Ultimately, governing is choosing the best option for society given many competing alternatives and scarce resources. What is best for society might not be best for individual groups within society, however. When you are about to decide to harm a section of the population by action, or inaction, you need robust evidence. And how robust is that evidence? How do you evaluate an emotional claim?
Cystic fibrosis is a genetic condition that affects sufferers’ lungs and digestive systems. About 70,000 people worldwide have it. Ireland’s 1,200 cystic fibrosis sufferers have lobbied for years for specific treatments from the state, with some notable successes including specialised hospital facilities, and some treatments.
In each case, the taxpayer, via the state, comes to the rescue of a group of citizens whose only fault was to be born. This is correct and right. The price you pay with your taxes is not just social services. It is also civilisation. So my taxes help you, and your taxes help me. Very often we forget this important circularity when discussing individual issues such as public sector pay or universal social charges.
In general, we do not try to understand the full cost - salaries, pensions, terms and conditions - or benefits - economic, social, civil - to the exchequer of public sector workers. Ditto for universal social charges, and every other public policy issue. It’s usually because we don’t have enough information.
Back to those suffering from CF. Advances in medical research mean that someone born with CF in the 1950s would have been very lucky to live long enough to finish school. Now they can live well beyond their adolescence, with the median age of all CF sufferers in the mid 30s. Across the world, the median predicted age of survival is between 34 and 47 years. Technology has given CF sufferers a chance at a doubling of their life. It’s important to note that the median age of death across the world remains in the mid-20s.
I have been lucky to teach several CF sufferers at the University of Limerick, so I have a small understanding of the privations the disease imposes on them. (They were less lucky to have me lecturing them economics, in fairness.)
The drugs Orkambi and Kalydeco have been developed for CF sufferers by a single company, Vertex Pharmaceuticals. Vertex spent billions over a 15-year period developing these drugs, which target a sub section of the CF population with a particular combination of mutated genes. This means not every sufferer of CF can get even partial relief of their symptoms using these drugs. In Ireland, we’re talking about 500 plus people affected.
You demonstrate clinical effectiveness by comparing your new treatment to either a placebo (a sugar pill) or the next best available alternative if a drug exists. If there are alternatives, the calculation of whether the drug is useful becomes much harder to establish.
If you can show a positive effect in repeated clinical trials, you may have a drug you can get regulated, and sell, typically to the state for distribution to its citizens.
Orkambi and Kalydeco are ‘orphan’ drugs, which are developed using vast subsidies from the US government to target very small groups of patients, so there usually aren’t any other available treatments. Because any treatment is typically seen as being better than no treatment, governments are lobbied intensely to fund the provision of these drugs. The cost of the US subsidies is then passed on to taxpayers across the globe. This is how medical research finds its way into the realm of political economy.
The pharmaceutical company’s target market is very small, but a successful treatment means they will enjoy a captive market for many years. The only way to recoup the cost of the drug’s development is by charging very high prices. When I say ‘very high’, estimates in the US are $147,000 per patient per year. In Ireland, the HSE has estimated the annual impact of Orkambi at up to €392 million over five years. Vertex disputes the HSE’s estimate, but doesn’t give a better number as an estimate.
A matter of life and death
In two clinical trials, with 366 people in the first trial, and 377 in the second, Vertex showed 2.6 per cent and 3 per cent increases in lung function, increases in weight, and a 30 per cent and 40 per cent reduction in the chance of their lungs worsening.
The upshot of all this is, that for a subsection of a small population, there is a very expensive new treatment that may alleviate some of their symptoms and potentially prolong their lives. Five hundred-plus people, Irish citizens who you may know, who may have passed you in the street, who we as a society now have the potential to help live a longer, better life. It is, literally, a matter of life and death.
How do you decide whether to agree, on behalf of the taxpayer, whose interests you are charged with upholding, to fund this medicine?
Orkambi was rejected because the economics of developing and marketing orphan drugs don’t work for small open economies such as Ireland
Remember that, ultimately, governing is about choosing the best option for society given many competing alternatives and scarce resources. Spending €392 million per year on 500-plus people is one choice the government could make. There are many others.
One way to think about funding Orkambi or any other treatment is to calculate a Quality-Adjusted Life Year measurement. Imagine you’re a 30-year-old woman with a chronic disease. Statistically, you can expect to live into your mid 80s or so, even with this disease. Say a drug is developed that can change the quality of someone’s life and their happiness for the next 50 years dramatically. The quality-adjusted life year score goes up.
For ‘utility’ read ‘happiness’
It is possible to simultaneously incorporate positive 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’) which comes from the increase in both your life and your quality of life in euro amounts.
Here, perspective matters a lot. 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. Funding one expensive drug is money that could have been used elsewhere and for other reasons.
It’s not a simple calculation. 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.
Take some extreme examples. Some drug can make you live one day longer, but it is €1 billion per person per year. The state spends €70 billion on everything it provides. So you’re probably not going to say yes to funding that drug through the healthcare system because the cost is so much higher than the benefit. Now imagine another drug where the cost is €1 per person per year and this other drug will enhance and prolong your life for decades. Funded instantly. Reality is in the middle. It might seem like life and death are being measured by thresholds in some ratio.
€15m to help 18 children
Now a very concrete example. The drug Kalydeco was submitted to the Irish National Centre for Pharmacoeconomics for approval of the treatment of children aged two or over. It was rejected. There were 18 patients who could have benefited. Over five years the gross budget impact was somewhere between €15.3 million and €22.7 million.
Would you pay €15 million to help 18 children?
Advanced economies such as Ireland and Britain typically devolve decisions on calculating the cost and effectiveness of new drugs to agencies, and these agencies have a cut-off threshold of how many euro per quality-adjusted life year they are willing to pay. In Ireland, that number is €45,000 per quality-adjusted life year. It doesn’t vary that much among countries, but Ireland is seen as being pretty generous by international standards.
Orkambi and other orphan drugs increase the cost per quality-adjusted life year into the hundreds of thousands, so Britain’s agency, the National Institute for Clinical Excellence, turned down Orkambi in June of this year.
Recently, the Irish National Centre for Pharmacoeconomics also turned it down. Companies such as Vertex, which develop orphan drugs, argue the thresholds used for calculating the incremental cost effectiveness of orphan drugs are too low.
They argue that you can’t treat a drug that might help thousands across the globe, that took 15 years and billions of dollars to develop, in the same way as an aspirin. Personally, I can’t see how even doubling the threshold to €90,000 per quality-adjusted life year for orphan drugs would make Orkambi viable in the Irish context.
There is a deep unfairness here. New drugs need to pass stringent cost-effectiveness tests. Older drugs and treatments which have been around for a very long time have not been subjected to a similar process.
Orkambi wasn’t rejected because it didn’t work at all. It wasn’t rejected because the people involved aren’t interested in helping their citizens live longer. Orkambi was rejected because the economics of developing and marketing orphan drugs don’t work for small open economies such as Ireland. Even banding together as part of the European Union and negotiating en bloc may prove unsustainable.
The conclusion is not just sobering. It is horrifying. We have chosen, among competing alternatives, to potentially shorten some citizens’ lives by not acting. And it may be the right choice, unless the price comes down. That is government in the 21st century.