By Bill Peckham
Anna linked and commented on a NY Times article that outlined the National Institute for Health and Clinical Excellence (NICE) review process in the UK. The quote from the article that caught my eye was this one:
That is the crux of the problem. The point of the article seems to be that a person with a dread disease values a drug that offers a chance at prolonging their life as having a nearly limitless value. In economics the concept of comparative value is captured by the term opportunity costs. The opportunity costs is the cost of forgoing the benefit of something in order to do something else. Following the construct of the article the NIH is weighing what could be done with $66,000 if it is not spent on Celgene. The conclusion is that given these high prices how can governments decide what to buy for their citizens. This resources are limited construct puts advocates at odds with one another -people with cancer against people with Alzheimer’s.
But the NIH isn't the only one with opportunity costs. Celgene has their own opportunity costs, and from the quote it is clear they understand they are better off selling Revlimd for $2,200 a year then not selling it all. Buyer's and seller's different opportunity costs are at the heart of all negotiations. Typically the market is perfectly capable of sorting out the price of goods and services but in the case of medical care the market is not a solution. There has to be a check on pharmaceutical companies gouging people who are ill. Pointing to the cost of research is a poor fig leaf, research alone cannot cover the indecent pricing practices. The solution may not be NICE but the ill cannot be expected to negotiate the price of the treatment they need.
Comments