Putting Dollar Value on Extending Life Poses Ethical Dilemma According to Stanford...

Putting Dollar Value on Extending Life Poses Ethical Dilemma According to Stanford Business School Research

STANFORD, Calif.--(Business Wire)--
Reported in today's edition of Stanford Knowledgebase, the single
biggest factor contributing to the astronomically rising cost of
healthcare is the emergence of expensive new technology. Science is
finding more effective ways of treating diseases and extending life,
but at a substantial cost. How much are we--and should we be--willing
to pay, as a society, for improving health outcomes?

New research from Stanford and Wharton shows that $50,000--the
average figure used internationally as a "threshold" for making
medical allocation decisions--is low. A more realistic figure is
probably a minimum of $129,000, which represents what it would cost to
give a person an additional "quality-of-life adjusted" year of life.
Moreover, the researchers argue, making decisions on whether insurance
should cover medical interventions based on their cost-effectiveness
leads to profound ethical dilemmas.

Outside the United States, countries such as the United Kingdom
and Australia that offer national health care have developed explicit
systems to determine the overall cost-effectiveness of a new medical
intervention. This includes calculating the incremental cost of a
treatment against the incremental improvements in the patient's
health, and comparing that figure to a threshold number. "As long as
the ratio is below that threshold number, a given treatment is
accepted as part of the healthcare offerings; otherwise, it's
rejected," explains Stefanos Zenios, the Charles A. Holloway Professor
of Operations, Information, and Technology at the Stanford Graduate
School of Business and one of the coauthors of a new paper forthcoming
in the journal Value in Health. The paper is coauthored with Glenn
Chertow, professor of nephrology at the Stanford School of Medicine
and Chris Lee of the Wharton Business School.

The U.S. Medicare system--the national health insurance system for
the elderly--has thus far eschewed making allocation decisions based
on such bald numerical calculations. "Big decisions typically are made
on the basis that the treatment is 'medically necessary and
appropriate,' but that concept is vague," says Zenios--and it does not
include explicit cost considerations. Debate on the cost of the new
Medicare prescription drug benefit program suggests that making
coverage based on clinical evidence alone without attention to cost
may not be feasible in the long term.

The authors wanted to know: If Medicare were to begin accepting or
rejecting coverage on treatments made available by new technologies
based on cost, what might a realistic threshold look like? To make
such a determination, they ran computer models using data from more
than half a million patients who underwent kidney dialysis--an
expensive procedure covered under Medicare that has typically been
used as a benchmark for evaluating the cost-effectiveness of all new
technologies internationally. "We found that starting dialysis earlier
than the current practice allowed by Medicare would be more expensive,
but would likely be associated with longer life and fewer medical
complications," Zenios said.

In such a case, the average incremental cost was approximately
$129,000 for a "quality-adjusted" year of life. "This means that if
Medicare paid an additional $129,000 to treat a group of patients, on
average, that group would get a total of one more quality-adjusted
life year," Zenios said. Based on surveys of patients with kidney
failure, one "quality of life" year is deemed the equivalent of about
two years of life under dialysis.

Medicare could consider using the $129,000 figure as a benchmark
to determine whether to cover treatments using new technologies. "Say
a new type of treatment for cancer comes along," explains Zenios. "If
the incremental cost of that new technology was more than $129,000 for
a quality-of-life adjusted year, then the recommendation would be that
Medicare not cover that new technology."

But the research comes with warnings. "The first caveat is that
the dialysis threshold may not be an appropriate benchmark for all
technologies," says Zenios. "This is something that should be
debated," said Zenios.

The second caveat, Zenios says, is that Medicare would quickly be
faced with a host of ethical concerns if it started applying the
$129,000 threshold differentially to selective groups. For the sickest
patients, the researchers determined that the average cost of an
additional quality-of-life year was much higher: $488,000. "Applying
the $129,000 threshold in a very sharp way for specific groups and
individuals would mean that the sickest subgroups of patients would be
denied access to expensive treatments such as dialysis."

For some policy makers, such a decision might be tempting, given
that the sickest benefit the least from dialysis, and if the threshold
were raised to even half that, or $240,000 per quality-of-life year,
90 percent of patients could be treated.

"Dialysis is a life-sustaining therapy," co-author Glenn Chertow
says. "While kidney transplantation is usually preferable, waiting
times for deceased donor organs are often longer than six years.
Without dialysis, hundreds of thousands of persons in the U.S. would
die each year due to complications of kidney failure. However, it is
difficult to justify the burden and expense of dialysis when persons
have other serious health conditions, for example, advanced dementia
or cancer. In these settings, dialysis is unlikely to provide any
meaningful benefit."

The issue of treating patients differently depending on their
health poses ethical questions. "We argue that any thresholds should
be applied in keeping with the principles of social justice
established by the American political philosopher John Rawls, who held
that resources should be allocated to benefit everyone, including the
most vulnerable individuals," says Zenios. According to this
philosophy, the authors maintain that the average
figure--$129,000--could be used as a global figure for the purposes of
accepting or rejecting an entire technology for coverage, but not for
accepting or rejecting specific subgroups once that technology has
been approved.

How much money we should allocate to helping the sick, sicker, and
sickest will only continue to be debated ever more vociferously as
newer, costlier technologies continue to emerge. "We need to be
conscious about the social and ethical implications of any numerical
figures arrived at by this or any other study," concludes Zenios.

(This story reports on research at the Stanford Graduate School of
Business and appears in today's Stanford Knowledgebase, the free
monthly information source for thoughts, ideas and lectures at the
Stanford Graduate School of Business. For related research citations
and to dig deeper, visit
http://www.gsb.stanford.edu/news/knowledgebase.html.)

Stanford Graduate School of Business
Helen Chang, 650-723-3358
chang_helen@gsb.stanford.edu

Copyright Business Wire 2008