Thursday’s edition of the New York Times contained an article (“British Clinic is Allowed to Deny Medicine“) describing how a British court ruled that local health authorities could deny coverage of a breast cancer medicine since it was not yet approved. The drug in question is Herceptin.
“Herceptin, made by Roche, is currently licensed for use in late-stage breast cancer. Although some studies have shown that it is also effective in treating HER-2 early-stage breast cancer, it has not yet been licensed for such use. If it does receive a license, the drug will be appraised for potential countrywide use.” – NYT (16 Feb 2006)
There are many interesting issues which arise in this article.
- The Cost of Regulation. Most people assume that regulatory bodies (such as the FDA) which ensure pharmaceutical safety do not impose costs on society. While looking out for public safety is important, over-regulation can delay the release of useful medicine. Ann Marie Rogers, the 54-year-old seeking Herceptin approval, is one example of how delaying the release of drugs imposes costs in the form of worsened health for the ill.
- Entitlement. If Herceptin was approved in a timely manner, what Ms. Rogers is concerned about is that the government pay for the drug which costs between $36,000 and $47,000 per year. Large government in-kind programs do create a sense of entitlement by recipients.
- Liquidity Constraints. Ms. Rogers attempted to mortgage her house in order to pay for the drug. Her bank did not allow her to do this, however, since they were concerned that Ms. Rogers may soon pass-away and would not be able to repay the debt. If Ms. Rogers were allowed to take out a loan against future earnings or assets, then she could purchase the drug on the private market.
- Centralized Health Care. When health insurance is provided by a centralized government, the government chooses which medicines are covered and which are not. The benefit of this is that centralized authorities can better control costs then the private market. In the case of insurance offered by private companies, however, consumers have a choice of a variety of insurance plans, some of which may cover the medicine they need and others of which will not. Consumer choice is the major reason why the United States has not adopted a centralized system.