Free The Price of Everything by Eduardo Porter Page B

Health, said pecuniary interests drove pharmaceutical companies’ protests. “They say it won’t be useful, but they make no effort to reduce the price of the vaccine.”
    The provision of health is awash in such cost-benefit calculations, as governments allocate limited budgets among new drugs and therapies streaming out of the world’s labs. In 2005 New Zealand’s Ministry of Health declined to fund a universal vaccination program against pneumococcal disease that would cost about 120,000 New Zealand dollars for each year of life gained in good health by the inoculation. It approved funding two years later, when the manufacturer proved that a program could be carried out for 25,000 New Zealand dollars per year of life.
    The British government, which since World War II has provided health coverage for its citizens free of charge, has been the trail-blazer in systematically applying cost-benefit analysis to its expenditures on health. It started in the late 1990s, when the erectile dysfunction drug Viagra appeared on the market and officials at the National Health Service worried that the new wonder drug would bust the government’s health budget.
    These days, the National Institute for Health and Clinical Excellence—or NICE—follows a standard set of guidelines to determine which drugs and procedures will be covered. Anything that costs less than £20,000 per year of good-quality life is approved. And except in very rare cases, the health service will not pay more than £30,000 per year of added life. The practice has spread around the world. The Canadian Agency for Drugs and Technologies in Health makes recommendations to the nation’s provincial drug plans on the cost-effectiveness of new drugs. From Australia to the Netherlands to Portugal, economic evaluations are mandatory for the approval of treatments.
    The World Health Organization has developed general thresholds for countries around the world. It deems treatments very cost-effective when each year gained in good health costs less than the nation’s economic product per person, cost-effective when such a quality-adjusted life year costs one to three years of GDP per capita, and not worth the investment when it costs more than that. This metric would suggest that governments in countries like Argentina, Brazil, or Mexico should afford treatments if they cost less than $29,300 per QALY, in 2009. Their poorer neighbors, like Bolivia and Ecuador, should only afford interventions costing up to $13,800. The rich countries in the hemisphere, the United States and Canada, should be willing to invest up to $120,000 per year of good life gained.
    Yet decisions based on cost-benefit calculations are never easy. In 2008 it seemed straightforward for NICE to reject paying for Sutent, Pfizer’s newfangled pill for kidney cancer that cost about £3,139 for a six-week regimen and usually extended life by less than a year. This meant it generally cost more than the agency’s £30,000 limit per “quality adjusted” year of additional life.
    But the storm of public protest that ensued was deafening. A British tabloid, the Daily Mail, called it a “death sentence” for those suffering kidney cancer. And NICE backtracked, approving Sutent for some patients on the grounds that “although it might be at the upper end of any plausible valuation of such benefits, in this case there was a significant step-change in treating a disease for which there is only one current standard first-line treatment option.” The investment, in fact, would not be too large. Fewer than seven thousand Britons suffered this kidney cancer and Sutent would be suitable for only about half of those. Moreover, Pfizer also offered to pick up the tab for the first six weeks.
     
     
    IT’S HARD TO overcome the belief that we are entitled to all the health care we need. During President Obama’s push to reform American health insurance, the White House reminded its allies never to use the dreaded