The priceless conundrum in healthcare

Pricing the Priceless: A Health Care Conundrum

Allocating resources in health care is a pivotal taks and three tools are used to solve it: market, government and professionalism. Briefly, in the market, prices paid would try to reflect information needed to take a decision for the supply side and demand side (hypotetically). Government allocates resources according to information of a benevolent ruler (biased and incomplete information). Professionals decide over the need of care according to "rules and guidelines" and specific patient situation (hypotetically).
As you may imagine, all these three approaches are used everyday in every health system in the world, and unfortunately they are imperfect, basically due to asymetric and incomplete information on one side, and incentives on the other.
Joseph Newhouse wrote a book fifteen years ago, that summarized many of these conundrums. The first is that we don't find prices, we find "administered prices" in health care, those set by insurers (private and public), and:

Setting administered prices is inevitably fraught with error, and because of lags in adapting to technological change, the extent of the error increases as pricing systems age.

This is reason why today we use the term payment systems instead of pricing. Payment systems try to combine different dimensions beyond price, sometimes volume, sometimes quality. Basically they want to correct the error of administered prices.
Unfortunately, the book finishes with a worrying  statement:

This is the conundrum of medical pricing; all arrangements that can be implemented have important drawbacks. Although variation in ideology plays a role in the payment methods that different countries use, the wide variation in institutional arrangements around the world as well as the ongoing efforts at attempting to reform and improve those arrangements in almost every country are consistent with that conundrum.

My impression differs a little bit, it is not and ideological issue. Payment methods differ because risk transfer may be possible or not. In a public system, finally the State assumes all the risk. In a private system, providers  market power may reduce the opportunities to transfer such risk.  Professionals in a public and private system don't assume financial risk, they decide but it is finally transferred to insurers and providers. Nowdays, the issue is still open for debate.

Pasimonious medicine

PRÁCTICAS CLÍNICAS EVITABLES: EL COSTE DEL DESPILFARRO

Tilburg and Cassel wrote in JAMA

Parsimonious medicine is not rationing; it means delivering appropriate health care that fits the needs and circumstances of patients and that actively avoids wasteful care—care that does not benefit patients

And Austin Frakt answered in his blog:

Perhaps the consequences of what they support with good intention will include rationing. Perhaps it’s hard to achieve parsimony with out at least a touch of it. If that’s the case, how much rationing will we tolerate to achieve some additional efficiency? Keep in mind, today we have a high level of rationing by ability to pay and a low level of parsimony. (in USA)

Unfortunately we don't now the level of parsimony in our health system. But if you want to know the size of the waste  in spanish health system, these are some figures for primary care:

El estudio APEAS cifraba en 10,1 por 1000 visitas los eventos adversos en atención primaria de los que un 7,3% graves y un 70,2% evitables (40), mientras que el ENEAS los cifraba en 9,3% por cada 100 hospitalizados, con un 16% graves y 42,8% evitables (41). Mientras que ambos estudios tendían a minimizar el impacto de estas cifras, los 300 millones de visitas no urgentes anuales en atención primaria resultarían en 3 millones de efectos adversos anuales, de los que casi 300.000 graves y al menos 2 millones evitables. En el caso de la hospitalización, los 5,2 millones de hospitalizaciones del año en que se realizó el ENEAS ofrecerían cifras de 450.000 efectos adversos anuales, de los que 90.000 serían graves y unos 200.000 evitables. Estas cifras situarían los eventos adversos derivados de la atención sanitaria como la probable tercera causa de morbi-mortalidad en nuestro país, tras las enfermedades cardiovasculares y el cáncer.

And regarding hospitalizations,

Diversos estudios publicados en la década del 2000 cifran en torno al 10-15% la cuota de este tipo de ingresos hospitalarios sobre el total de hospitalizaciones producidas en España en los años estudiados (42-46). Este porcentaje sería aún mayor para los ingresos por hospitalizaciones evitables en enfermedades crónicas estudiados más recientemente por el grupo Atlas de Variaciones en la Práctica Médica

And the figures for inappropriateness and low value care are more diffiuclt to estimate, though:

En España se han realizado numerosos estudios sobre utilización inapropiada de la hospitalización con cifras que sitúan este problema alrededor del 10% de las admisiones y el 30% del total de estancias hospitalarias

