Medicines: The true value

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That pill you take twice a day doesn’t just help you get better or become productive again. It helps the people who love you relax, and focus on their own lives and work. It helps your employer be able to rely on you, reducing the costs associated with both health-related absences and hospital stays.

In other words, the real value of medicines reverberates. A drug that’s good for an individual is good for society. All of us benefit when each of us stays healthy – even before taking herd immunity and other specific health benefits into consideration.

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They’re too focused on math that makes dollars the main determinate while ignoring how essential the ongoing development of new drugs is for all of us, as individuals and as a society. Cutting prices, or controlling prices, is a short-term and short-sighted solution – in other words, no solution at all. Under-valuing medicines is actually counterproductive. But many health economists continue to do so routinely by:

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1. Ignoring the herd immunity property of vaccines, and underestimating their cost effectiveness. By factoring in herd immunity, 43 percent of assessments that concluded a vaccination program was not worthwhile would be overturned.

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2. Ignoring that medicines help not only the patients who use them but also bring peace of mind to other people who worry about contracting that disease.

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3. Ignoring that medicines are only temporarily expensive, and that most go generic. At that point, they become public goods that offer benefit to all of society in perpetuity, at a low and affordable price.

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4. Assuming that a unit of benefit has the same value to everyone, which is as incorrect as assuming that $1,000 means the same to a rich person as to a poor one. Making this adjustment shows that a unit of benefit is worth more when it helps patients with severe illnesses than a mild health condition.

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5. Ignoring that medicines are only temporarily expensive, and that most go generic. At that point, they become public goods that offer benefit to all of society in perpetuity, at a low and affordable price.

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6. Underestimating the value of a life-extending medicine by discounting the value of the lives of patients who have reduced quality of life. That means health economists who use QALYs (quality-adjusted life years) regularly conclude that saving the life of a person with a disability is less worthwhile than saving the life of one without. Opposition to QALY assessments is strong and growing.

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7. Ignoring that the rewards for development of one medicine for a disease spur investment in development of more medicines, which drives progress. Failure to adequately reward a medicine would reduce investors’ willingness to fund research into more medicines for that disease or related conditions. Therefore, each medicine can lay claim to some of the value of subsequent medicines -- value not reflected in conventional cost-effectiveness math.

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8. Over-relying on old math. Increasingly, assessments of specific drugs that use a more generalized cost-effectiveness math demonstrate that their societal value is greater than their costs.