The Gift of Life

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No sooner do I say that perhaps it's time to stop blogging about health care short of interesting economic side issues, then Julian Sanchez raises an interesting economic side issue:

Do we believe that? That every American has basic right to extremely expensive drugs that provide very little benefit? It's one thing to say there's a shared obligation not to let people suffer or die when we know how they could live many years longer, or in much less pain. I find it a whole lot less compelling to suggest that people are entitled to public provision of, say, Tacerva--which the Times article says was approved to treat pancreatic cancers because it improves survival time by a whopping 12 days at a monthly cost of $3,500. Another is good for an additional month and a half on average, at a per-patient cost of $50,000. Is it only people who favor dismantling Medicare who might think that this goes beyond what people must have as a matter of basic justice?

I think one of the genuine problems that liberals will face if they get the comprehensive system they want with some sort of cost-effectiveness review board, is that cost-benefit analyses break down at the margins of life.  I'm not concern trolling here; it's just an intellectually fascinating, and politically thorny, problem, which is why Ezra Klein wrote the original post that Julian linked.

For starters, I'm not sure that it's meaningful, in discussing a medical treatment, to say that a drug, improves survival time by a whopping 12 days.  Here's what the New York Times wrote:

And even some of those drugs offer only a few months at most of extra life or tumor stabilization despite prices that often reach thousands of dollars a month. The drug Tarceva, which costs about $3,500 a month, was approved as a treatment for pancreatic cancer because it improved survival by 12 days.

The battle to treat cancer has become, as a commentary in a leading journal put it, a "grinding war of the trenches."

I think that when we talk about it this way--and this is how we talk about so many diseases--we're prone to composition fallacy.  Which is not to say that this is how Julian is thinking about it, but that this is how such statistics are often taken when policymakers discuss them among themselves. 

Twelve days indeed does not sound like a lot.  The problem is that the drug does not improve each patient's life expectancy by 12 days, in which case yeah, it doesn't sound like such a great deal.  It gives some people extra months of lives, probably slightly shortens some lives because most serious drugs have iatrogenic effects, and does less for other people.

If you frame the question as "do you want to pay $12,000 to get a 20% chance of an extra two months?" you probably get a different answer than if you ask whether someone wants to spend it on an extra twelve days.  Particularly when you consider that the mean survival time for metastatic pancreatic cancer--60% of all cases--is four to six months from diagnosis.  For another 30%, who have locally advanced cancer, mean survival is 8-9 months.  Twelve days, or two months, doesn't sound like so much to me, when I'm in my thirties and, as far as I know, cancer free.  But if we were talking about a 20% chance of increasing my lifespan somewhere between 25% and 50%, I'd probably want to pay for Tarceva.  I might even start sobbing and call my local television station if my doctor, or insurer, denied it.

Expected value calculations just don't work very well when you're facing imminent death--a criticism that liberals justly make of libertarians who claim that the only problem with the health care market is third-party payment.  We get away with doing these sorts of cost benefit analyses for environmental regulations and highway safety issues because they don't involve directly denying a specific person a treatment that has a decent chance of extending their life.  Even countries where the political culture is much friendlier to bureaucratic limits have ended up backing down on these sorts of decisions in the face of exactly the kind of outrage American wonks are getting from seniors when we propose not just showering them with money every time they ask. 

I think you could make a coherent argument that in fact people who have just found out they have imminently fatal diseases should get more money spent on comparatively small gains in lifespan, for the same reason that I'm potentially willing to incur a large deadweight loss in order to transfer $500 a month from the middle class to welfare mothers who earn a few thousand dollars a year, and not potentially willing to incur the same deadweight loss transfer $5,000 a month from Warren Buffett to me.  I'm not saying that this is the standard we should adopt.  But I actually think that it has a fair amount of emotional resonance, which is why appeals from cancer patients are so effective when they're denied marginal treatments.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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