And only one example regarding pharmaceuticals

Añadir lapatinib a capecitabina en el tratamiento en segunda línea del cáncer de mama permite ganar, en promedio, 0,3 meses (10 días) de supervivencia con respecto al tratamiento previo con solo capecitabina, con un coste adicional de 18.298 € (60.996 € por mes de vida adicional) (59). Estas cifras implicarían que socialmente estamos dispuestos a pagar unos 732.000 euros por cada año de vida adicional ganado y, si se tiene en cuenta la baja calidad de vida de estos días ganados en la fase final de los procesos oncológicos, probablemente estaríamos hablando de cifras superiores a los 2 millones de euros por año de vida ajustado por calidad (AVAC o QALY) ganado con la incorporación de este tratamiento a este precio a la cartera de servicios.

If we as a society, we are not able to solve the rationing puzzle, then we could start by a more parsimonious medicine. You'll find more details in the chapter by S. Peiró in this book (p.273).
After reading this chapter, you'll be more concerned than before.

Garry Winogrand

Responsible corporate governance

A Skeptical View of Financialized Corporate Governance

Corporate governance practices need to improve, though the approach to fix it is still a work in progress. The last recession gave us multiple examples of irresponsible corporate governance, but few actions have been taken to reverse the trend. A recent article shows how this misallocation of risk and resources should be addressed:

Effective governance requires that those in control are accountable for actions they take. However, those who control and benefit most from corporations' success are often able to avoid accountability. The history of corporate governance includes a parade of scandals and crises that have caused significant harm. After each, most key individuals tend to minimize their own culpability. Common claims from executives, boards of directors, auditors, rating agencies, politicians, and regulators include "we just didn't know," "we couldn't have predicted," or "it was just a few bad apples." Economists, as well, may react to corporate scandals and crises with their own version of "we just didn't know," as their models had ruled out certain possibilities. Effective governance of institutions in the private and public sectors should make it much more difficult for individuals in these institutions to get away with claiming that harm was out of their control when in reality they had encouraged or enabled harmful misconduct, and ought to have taken action to prevent it.

 Public and private organizations are affected and these are the author's "skeptical" suggestions:

The key to improving corporate governance is to increase transparency, create better internal and external control and accountability, and address distortions and inefficiencies through effective laws and regulations.

Society should demand such change, though laws in regulations are not enough. As Foucault reminds us from roman culture, infamia is a crucial measure. Nowadays,  power and money through the media are able to stop infamia too often.

Bjork digital now in Barcelona

Health care priorities in practice

Implementation of the 2013 amended Patients’ Rights Act in
Norway: Clinical priority guidelines and access to specialised
health care

Norway decided to update their system to set health care priorities. In 2013, the Patient Rights Act was amended to simplify the priority setting process for specialized elective health care and to improve access to care. And now, this is what they have:

Priority for treatment is now determined by only two criteria: 1) clinical effectiveness; and 2) cost-effectiveness of the intervention. There are 33 clinical priority setting guidelines organised by medical specialty, which help hospitals evaluate whether individual patients have a right to access care.
The revised guidelines define and score a total of 556 condition-intervention pairs, and will give all patients who are evaluated as having a need for specialist elective healthcare the right to access these services

Health policy must define priorities, it is not only a professional issue. Unfortunately by now, in our country are quite far from Norway, geographically and politically.

People on the waiting list? In Catalonia there are 736.000 citizens (10% of population) waiting for an appointment, test or hospitalization. SOMEBODY SHOULD SOMETHING

Weegee by Weegee in Barcelona

A quantum leap in biomedicine

Correction of a pathogenic gene mutation in human embryos

Today you should have a look at Nature. The reason is genome editing of human embryos. Although a chinese team performed something similar in 2015, right now the details are clearly explained. The trial has been developed to fix a mutation that causes hypertrophic cardiomyopathy.If you don't want to read the whole article, check the news. Genome editing is gaining momentum as I said some months ago, it is closer than you may think.


PS. Why FBI is concerned about CRISPR? The answer in FT Big Read
PS. The news in FT.
PS. A useful article from Nature 2015:

Genome editing: 7 facts about a revolutionary technology

What everyone should know about cut-and-paste genetics.

