Cost-Effectiveness of Meningitis Vaccine

Generally preventative medicines have a good shot at being cost-effective. They prevent hospitalizations, medical/ surgical procedures, additional medicines, etc. The trade-off is that vaccines need to be given to everyone who can get the vaccine for it to be effective. Like the flu vaccine ads say,"don't get it for you-- get it for ___ (insert name here)___" highlighting how getting a vaccine not only protects the person who gets it-- but also the all of the people who that person comes in comes in contact with.

What we don't want to see is the resources a vaccines saves in illness care for the small number of people who are infected, get made up for in the quantity of people having to get the vaccine (albeit, the vaccine is much less expensive than the medical treatment treating the disease). This is the case when the vaccine is very expensive and the disease the immunization protects against is relatively rare.

As a recent NPR piece highlighted, the bacterial meningitis may be in the position discussed. At first the vaccine was only given once and cost $100. Now ACIP (Advistory Committee on Immunization Practices) is recommending a booster-- which raises the cost to $189. NPR states that this would cost the government $387 million annually. All of this is estimated to prevent only 23 deaths per year. Is that okay? If all 23 deaths were people covered by government health care-- that would be more than $16 million per life saved. If you included what other non-government entities were spending on the vaccine- the cost would be even higher--since there are still only 23 deaths per year. Is that an acceptable amount to pay to save a life given the fact that there are budgetary constraints?

From the article:

....experts can't solve the fundamental problem of how to put a dollar value on preventing death or disease, says Mark Pauly, a health economist at the University of Pennsylvania.

"You do have a rough idea that if it's $1.98 per life saved that sounds like a good thing to do and if it's $198 million per life saved, that sounds like not a good thing to do," he says. "But where to draw the line is the part that any sensible person will run away screaming from trying to answer that question."

Excess spending on end of life care

Chris sent me this article- and it was pretty interesting!

This describes a problem well-known to those who know anything about health care expenditures. I remember a vague statistic from my Health Economics course-- it was something like a third of all personal health care expenditures are spent at the end of life, on average (don't quote me on that). While it may not be a third, I think we can safely say it's a disproportionate amount of money...

Given that I have a degree in the dismal science, I'm about to get all dismal on you-- but just think about this without thinking about the morbidity of it:

When you think about how you want to die, you probably don't envision your death dragging out over months and months while you whither away. However, by spending ourselves into the ground (or under it?) we do just that-- we pay for treatments that keep us alive for a marginal amount of time while we suffer.

As you're probably already thinking-- this is pretty tricky. Ideally you would know which disease would be your final, and you would know not to pursue any additional treatments that would prove to be fruitless-- as they would only drag out your suffering (which, it is assumed, is not your goal). Anyway- you would know to just stop, and enjoy your time on Earth doing the things you like to do and spending time with the people you love.

As far as spending goes-- yes, we'd like to reduce end-of-life expenditures (we'd like to reduce all types of expenditures really)... but the problem is that you never know when the "end" really is. This really just adds fuel to the cost-effectiveness fire- and makes it even more of an important and critical type of research. If we're not wasting time or resources of treatments that are just not effective or worth spending money on, we can theoretically give the best reasonable care, while still being fiscally responsible.

C-sections galore!

NPR ran a story on the air today describing the increased rates of Caesarean section births in developing nations. It is relatively well-known that C-sections have increased in popularity in developed countries like the US due to their convenience (working moms can schedule the C-section and plan maternity leave more easily, avoid the pain associated with a vaginal birth, retain bladder control by preserving the pelvic floor, rates of inducing births have increased which can cause the need for a C-section birth, etc.) Now we're starting to see this trend in developing countries as well-- but this is causing something of a problem.

Now that more women are opting into C-sections they're taking up more space in operating rooms that were once used only for women who truly needed them for medical reasons. The concern that arises now is whether wealthier women who can afford to pay for an elective C-section are taking operating room space away from women (poor or wealthy) who really need it.

