No 70: Cost benefit analysis of a heart drug

AN INTERESTING story in this week's press which fits in well with the work on CBA which we have been doing in AS lessons:

http://www.telegraph.co.uk/health/healthnews/7080111/Nice-should-allow-a-2-a-day-heart-drug-on-the-NHS-which-could-help-thousands.html

Deciding which drugs should be made available on the NHS is a very emotional issue. There's only a scarce amount of money to subsidise medicine and an opporunity cost in chosing to provide a particular drug (a few years ago there was a heated debate over whether the NHS should prescribe viagra).

The above story is about a drug that can prevent problems from an abnormal heart beat - something that affects about 40,000 patients a year.

It would cost £2 a day - or, for 40,000 people - just over £29 million a year.

Of course though, we economists know direct cash costs are not the only way of measuring costs and benefits. We could for example, look at the money we would save if this drug prevents people from needing a lot of health care later.

This argument is one used by those in favour of making the medicine available on the NHS:

"Trudy Loban, chief executive of the Atrial Fibrilation Association, said: “Paying out around £60 a month to keep a patient’s condition controlled is a small price to pay compared to the thousands it costs to treat every stroke suffered by an AF patient.”

She added that the yearly costs of treating those whose condition was not controlled by medication could run into hundreds of millions of pounds.

Around 16,000 patients with the condition have a stroke every year, of whom half die."

On the other hand, NICE (the National Institute of Clinical Excellence, the organisation that decides which drugs are provided by the NHS) argues that it is less effective and more costly than substitutes:

"When Nice announced that it had provisionally rejected the drug, Andrew Dillon, the organisation’s chief executive, said: “The manufacturer’s own data indicated that dronedarone was the least effective of currently used anti-arrhythmic drugs for controlling atrial fibrillation. 

“The drug is much more expensive than existing treatments and the evidence suggests that on balance it offers little additional health benefit.” 

He added that there was not enough information on the drug to accept that it caused fewer long-term side effects than other treatments"

Hopefully this story again shows you that the ideas of economics are not just for the classroom, They can help with making important real life decisions!