• Lucy Odling-Smee,
• Heidi Ledford
• & Sara Reardon

30 November 2015

Article toolsediting is in the spotlight again as a large international meeting on the topic is poised to kick off in Washington DC. Ahead of the summit, which is being jointly organized by the US National Academy of Sciences, the US National Academy of Medicine, the Chinese Academy of Sciences and Britain’s Royal Society and held on 1–3 December, we bring you seven key genome-editing facts.

Yorgos Nikas/Science Photo Library

Human embryos are at the centre of a debate over the ethics of genome editing.

1. Just one published study describes genome editing of human germ cells.

In April, a group led by Junjiu Huang at Sun Yat-sen University in Guangzhou, China, described their use of the popular CRISPR–Cas9 technology to edit the genomes of human embryos. Only weeks before the researchers’ paper appeared in Protein & Cell¹, rumours about the work had prompted fresh debate over the ethics of tinkering with the genomes of human eggs, sperm or embryos, known collectively as germ cells. Huang and colleagues used non-viable embryos, which could not result in a live birth. But in principle, edits to germ cells could be passed to future generations.

2. The law on editing human germ cells varies wildly across the world.

Germany strictly limits experimentation on human embryos, and violations can be a criminal offence. By contrast, in China, Japan, Ireland and India, only unenforceable guidelines restrict genome editing in human embryos. Many researchers long for international guidelines, and some hope that the upcoming summit in Washington DC could be the start of the process to create them.

Ramon Andrade 3Dciencia

The CRISPR-Cas9 system makes editing genomes cheap and easy.

3. You don’t have to be a pro to hack genomes.

The CRISPR–Cas9 technology has made modifying DNA so cheap and easy that amateur biologists working in converted garages or community laboratories are starting to dabble.

4. Cas9 is not the only enzyme in town.

A key ingredient in the CRISPR–Cas9 system is the DNA-cutting enzyme Cas9. But in September, synthetic biologist Feng Zhang at the Broad Institute of MIT and Harvard in Cambridge, Massachusetts, reported the discovery of a protein called Cpf1, which may make it even easier to edit genomes².  (Zhang is one of those who pioneered the use of CRISPR-Cas9 for genome editing in mammalian cells).

BGI

A gene-edited micropig created by the BGI in Shenzen, China. 

5. Pigs are on the front line of genome-editing experiments.

Dogs, goats and monkeys are all part of the growing CRISPR zoo. But pigs in particular have been at the heart of several eye-catching announcements — from micropigs that weigh about six times less than many farm pigs, to super-muscly pigs, to a pig whose genome has been edited in 62 places (the aim being to produce a suitable non-human organ donor).

6. Gates, Google and DuPont want a piece of the genome-editing action.

In August, several high-profile investors, including the Bill & Melinda Gates Foundation and Google Ventures, pumped US$120 million into the genome-editing firm Editas Medicine of Cambridge, Massachusetts. Big Agriculture is following suit: DuPont forged an alliance with the genome-editing firm Caribou Biosciences of Berkeley, California, in October, and announced its intention to use CRISPR–Cas9 technology to engineer crops.

Eloy Alonso/Reuters/Corbis

Microbiologists Emmanuelle Charpentier and Jennifer Doudna.

7. The CRISPR–Cas9 system is at the centre of a patent row.

Zhang was granted a US patent on CRISPR–Cas9 in April 2014. But several months before he filed his application in 2012, molecular biologists Jennifer Doudna at the University of California (UC), Berkeley, and Emmanuelle Charpentier, now at the Max Planck Institute for Infection Biology in Berlin, had filed their own patent. UC Berkeley has since requested that the United States Patent and Trademark Office determine who should get credit for harnessing the CRISPR–Cas9 system, in particular for its application in human cells. And a similar debate is playing out in Europe, where oppositions to a patent that Zhang and his colleagues won in February have been filed. All three scientists co-founded companies that make use of CRISPR–Cas9.

Measuring quality of episodes of care

Episode-Based Approaches to Measuring Health Care Quality

I have always thought that all the efforts to link payment to performance need to define first what is the unit of analysis. In my opinion, episode is the crucial one. Unfortunately there are very few settings that are measuring episodes. If performance and value is not linked to the episode, then forget about the impact, it may be anything.
A new article emphasizes the need for episodes in measuring quality, and provides a useful framework:

Episode-based measures could assess changes in health outcomes (“delta measures”), the amount of time during an episode in which a patient has suboptimal health status (“integral measures”), quality contingent upon events occurring previously (“contingent measures”), and composites of measures throughout the episode.