Obviously this also starts raising questions about cost-effectiveness.... why are we paying for unnecessary medical procedures? I wouldn't say that a C-section is unnecessary if a women just prefers it (she should be able to obtain it if she's willing to pay for it and understands the risks involved...not that she's bearing the full cost of the procedure at all due to insurance--but that's a different conversation altogether), but I would say that it's unnecessary if the woman has been unnecessarily pushed into a C-section either due to convenience or revenue considerations coming from the hospital. C-sections are revenue makers. They generate twice as much revenue as a vaginal delivery.

It seems that we're getting a little heavy-handed with the C-Section ordering pen, but are we really considering the Economic implications? With such a great deal of geographic variation in C-section births, it's hard to make the argument that C-sections are needed at the high rates seen in some hospital systems. These C-sections are coming at a much greater cost than the vaginal deliveries, and also are more risky, and result in more readmissions--and in some cases lock women into delivering via C-section for subsequent children. All of these factors add up to much larger expenses in the end. It may be time to re-examine what determines the need for a C-section, and what does not, so that we can avoid unnecessary surgical procedures.

Also of interest

Methods of effectiveness research: Intro

I'm currently in the last semester of my Master's in Economics degree and am completing an independent study related to types of Economic analysis with respect to health care. Evidence-based medicine (EBM) is an "it" topic when discussing health care reform, or health care policy. While I'm not directly studying EBM this summer-- my topic is related as effectiveness research not only looks at which treatments are effective (like EBM), but also looks into quantifying and valuing the costs associated with the treatments--and attempting to make decisions related to which treatments/ procedures are worth their costs.

I'm looking at four types of analysis-- Cost of Illness studies, Cost-Benefit analysis, Cost-Effectiveness analysis, and Cost-Utility analysis. I'm also examining issues and practices that arise in the practice of these types of analysis--such as sensitivity analysis, discounting, and challenges associated with data collection and data interpretation.

Many of these topics have recently received a lot of attention from medical and academic communities--especially cost-effectiveness research. To understand why this has become so popular you have to understand where this type of research has come from. Cost-Benefit analysis is largely considered to be the gold standard form of analysis as far as Economists and other professionals are concerned. It's a very simple concept-- you subtract the benefits from the costs (in a common unit-- like dollars) and if the result is positive (ie: benefits > costs) then the decision is considered to be favorable. We do this everyday without noticing. For example, do the added calories from an extra Oreo outweigh how happy eating the extra Oreo is going to make you? If so, you will likely choose to put down the Oreo because the net benefit is going to be negative.

As far as health care is concerned, do the benefits of a twice yearly pap smear outweigh the costs associated with going to the OB-GYN for a pap? Maybe--maybe not. It depends on who you are (do you have a history of cervical cancer? how old are you? have you ever had an irregular pap?). What are the costs of going to the OB-GYN for a pap? Obviously the cost you pay to the office is a cost-- but what about what the insurance company pays? What about your lost productivity or wages at work due to the office visit? What about the emotional stress of receiving a pap twice a year? These are the types of problem you run into with Cost-Benefit analysis when you start trying to analyze these types of procedures. It's difficult to quantify costs-- but even more difficult to quantify benefits (ie: how much money is it worth to prevent cervical cancer?) For this reason, there has been a movement towards Cost-effectiveness analysis.

Cost-effectiveness analysis tries to get around the issue of having to put a dollar amount on benefits. Rather, benefits are measured in another form-- such as the number of cases of cervical cancer reduced due to an increase in screenings, or days of regular blood sugar when taking a new Diabetes medicine, or the % reduction in the size of tumor due to a new cancer treatment. Once the benefits are quantified in this form you can take the cost (which, granted, is still hard to quantify completely) and divide it by the measured benefits (ie: the number of cervical cancer cases avoided). This gives you what is known as an ICER-- incremental cost effectiveness ratio. When other ICERs are calculated (using the same units and same measures) they can be compared.

