Sutent's price more reasonable.

In Britain, NICE has determined that the population can only afford to pay $23,000.00 for six months of life.  It has made other value judgments, as well.  For example, it has concluded that there is no difference between a month of life for a five-year old and a month of life for an elderly smoker.  Top health officials in Austria, Brazil, Colombia and Thailand are considering similar programs and an official at the World Bank claimed that these discussions are going on institutionally throughout the "middle-income" countries.  In the U.S., health care spending currently  consumes 16 percent of our gross domestic product, and at its current rate of increase, by 2025 health care spending will consume one-quarter of all the goods and services produced in the U.S.  Probably no culture can sustain that level of spending.

Prominent economists and specialists, even including the notoriously pro-pharmaceutical Bush Administration's secretary of health and human services, warn that the cost of health care will soon drive the U.S. into a financial crisis that will "Make the sub-prime mortgage crisis look like a warm summer rain".  Half of the increase in US health care costs is expected to come from the pharmaceutical and medical device industries, according to the Congressional Budget Office. We spend more than twice the per capita average of other industrialized nations on our health care, and yet we achieve comparatively poorer health care outcomes, compared nationally.  About 10 percent of our health care costs are pharmaceuticals:  that share is actually higher in most other developed countries.

NICE advocates point out that if a device or drug is approved by NICE, it becomes available in all regions and to all consumers, eliminating geographical and income disparities that occur regularly in the U.S.  They note that as a result of NICE documentation, more English Emergency Departments are now equipped with CT scans, because NICE recommended their cost-effectiveness in treating head injuries.  NICE decisions are made by one of three committees, composed of doctors, nurses and private economists who collectively evaluate the benefit of a treatment and the predicted cost to the government. 

As a result of the efforts of the Insititute, most experts agree that a wider range of treatments are available to English residents--at a more affordable price--because it gives the health care payor the clout to negotiate with large pharmaceutical manufacturers.  A representative of NICE explained that drug prices are pushed to the maximum the market will bear--using the case of Revlimid, manufactured by Celgene, as an example. 

Revlimid is a derivative of thalidomide, which is used to treat multiple myeloma  Thalidomide (manufactured  in Brazil for pennies per pill) required little research decades ago and was originally priced at $6.00 per pill.  As it became a larger seller, the drug was re-priced to $180.00 per pill or $66,000.00 per year.  In 2005, the company developed a derivative of the decades-old drug which is touted as less toxic, and prices it at $260 per pill, or $94,000.00 per year.  As documented in an earlier weblog, some industry executives openly acknowledge that industry pricing of some drugs is driven by what executives believe their patients can force third-party payors to pay if a life is at stake.  By that philosophy, ER triage nurses could certainly negotiate a significant increase in income from their patients' families at the ER door.  Imagine what a good ambulance driver could make.

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