After reading this article somebody should do something (...) on current and available measures of quality.

Parov Stelar new album

Beyond health gain:the value of knowing in precision medicine

Value assessment in precision cancer medicine

Towse and Garrison provide a clear picture of the economics of using drugs with companion diagnostics (precision medicine) in the Journal of Cancer Policy. Three main issues arise:

A. Reducing or avoiding the adverse effects associated with treatment (including the medical and nonmedical costs of man-aging them).
B. Reducing or avoiding time delays in selecting the most appropriate intervention
C. Enabling a treatment effective only in a small fraction of the population to be made available or more widely available.

But there are also psychological gains (difficult to estimate) related to the value of knowing:

1. Reduction in uncertainty reflecting the idea that a companion diagnostic, by increasing the certainty of a patient’s response to a medicine—would be more valuable to individual patients and hence they (or their payer) would be willing to pay more for the combination. Furthermore, as noted above, at the population level, greater certainty could lead to greater uptake and improved compliance.
2. The value of hope is the notion that in some circumstancesindividuals become risk-seekers in the sense that they would be willing to pay more for access to a technology with a long tail indicating that some patients have a much longer survival time than current therapy, even though the average life expectancy may be no greater, or even less, than standard therapy.
3. Real option value for which the best example is that if  a treatment can extend life, this opens up possibilities for individ-uals to benefit from future advances in medicine. Hence, they(or their payer) should be willing to pay more than simply theamount they would pay for a gain in life expectancy alone, ascalculated under conventional methods, because it provides the option of benefiting from further treatments.
4. Insurance value is related to the idea that insurance tocover innovations provides peace of mind, not just by protectingagainst catastrophic financial loss but also by protecting fromcatastrophic health loss. The focus is usually only on financial protection, in the form on an Extended Cost-effectiveness Analysis. Lakdawalla et al. point out that greater value comesfrom the reassurance value of knowing of the existence of a treatment, or even of incentives to develop such a treatment.
5. Scientific spillovers arise because the benefit of scientificadvances cannot be entirely appropriated by those making them. Improving knowledge creates opportunities for additional innovation by others. For example, proving that a particular agentworks on a hypothesized pathway in a particular cancer means that the general understanding of that cancer is enhanced and thus further research can explore other pathways in the same cancer. This creates a commons problem with potential underinvestment, implying that patients may wish to reward developerswith higher prices to encourage knowledge generation.

The authors back value based pricing for drugs and companion diagnostics, just at the same time that The New York Times casts some shadows over this option.

Cantut - El Pomeró

Precision medicine: a deep breakthrough in life sciences paradigm

Bioscience - Lost in Translation? How precision medicine closes the innovation gap

It is not so easy to translate knowledge into practice, and this is the case of biosciences into clinical applications. However, recently this trend is accelerating and precision medicine is emerging. A new book gives us the highlights to understand precisely what's going on: Bioscience - Lost in Translation? How precision medicine closes the innovation gap.

Richard Barker (the author of 2030 - The future of medicine) says:

The classic definition of diseases has been in terms of the symptoms they cause and/ or where in the body they appear. This was the best that medicine could do when external observation of the patient was the only or primary means of diagnosing disease. The  powerful new tools of molecular biology are reinterpreting disease in terms of aberrant,
defective, or unbalanced molecular mechanisms at the cellular, organ, or organism level. Molecular level diagnosis becomes a real possibility. Such an approach brings effective therapy immediately closer. Molecular diagnostics can separate diseases with similar symptoms but different underlying causes— and often suggest a different starting point for intervention.

If this is so, what should we do?

The seven changes of mindset and of practice are:
1. Advance the molecular definition of disease and the application of systems biology. We need a more decisive move from a classic definition of diseases— in terms of the symptoms they cause and/ or where in the body they appear— to a definition in terms of aberrant, defective, or unbalanced molecular mechanisms at the cellular level. And we need to marry this with a recognition that singular target- based innovation rarely works: we need a systems biology approach.

