Hard Economic and Finance Choices in US Healthcare
Read the following case study, “Hard Economic and Finance Choices in US Healthcare” (Milstead):
o Case Study 1: Hard Economic and Finance Choices in US Healthcare
Applied economics is all about managing scarce resources. Economics is an amoral field of study: it is neither moral nor immoral. Morality and values are determined by individuals at the personal level and by group consensus or majority opinion at the national level. State and federal governments determine the ‘will of the people’ about how to use scarce resources for the good of a nation.
The U.S. health care system is an exemplar of scarcity: primary care physicians, substance abuse treatment centers, trauma centers, registered nurses, and the money to pay for goods and services. Finance is all about how to pay for goods and services. The Medicare Payment Advisory Commission (MedPAC) is appointed by the Executive branch of the federal government to make decisions about what the Medicare program will and will not pay for. In this role, MedPAC makes decisions about medications, procedures and treatments. Examples of MedPAC decisions include coverage for left ventricular assistive devices as a destination therapy, coverage for bariatric surgery, and in 2010, coverage of the drug Provenge™. By law, MedPAC is not allowed to use price or cost of any treatment in its decision-making processes.
· Review the information in the Washington Post article “Review of Prostate Cancer Drugs Provenge Renews Medical Cost-Benefit Debate” in the Learning Resources.
· Consider how policy decisions currently are made about what will and will not be paid for and what changes, if any, could improve the process.
· Reflect on how the Washington Post example illustrates the tension between cost and care.
Post your analysis and assessment of the ethical and economic challenges related to policy decisions such as those presented in the Washington Post article. How does this type of situation contribute to the tension between cost and care? Substantiate your response with at least two outside resources.
Review of Prostate Cancer Drug Provenge Renews Medical Cost-Benefit Debate
November 10, 2010
Federal officials are conducting an unusual review to determine whether the government should pay for an expensive new vaccine for treating prostate cancer, rekindling debate over whether some therapies are too costly, says the Washington Post.
· The Centers for Medicare & Medicaid Services is running a “national coverage analysis” of Provenge, the first vaccine approved for treating any cancer.
· The treatment costs $93,000 a patient and has been shown to extend patients’ lives by about four months.
Although Medicare is not supposed to take cost into consideration when making such rulings, the decision to launch a formal examination has raised concerns among cancer experts, drug companies, lawmakers, prostate cancer patients and advocacy groups.
“If the cost wasn’t a consideration, this wouldn’t even be under discussion,” says Skip Lockwood, who heads Zero – the Project to End Prostate Cancer, a Washington-based lobbying group.
· Prostate cancer strikes 192,000 men in the United States each year and kills about 27,000.
· The only therapies are surgery, radiation, hormones and the chemotherapy drug Taxotere.
“To charge $90,000 for four months, which comes out to $270,000 for a year of life, I think that’s too expensive,” said Tito Fojo of the National Cancer Institute. “A lot of people will say, ‘It’s my $100,000, and it’s my four months.’ Absolutely: A day is worth $1 million to some people. Unfortunately, we can’t afford it as a society.”
Company officials say the cost is not out of line with that of other cancer drugs. Each treatment with Provenge, which the company estimates cost nearly $1 billion to develop, is tailored to each patient, says the Post.
Source: Rob Stein, “Review of Prostate Cancer Drug Provenge Renews Medical Cost-Benefit Debate,” Washington Post, November 8, 2010.
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