Medicare pits life against the bottom line
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Friday, December 5, 2003
COLUMN: Eric Blom
You can't put a price on human life. But Medicare did just that for the first time recently, in its review of a Maine-made test to detect colorectal cancer.
A calculation determined that In-Sure, which is produced by Enterix Corp. in Falmouth, could provide an additional year of life to one senior citizen for somewhere between $11,000 and $21,000. The kit is more expensive than others, but probably does a better job of detecting cancer at an early stage than existing tests.
Agency administrators then set a price for In-Sure, based in part on their judgment that the cost was too high for the benefit offered.
With that decision, Enterix found itself at something of a crossroad for U.S. health-care policy. This kind of cost-benefit analysis may be unique, but it could one day become standard.
One agency administrator calls the debate about whether to inject cost-benefit analysis into medical-pricing discussions the "$100 billion question" confronting health-care policy in the United States. The answer might one day determine whether you live or die, whether the insurance program that has become so crucial to America's elderly population remains solvent.
Medicare recently set a reimbursement rate of $18.56 per In-Sure test. Unfortunately, said Craig Sands, president and chief executive officer, In-Sure costs $25.50 to produce, distribute and market, assuming the firm makes 750,000 kits a year. Enterix really needs a reimbursement rate of $28, when research expenses and profit are considered.
Unless something changes, he said, Enterix will close its U.S. operation, lay off its seven workers and pull out of the market. And if that happens, Sands argued in an interview, 440,000 Americans may die sooner than they otherwise would have during the next 30 years.
"Medicare (administrators), because of the prescription drug bill, have adopted a position that they are trying to cut costs wherever possible," Sands said. "But I'm not sure screening for cancer should be where they cut."
Dr. Sean Tunis, chief medical officer for the Centers for Medicaid and Medicare Services, acknowledges that the cost-benefit component of its review was unusual in that it helped set the reimbursement for In-Sure. But he stressed that other factors played into the decision as well.
The medical community is not sure just how much more effective In-Sure will be at detecting cancer. And Medicare administrators aren't convinced that Enterix - or some other company - can't sell the test profitably for $18.56.
"If we were confident that this would be putting them out of business, we wouldn't set the price at this level," he said.
Tunis knows that whenever the agency talks about weighing the cost of a medical service along with its effectiveness, people grow concerned and politics comes into play. But, he said, unless the country decides to spend a whole lot more on health care - say 20 percent of gross domestic product rather than 14 percent - the nation won't have enough money to pay for all the medical breakthroughs coming out.
"There's lots of good stuff to pay for and not all of it is affordable," he said. Hence, the "$100 billion question" about whether the nation will support more health funding. If not, more cost-benefit analysis like the one focused on In-Sure is inevitable.
The In-Sure analysis looked at the relative effectiveness of different tests, the prices of them, how many lives would probably be saved, how long those people would live. It came up with an average cost for every extra year of life somebody was likely to have because In-Sure detected their cancer early.
Research suggests In-Sure is a superior test, in many ways. It detects more cancer and produces fewer false positives. It doesn't require the dietary changes that test subjects must make with other products.
Researchers suspect compliance will be a lot better with In-Sure because it does not require people to spear their feces with a probe and smear a sample on a test card after three different bowel movements. Instead, In-Sure users swipe the toilet bowl with a little brush two times.
Unfortunately for Enterix, one of the competing tests against which it was measured costs $4.50. That price point is a loss leader, a marketing ploy used by big corporations with a whole suite of medical tests to get more lucrative sales of other products, Sands said. In-Sure is the only product Enterix distributes.
But business considerations that may underlie product pricing were not included in the analysis.
"It's not something that we could include in the analysis," said Ann Zauber, one of the report's three authors. She is a statistician with the department of epidemiology and biostatistics at Memorial Sloan-Kettering Institute Cancer Center in New York. "It wasn't asked of us."
All the math - 59 pages of prose, statistics, charts and tables - was raw material for answering a single question: How much should the government pay for that extra year of someone's life?
Zauber said in an interview that she considers an average cost of $11,000 to $21,000 for every extra year of life given some American a "bargain." That cost is far cheaper than the $40,000 to $50,000 per extra year of life that federal insurance programs already spend on many other medical tests and services.
The cost of all colorectal screening tests "comes out exceedingly low," Zauber said. "Here's the number two cancer cause in the country. It's such a bargain if we can get people to use these tests."
But the report authors were not asked to make a recommendation. They were asked for an analysis of the cost, which the Centers for Medicaid and Medicare Services used in its decision.
The ultimate success or failure of the Enterix cost-benefit analysis will fuel a growing debate about how much compassion the nation can afford and who should make life-or-death, dollars-and-cents decisions.
In Western Europe, where governments run the health-care networks and taxpayers directly fund medical services for all citizens, discussions about rationing health care and choosing between medical advances are common. But the debate is new for our country and makes Americans uncomfortable, said John Hoadley, research professor at the Health Policy Institute at Georgetown University. The discussion of how to value life and whether society can afford to pay infinitely for its extension is emerging in the United States.
"I think it's more than an aberration," Hoadley said of the Enterix decision. "I think the pressure continues to be strong for Medicare and Medicaid" to cut costs.
"Down the road," he said, "we definitely have to find ways to agree that society will pick up more of the costs through higher taxes or to contain costs.
"You can't put a dollar value on human life, but we do."
Business Editor Eric Blom can be contacted at 791-6460 or at:
eblom@pressherald.com