2. Partner academia and industry in more collaborative, impact- oriented research. We need to extend the ‘open innovation’ approach in which academia and companies invest together and share IP. We need to define new pre- or non- competitive spaces, especially in work on disease mechanisms and disease models. And we need to provide for new types of links and incentives to break down the barriers between these two worlds. 

3. Move decisively to a more adaptive approach to development, trial and approval design. We need to build on successful experiments in more flexible trial design, development pathways, and regulatory appraisal to a globally accepted adaptive approach. This involves collaborative design of the evidence package needed to secure approval and reimbursement, and greater teamwork through the process. 

4. Create new reward and financing vehicles for leading edge innovation. We need to move from reward systems based purely on unit sales of products, irrespective of outcome, to rewarding innovators for positive outcomes, patient by patient. We also need to design financing mechanisms that bridge between cost- effectiveness and affordability. We must be able to accommodate high- cost precision therapies that offer cures and so generate long- term returns for the system.

5. Engineer tools and systems for faster and better innovation adoption and adherence. We need to move from reliance solely on promotion to doctors and passive patient participation to a disciplined approach to establishing new pathways of care. These will be based on modern behavioural science, clinical decision support, and other digital technologies.

6. Develop an infrastructure for real- world data- driven learning. We now have the opportunity to study in large populations how lifestyle and treatment choices lead
to outcomes, learning from every patient as if in a clinical trial. New analytical tools will empower this.

7. Bring patients into the mainstream of decision- making and engage them  hole heartedly throughout the process. It is time to move from a process and mindset in which patients are regarded as passive subjects for clinical trials and recipients of products and procedures. Their input and engagement needs to be sought along the whole innovation chain: on treatment benefits, acceptable risks, optimal clinical trial design, adherence support, and outcomes.

Highly recommended.

In search of the balance between government and market

THE LIMITS OF THE MARKET: The Pendulum between Government and Market

Thirty years ago I bought a book that was a key reference MARKETS OR GOVERNMENTS : CHOOSING BETWEEN IMPERFECT ALTERNATIVES. The focus was clear, the government should enter when there is a market failure and try to curb it. This was the message and has been the message for many years. Now we know that the approach was too simplistic. If you want to understand an updated approach to the same issue, check the new book by Paul de Grawe, THE LIMITS OF THE MARKET: The Pendulum between Government and Market. A well written and accessible book that helps to remake the arguments with the evidence of the past years. The chapters:

The Great Economic Pendulum
The Limits of Capitalism
External Limits of Capitalism
Internal Limits of Capitalism
The Utopia of Self-Regulation in the Market System
Who can Save the Market System from Destruction?
External Limits of Governments
Internal Limits of Governments
Who is in Charge? Market or Government?
Rise and Fall of Capitalism: Linear or Cyclical?
The Euro is a Threat to the Market System
The World of Piketty
Pendulum Swings between Markets and Governments

At the end of the book there are two issues that concern the author: inequality and the degradation of environment. The need for internation cooperation on taxation is critical for the first issue, and the functioning of democratic institutions for both. His final comment is a call for action:

The Myth of Sisyphus

Sisyphus was a Greek king who felt stronger and wiser than Zeus, and was punished for his hubris. He was sentenced to push a rock up a mountain every day, after which the rock would roll back down each evening. The following day Sisyphus had to start all over again, continuing for eternity. In his essay The Myth of Sisyphus Albert Camus gave an existentialist interpretation of this well-known Greek myth. Camus sees Sisyphus’s punishment as a metaphor for the absurdity of life. How should we deal with this absurdity, he wonders? One option is to commit suicide. Camus rejects this option. Instead he suggests that we should rebel against the absurdity of life by throwing ourselves into it, living intensely, and being creative. The revolutionary hero is the one who despite the absurdity and knowing that his rebellion will eventually achieve nothing, still sets the rock in motion and remains happy. ‘Il faut s’imaginer Sisyphe heureux’ (‘One must imagine Sisyphus happy’), Camus decided.
That is the position I would like to offer as a guiding principle for the end of this book. It will be extraordinarily difficult to prevent future catastrophes. It may even already be too late. (I am at least a little more optimistic than Albert Camus with his Sisyphus interpretation, which is very bleak indeed.) We have a small chance of preventing decline with the reforms I outlined above. But even if that does not work, we are left with the option of doing as Sisyphus did, of starting again each day. It is the only way of giving meaning to our existence. If we do not take action, our grand children will not forgive us for failing to try to save them. That in itself is sufficient motivation to persist.