Cost-utility analysis, which is a form of cost-effectivenss analysis-- an is often just called cost-effectiveness analysis, takes the analysis one step further. Cost-utility analysis uses QALYs (quality adjusted life years) to value benefits rather than trying to directly measure an outcome.

Simply put:

As you can see, the numerator stays the same in all forms, but the denominator changes. Often times people prefer to avoid Cost-benefit analysis because of the difficulties associated with valuing benefits. Cost-effectiveness analysis and the ICER are useful, but sometimes ICERs can not be compared if the denominator isn't being measured in the same way (ie: for a Diabetes treatment: one researcher may measure days within a range of healthy blood sugar levels for a non-Diabetic person, while another researcher may measure days within a healthy blood sugar range for people are are healthy, or pre-Diabetic.) Another benefit associated with using QALY's is that QALYs take into account, not only mortality avoided, but also morbidity avoided due to a treatment. Researchers often like QALYs because of their ability to account for the increased quality of life people achieve after going through a treatment--something not accounted for when measuring a specific health outcome like days of healthy blood sugar. QALY's are, of course, not without their own problems as is described in "Cost-Utility anaysis: Use QALY's only with great caution". In this article, McGregor describes how mis-measuring (or not understanding what is being measured ) with regard to QALY's can limit how powerful the explanatory or comparative power of results of a Cost-Utility Analysis are.

So why does any of this even matter? It matters because no one is able to spend infinite dollars on health care. When there are scare resources, decisions have to be made. Using these forms of analysis we can make more informed decisions--which desperately needed by the federal and state governments as more and more of their money is going towards health care expenditures. We need to make purchasing health care more like purchasing a refrigerator. If you were going to purchase a fridge, you would research the models you were interested and determine which bells and whistles you wanted, and then research how much each model cost in one present day currency (as in 2010 dollars). From there you'd pick which one best fit your needs and your budget. We need to approach health care the same way-- determine what the costs are and which benefits we desire-- and then weigh each one in a standardized way to determine which treatments and procedures we want to (and can feasibly) support.

Information Problems

Asymmetric information is a topic discussed in introductory Economics courses that describes a situation where one party has more information than another. For example, if you are selling your car to a passerby on the street, you have more information about the car than the passerby does. You know that you took your car to your trusty mechanic every 4,000 miles for an oil change, and that whenever anything seemed remotely wrong with your car you got it checked out immediately. Perhaps you’re charging $ 8,000 for you 8 year old car. The passerby is thinking “that’s a pretty steep price for this car… it looks good, but how do I know if something isn’t wrong with it… there MUST be a reason (s)he’s getting rid of it”.

Alas—we have an information asymmetry.

There is no way the buyer can be certain of the quality of the car until they purchase it and drive it around for a few months. The seller can attempt to tell the buyer what a good car it is, but how can the buyer be sure they aren’t just getting scammed?

This story is applicable to the heath care industry as well. Let’s say you go to the doctor with a persistent sore throat and the doctor diagnoses you with some condition--something you can't even pronounce with confidence. “Oh no” you think to yourself, “that sounds serious". The doctor goes on to prescribe you an antibiotic and perhaps some other medicines that will make you more comfortable. The doctor is giving you directions on how to take your medications and what the side effects are, etc. You’re starting to feel a little out of the loop and you’re getting blown away by all of the foreign terminology and directions. At the end of the appointment the doctor asks “do you have any questions”? You think to yourself quietly for a moment… you’re not even sure you could come up with an educated question if you had to. Despite feeling overwhelmed you respond, “no”.

You’ve just been a victim of asymmetric information (and if this situation has never happened to you, surely you’ve taken your car to the shop before and have agreed to all sorts of repairs you weren’t really quite sure about). Doctors go through an intense amount of education—both in the books and in practice. We can’t expect for them to convey all of that knowledge to us when we visit their offices, but we really ought to be better consumers. You wouldn’t buy a new dishwasher without doing at least a little bit of research (at least you’ll compare Home Depot and Lowe’s). However, when you go to the doctor, often times you go in with very limited knowledge about prescription drugs or treatments your doctor may prescribe. If your doctor tells you that you need a test that will cost you (or your insurance company) $4000 at the hospital that you usually go to, are you going to call the other local hospitals to see if you can get the same test for less money? Maybe you think that the test will cost the same everywhere—surely these things have to be standardized—right?

