Life and death: At mercy of the market

Imagine a new drug has been invented that would save only one person, but which would take the entire health budget to administer it to them. Should you sanction the use of the drug? The pot of money is finite. All other resources will be diverted and stopped. Others will suffer, if not die, because of your decision. If you don’t give that person the new drug, they will die.

What would you choose?

This is a hard, ethical question. It strikes at the heart of how we value human life.

But we’re not in a philosophy class. This is a real world problem, where life and death are commoditised and exposed to market-thinking.

From the relatively boring problem of pricing life assurance policies, to the market for organ donations, to compensating families for the incomes lost by illness and death, to outsourcing surrogacy to developing countries, to deciding on speed limits, to figuring out whether to approve taxpayer-funded drugs to save lives, the question of the value of a human life pops up all the time for policy-makers.

Economists have studied this problem for years and in many contexts. It turns out that measurement, perspective, uncertainty, technology and politics matter most.

The value of a statistical life is what you’d give up in money terms to eliminate the possibility of something killing you, and you living a longer and more productive life as a result. It turns out that your life is worth between three million and five million euro by this measure.

That’s if you’re perfectly healthy. What if you’re sick, and a drug can make you better? One way to think about funding the intervention is to calculate a quality-adjusted life year measurement.

Imagine you’re a 30-year-old man with a chronic disease. Statistically, you can expect to live to 80 or so. Say you can change the quality of someone’s life and their happiness for the next 50 years dramatically with a new drug. The quality adjusted life year score goes up.

It is possible to simultaneously incorporate changes in the quantity of life and in the quality of that life, with the superiority of one technology over another expressed in terms of the quality-adjusted life years gained.


You can now compare the cost of supplying the drug with the extra ‘happiness’ (economists call this ‘utility’) in euro amounts.

Here, perspective matters a lot. Whose perspective is being taken is important.

Take the societal perspective – taxpayers are funding this intervention.

If the cost is massive, but the increase in the quality of your life is small, then perhaps society shouldn’t fund the drug.

What if introducing the drug changes both the direct and indirect costs of making you better, but it makes you more productive, allows you to pay more tax, invest and save more, and so forth? All of these are considerations in allowing the introduction of a new health technology like a drug.

There will typically be a ‘threshold’ you have to meet in terms of the cost per quality-adjusted life year.

In Ireland, that threshold is €45,000 per quality-adjusted life year, and is more generous than other jurisdictions, meaning we’ll typically fund more interventions than in, say, Britain or France.

Now change the perspective to the individual. The calculation might work for a very rich person, but not for a poor one, which is why, in the US, the cost of end-of-life care for very wealthy individuals has skyrocketed.

Now, take the perspective of the future.

Should you fund an intervention for an eight-year-old or an 89-year-old? Who will benefit more?

Let’s say the new drug only makes a real improvement to the lives of 10 per cent of those suffering from whatever it is this stuff cures.

By not approving it, you aren’t harming all of those who have this chronic condition. You only harm that 10 per cent.

Before introducing the drug, you don’t know which 10 per cent because you don’t know who those people are, and they don’t know if it works on them either.

If you do introduce the drug, but decide later to withdraw support based on the fact that only 10 per cent of sufferers actually benefit, you can be sure the people you’ll hear from are those lucky ones in the 10 per cent, whose lives you threaten to wreck with your decision.

The uncertainty around the efficacy and clinical effectiveness of the drug is really important, and when people try to think about these things, they think about them in terms of the actual population that might be affected, and the conditions those people will actually take the drugs in.

So, say you need to take the drug in a sterile room flanked by hospital consultants. That obviously changes the costs of administering the drug.

It’s really inconsistent. We don’t ask what the cost-utility measurements are for loads of existing interventions, just new ones.

We’d learn a lot about the true costs of medical care in Ireland if we did.

What if it turns out we’re not resourcing A&E beds the right way, or if defibrillators aren’t worth having everywhere, or the costs borne by home-carers requires a much, much greater subvention because of the amount of money they save the State?

Technology and politics matter too. Thanks to heavy subsidisation in the US in particular, so-called orphan drugs have been developed, targeting very small groups of patients suffering from thousands of identified rare diseases.

From the pharmaceutical company’s perspective, orphan drugs are a low-volume, high-margin market, amenable to public funding typically through well organised advocacy group pressure.

One reason why orphan drugs are being developed so quickly is the cost-utility analysis they perform is the difference between nothing and something, which is always a positive.

Comparisons are important. I happen to suffer from asthma. If a new inhaler came out, it would have to show a large improvement relative to the one I’ve been taking for the last 30 years. Not having that comparison means these are much more likely to get approved.

The politics are truly toxic.

Politicians, fundamentally, are intelligent, hard-working, hopeful people who want to make things better for their counties and their country.

The current Minister for Health is a great example. Each technical argument I’ve advanced here pales instantly in the face of a sufferer of a rare disease, which any human being would love to help alleviate.

But the minister has to think not only of the individual, but the system as a whole, and the public purse he is charged with managing to the benefit of all of society.

It is the societal perspective that matters ultimately, but ministers are all too human.

Faced with a chance of benefitting one life directly, while potentially taking resources away from many others, some ministers may opt to save the life and damn the cost. But we all pay that cost, one way or another. More rational mechanisms are required, and more rational mechanisms exist. Let’s use them.