Transforming the practice of care in the most inefficient and wasteful health system

The Smart-Medicine Solution to the Health-Care Crisis

Eric Topol provides clear insights for a wide range of life sciences issues, and some days ago he insisted once again on the need to reform US health system. Everybody is talking about financing and acces, and he focuses on organization. That's good to hear. I suggest a close look at the WSJ article. Although the scope is US, you'll find many comments that are absolutely useful for our health system (the public and specially the private one).

Our health-care system is uniquely inefficient and wasteful. The more than $3 trillion that we spend each year yields relatively poor health outcomes, compared with other developed countries that spend far less. Providing better health insurance and access can help with these problems, but real progress in containing costs and improving care will require transforming the practice of medicine itself—how we diagnose and treat patients and how patients interact with medical professionals.

And he backs a smart medicine practice:

Smart medicine offers a way out, enabling doctors to develop a precise, high-definition understanding of each person in their care. The key tools are cheaper sensors, simpler and more routine imaging, and regular use of now widely available genetic analysis. As for using all this new data, here too a revolution is under way. 

And the key integrative tool:

At the Scripps Research Institute, we are working with the support of a National Institutes of Health grant and several local partners to develop a comprehensive “health record of the future” for individual patients. It will combine all the usual medical data—from office visits, labs, scans—with data generated by personal sensors, including sleep, physical activity, weight, environment, blood pressure and other relevant medical metrics. All of it will be constantly and seamlessly updated and owned by the individual patient.

Good news (US only):

 Fortunately, serious ventures in smart medicine are well along. My colleagues and I at the Scripps Research Institute are leading the Participant Center of the NIH’s Precision Medicine Initiative, which is currently enrolling one million Americans. Volunteers in the program will be testing many of the new tools I have described here. The recently formed nonprofit Health Transformation Alliance, which includes more than 40 large companies providing health benefits to 6.5 million employees and family members, intends to address the high cost of health care by focusing on, among other things, the sophisticated use of personal data.

I have to say that his position is well grounded, it is not a fascination for technology. The true health reform starts with the practice of medicine. Completely agree.

Fotopres

Critical thinking in medicine

Testing Treatments
Els Tractaments, a prova

If you are interested in critical thinking about treatment claims, then now it is the time to read this book in english and catalan. You'll understand:

Why do we need fair tests of treatments?
What are fair tests of treatments?
What can be done to improve tests of treatments?
How can YOU help to improve tests of treatments?

And you'll find a review by Xavier Bonfill at Annals

Health as the capacity for action

The Patient as Agent of Health and Health Care.

Autonomy in Patient-Centered Care for Chronic Conditions

Currently the concept of health as the absence of disease is absolutely outdated. The goal of clinical care has moved towards health-related quality of life. I have to admit that this is more an aim than a reality, but many professionalos share this view. If this is so, then considering health as capacity for action becomes critical. Mark Sullivan explains this view in an outstanding book, specially on part 3 and 4.

The turn to HRQL arose from the recognition that observable characteristics of the body could not provide an adequate account of the overall burden of chronic disease on individual patients or on the population as a whole. But the HRQL concept merely tried to add the experience of the patient to a notion of health defined by observable damage to the body or objective disease. It is not adequate to talk about the subjective experience of objectively defined health states. Health is not an objective state because neither death nor disease are always bad for patients. Most patients now choose to limit the medical care they receive at the end of life because they do not see death as the worst possible outcome. Similarly, it is possible for older adults to live well despite multiple chronic diseases. HRQL has not provided a fundamentally new metric for health and has not succeeded in redirecting clinical trials or activity to a more patient centered set of goals.

Any adequate, comprehensive, and valid approach to health must focus on personal agency, or the capacity of the person to achieve his or her goals. This is the only way we will understand and achieve individual well- being. This personal agency is both a means to well- being and an intrinsically valuable component of it. We conceptualize health and well- being as capabilities rather than as objective or subjective states: “our capability to lead the kind of lives we have reason to value.” To explore and define a new sense of health as agency, we will need to understand the various ways in which health and action are related.

A deep view of bioethics and the concept of health, all together. Good read for this summer.