Wrong. The variation in cost between hospitals can be astronomical. We’ll wait for another blog post before we discuss this in full—so for right now you’ll just have to believe me when I say that procedures don’t always cost the same at every hospital.

So, what is the problem here? The problem is simple—you don’t understand that product(s) you’re consuming, and you’re likely paying too much. The bigger problem is that, if you have health insurance, you (and your doctor) probably don’t care too much since you won’t be picking up the bill yourself. This results in overtreatment at increased costs. What’s worse is that, if you’re taking unnecessary medications (perhaps you get prescribed an antibiotic for a common cold) you may actually end up hurting yourself in the long run. I hypothesize, that if we were better, more informed, consumers of medicines we would save money, but more importantly we could be healthier. Every day people are harmed by drug interactions that could have been avoided. Doctors are people too—so they will make mistakes. The informed consumer can safeguard themselves from medical mistakes by asking questions and attempting to learn more about the medications and treatments their doctors prescribe.

What can you do? Next time you’re at the doctor try and think of questions to ask—even if they’re simple. Your doctor has a lot of knowledge—you just need to finagle it out of them.

Here are some questions to ask that I found on about.com:

1. What is the name of my medication?
2. What does my medication do?
3. How/ when should I take my medication?
4. How long should I take my medication for? (this is important—sometimes doctors are not inclined to remove you from medications, even when you may no longer need them)
5. What should I do if I feel better and I don’t want to finish my medication?
6. Does this medicine contain anything I’m allergic to—or will it react with any of my other medications and/or supplements or vitamins?
7. What food, drinks, or activities should I avoid when I take this medicine?
8. What are the side effects? Are they common?
9. Is there a generic version of this medicine?
10. Is it safe to use this medicine if I am pregnant or breastfeeding?
11. How soon will this medicine start working?
12. Will any tests be necessary while I’m taking this medication?
13. Most importantly (arguably): What risks are associated with this medicine and do they outweigh the benefits?

Patents

I am no legal expert, but today I thought I would examine another one of the reasons why medical care is so expensive in the U.S.--the practice of "evergreening" patents in prescription drug. This is a tactic pharmaceutical companies use to extend the life of patents of money-making prescription drugs.

A patent on a prescription drug typically lasts 20 years. However, this can be extended for various reasons. Congress allowed for a 6-month extension of patents if the drug was one that needed to be tested in children. While child testing is important since children sometimes react differently to medicines than adults, this is a very costly provision. According to an article by Robert Weissman (called The evergreen patent system: pharmaceutical company tactics to extend patent protections (Patently Abusive)) It cost pharmaceuticals a bit less than $800 million to do these tests in children on selected drugs, but it resulted in an extra $30 billion dollars in sales. (That's right $800 million in costs, $30 billion (with a B) in extra revenue). I think there is something fishy about this situation. A patent lasts for 20 years-- why can't they do research on the affect of the drug on children in those 20 years? Why do they need an extra 6 months? Six months doesn't seem like much time to do substantial research--especially with medical testing where a lot of the testing revolves around affects from drugs on the body over time. It seems to me that enough research could be completed in 20 years, and that extending the amount of time to do research by 2.5% doesn't add much except excessive profits at the expense of those who are ill.

Again from Weissman:

Led by Public Citizen, consumer groups say the pediatric exclusivity has conferred a windfall on the drug companies. Public Citizen estimates AstraZeneca will earn more than $1.4 billion in added revenue for Prilosec, thanks to the pediatric exclusivity provision, with Pfizer also crossing the $1 billion threshold for Lipitor. Drugs such as Prozac, Celebrex, Zoloft, Claritin and Cipro will bring their makers more than $300 million in added revenue, due to the provision.