The value of lab testing in precision medicine

The Value of Diagnostic Testing in Personalized Medicine

Before Jevons, economists were unable to think on marginal terms. If price should be related to marginal utility, then cost pricing nowadays is outdated. However, when someone suggests value pricing, you must ask immediately about what is value for him, and maybe it is not the same than for me. A paper on lab testing and its value suggests the following:

The value of a diagnostic arises not because of its direct effect on a patient’s health but because of the information it provides on a patient’s likely response to a particular therapy. Personalized diagnostic testing reduces – though does not eliminate – the trial-and-error associated with empirical medicine, where physicians and their patients try an initial set of therapies and decide to continue or discontinue them on the basis of realized efficacy and side effects. In this manner, personalized diagnostic tests transform medical care from what economists call “experience goods,” whose quality can only be determined through consumption, to “search goods,” whose quality can be learned before  consumption

Personalized diagnostic testing offers several advantages over an empirical, trial-and-error approach to medicine. These benefits include the avoidance of side effects, potentially reduced financial costs of therapy (e.g., if a patient is identified as a likely nonresponder to an expensive therapy and the alternative is cheaper), potentially reduced opportunity costs of time – not just in terms of physician visits but also time lost on an ineffective or even harmful treatment, and improved or earlier access to effective care. Not only do patients receive value from personalized testing and treatment, but providers and health care systems benefit by avoiding ineffective, or wasteful, health care that accompanies less targeted, traditional treatment approaches. Specifically, a diagnostic test will be most valuable when the therapy being evaluated is expensive relative to alternatives, when side effects are frequent and severe (thereby making the empirical approach relatively less safe), and when delay from an alternate therapy can severely harm an individual’s health (e.g., metastatic cancer)

The concept is clear, its measurement is still uncertain.

Is there any justification for interventions that aren't cost-effective?

Ethics, priorities and cancer

This is one of the most challenging questions nowadays. Anthony Culyer sheds light n this difficult issue in a recent article applied for cancer care. These are his nine  arguments:

Argument 1: the whole health maximisation assumption underlying the approach is misconceived. health care is about more than just promoting health. Other objectives commonly include financial protection (e.g. from the out-of-pocket expenseof costly interventions), innovation, and all those listed earlier
Argument 2: innovation is stifled by the strict application acost-effectiveness threshold that is too low
Argument 3: the use of standard outcome measures, like theEQ-5D QALY or averted DALYs, underestimates the health benefits of cancer treatments
Argument 4: the assessment of benefit excludes the beneficial effects that treatment and its consequences have on those who care for cancer patients
Argument 5: the opportunity cost argument is weak. There are always efficiency savings that can be found in any systemwhich mean that the alleged sacrifice of health represented by the threshold is spurious. the actual sacrifice is much smaller
Argument 6: cancer is a scary disease and people who suffer from it deserve to have access to treatments that would fail aconventional cost-effectiveness test
Argument 7: for some cancer patients a costly and not very effective treatment may offer a “last chance” to someone in despair. such a situation might exist if no intervention of any kind existed for these patients or if the patient suffered from a rare form of cancer
Argument 8: cancer is a “severe” disease and should accordingly be given a higher priority than less severe diseases
Argument 9: many cancer patients have a short life expectancy even with treatment. a quasi-utilitarian argument might cite the law of diminishing marginal value: even small gains for such people are to be valued more highly than the same gains of equivalent quality of life for people with an already long expectation of life. alternatively, there is the more direct emotional appeal “Our moral response to the imminence of death demands that we rescue the doomed proof"

These arguments fall into two broad groups. Some are questionsof social value: how should we value health gains of particular kindsand should we value them differently according as they accrueto different people? Others are questions of fact: would informa-tion about the quantitative size of the effects in question lead us to conclude that cancer is indeed a special case? The burden of proof in both cases lies with those making the assertion that cancer is, indeed, special. That burden of proof is not impossible to bear.

Is cancer a special case? The question may apply to many diseases and will provide more difficulties than answers. In the end any analysis relies on distributive justice principles and according to different views you'l apply different prioritisation criteria.

PS. The article was published in a cancer journal. I was surprised by the new perspective by Tony Culyer.

PS. What do you think about a new cancer inmunotherapy service that may cost $750.000???

Le Corbusier Guitariste (1960)

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