Another way pharmaceuticals can extend the life of a patent is by tweaking the ingredients in medications, or by claiming that the drug can actually cure or treat other conditions than originally advertised. For example, a depression medicine may be able to be re-billed as treating anxiety which will extend the life of the patent. Sometimes when a patent does expire, pharmaceuticals can again, tweak the ingredients, and then market the drug as a "new and improved" version of the drug. Since consumers don't know whether the new ingredients are really necessary or not, they may choose to take the new medicine (with the new patent), rather than staying on the old drug which has lost its patent protection.

I don't want to totally demonize pharmaceutical companies since they do a lot of good. I also firmly believe that we do need monetary rewards to help pharmaceuticals recoup the costs of research and development. We can't expect people to be extremely inventive if we're not willing to compensate them handsomely. However, the line needs to be drawn somewhere. The cost of prescription drugs is rising much faster than the value of our incomes and health benefits. At some point the cost will be more than we car bear, and we will have to either reform the way prescription drugs are priced, or we will have to do without prescription drugs; and for many people, the latter is not an option.

WSJ: Does a slower economy increase athleticism?

Slow Economy, Faster Marathons?

The Wall Street Journal online edition had an article that presented evidence of laid-off workers running faster road races. Overall, marathon times in the U.S. have gotten faster this year after slumping a bit in 2007 and 2008. The author suggests that this is because, during 2007-2008 people were trying to hold onto their jobs as the economy started to contract--which in turn meant that they sacrificed their early morning run for an even earlier arrival to the office. In 2009 when massive layoffs really started adding up more people had time to train for major athletic events, like marathons.

Is this a spurious relationship or not?

At first the economist in me said, this is probably just a fluke in the data. The evidence the author provides is really just aggregate level stuff that says marathon times have gotten faster this year. Then the author proceeds to say that this is because a lot of those unemployed people are actually competitive marathon runners... seems a little far-fetched. I could believe once people are laid off they take up running as a hobby--hence why marathon registration has increased, but I don't know about their times being significantly faster statistically. Wouldn't once ''regular Joe's'' have to be training a more than 6-9 months to get really, really fast? I would think so.

I can more easily believe the student athlete story that goes like this: Athletes who graduated recently are more likely to try and run competitively this year than in the past because they know that the job market is so unfavorable. The cost-benefit calculation has really changed for new grads. The cost of pursuing a hobby like competitive running is less costly because you're probably not giving up a salary at some high-paying job (however you are giving up health insurance, potentially). The benefit, is that you don't have to go through the pain of searching for a job during a recession, and you get to do what you love--run races (and potentially get paid for it)! I can see how this would skew the data towards faster times, if all of a sudden you have a huge pool of competitive runners being dumped into the marathon pool.

In the article, the author interviews a few recently laid off workers-turned competitive marathon runners. Their anecdotes fit his story about the evidence. I thought to myself, maybe this isn't completely spurious. I even thought about my own situation. This summer I'm taking enough summer classes to keep me busy, so I'm not working a part-time job like I usually would. I've always been a recreational runner-- but my pace has always been very, well, recreational--at around 10 minutes per mile for longer races. This summer I'm training for my third marathon this fall (which, first of all, may only be happening because I have enough time to train for it since I'm not working). I've been running a few fun runs around town--and strangely--my times are substantially lower than they usually are. I'm down to about 9:00 minutes per mile now for longer runs. I'm not sure if this is because I have all of a sudden developed some fast twitching muscle fibers, or if it's due to the fact that I have time to do quality runs. Last summer when I was taking 6 credit hours and working 40 hours a week, my running really suffered and I ended up missing out on the Fall marathons. Even when I would get out for a run in the morning it would be rushed--and if I waited until after work and school I was too exhausted to do anything but jog around the block a few times before crashing into bed. I think a lot of people probably have the same experiences-- it's tough to come home from work and find the energy to go outside for a speed workout on the track. However, when you're not working you have ample time to pursue your hobbies. So maybe the effect of laid-off workers on marathon times is really there-- at least a little bit.