Do we value curbing carbon emissions more than curing cancer?
by Robert Goldberg, PhD
Robert Goldberg, PhD, is Vice President for The Center for Medicine in the Public Interest.
May 5, 2023
Last month the Environmental Protection Agency announced tougher auto emissions standards, which is a way to get Americans to switch to cleaner electric vehicles (EVs). Those EVs cost more but also offer cost offsets since they are easier to maintain and cost less to fuel.
But the EPA didn’t make the case that over EVs’ lifetime they’d make up the cost difference with less gas and fewer oil changes, because they don’t. Instead, it produced a detailed economic analysis demonstrating how the expected decline in air pollution thanks to the EV transition would generate $1.6 trillion in societal value by reducing death, disease, and discomfort caused over the coming decades. Likewise, the Office of Management and Budget has estimated that the climate side of the Inflation Reduction Act (IRA) could reduce the societal cost of climate change by $1.9 trillion by 2050.
Modeling the long-term value to society from changes to new regulations and legislation is possible and it makes sense to do so. That means taking into account not just the obvious benefits of a policy change but also the indirect ones that might otherwise be overlooked. For example, the Biden administration is requiring government agencies to apply more holistic cost effectiveness analysis (CEA) to calculate the worth of healthy ecosystems to humanity when formulating regulatory policy.
“Natural assets, like land and water, underpin businesses, enhance quality of life, and act as a stabilizing force for economic prosperity and opportunity. They also help counteract the destabilizing risks to our environment and markets caused by climate change and nature loss. Yet the connections between nature and the economy are not currently reflected in our national economic statistics,” wrote members of the White House Office of Science and Technology. That’s observant. We clearly value our environment, as evidenced by the joy that communities take in the nature around them when they are fortunate to be near greenery and bodies of water, so it would be wrong for our estimations of what’s worth what to ignore such “natural capital.” It’s good that this gap is being addressed.
These more comprehensive analyses – which determine the value of making investments today that will generate societal well-being in the future – will inform governmental decisions like which industries to support, which natural resources to preserve, and which regulations to pass.
So how is curing cancer less valuable than curbing carbon?
Yet when it comes to another bold initiative – The Cancer Moonshot’s goal of cutting the cancer death rate in half by 2047 – the government is only looking at how much money new technologies cost and how much they save today. When considering the burden of cancer, their math doesn’t look out decades into the future. It doesn’t consider the benefits to family members who will spend more healthy years together. It doesn’t consider the peace-of-mind everyone will enjoy from knowing that new medicines make cancer curable. In fact, the metric the Biden Administration is using doesn’t place much value on new cancer tests and treatments at all.
It may surprise you to find out just how badly we’re failing to take a comprehensive approach to quantifying societal value from new innovations in medicine. The IRA’s investment in our climate future should be lauded; its treatment of medical innovation is unfortunately hobbled by its goal of lowering Medicare spending today at the expense of tomorrow’s patients – that is to say, all of us.
When measuring the impact of biomedical innovations, today’s loudest health economists ignore the social benefits beyond the benefit to today’s patients, in some cases refusing to even consider a caregiver’s perspective. But if we can measure the long-term social value of reducing the burden of climate change, which threatens to impose high costs and suffering on people around the world, why don’t we measure the long-term societal value of reducing the burden of disease that we know imposes high costs and suffering on people around the world?
Conventional health economics devalues future well-being
Health economics measures a medicine’s benefits to patients using the Quality Adjusted Life Year (QALY) and claims that a QALY, one year of good health, is worth about $50k-150k. But the trouble is that this approach fails to account for all the benefits a medicine generates, whether in QALYs or even cost savings. For example, medicines go generic, so they are only temporarily expensive. On the other hand, hospital costs only increase. So, when a new medicine keeps people out of hospitals and then goes generic and continues to keep people out of hospitals, that’s a source of considerable long-term savings, and yet ignored by conventional health economics.
Conventional health economists do acknowledge that medicines have more value than what they measure. But they say it’s nearly impossible to measure these factors accurately and so arbitrarily assign them zero value in their calculations. They assert that their simplified estimations of a drug’s value are better than not doing any math. And yet, for patients denied access to medicines by payors who cite it, bad math can be lethal. Just ask patients with cystic fibrosis for whom this isn’t a hypothetical.
Health insurers and policymakers focus on new drugs’ upfront cost and ignore the long-term benefits. Value accruing to future generations is deeply discounted to the point of being ignored.
Even when they do look further out, their high societal discount rate reflects a dim view of the future, one not worthy of much investing today.
Higher discount rates attribute less value to future impacts. Traditionally, a 3% discount rate is used to measure the future value of new medicines. In its evaluation of climate technologies, the government uses a 2% discount rate. Lower rates reflect how much it matters to us that a warming planet will significantly burden us and future generations.
A 1% drop in the societal discount rate may not seem like a big deal, but over 75 years that’s a two-fold change in value (not even counting the impact of all the other factors ignored by conventional CEA that compound over time, like population growth and hospital cost inflation), and it’s a three-fold change over 125 years.
Climate economic models look out over a hundred years and value long term benefits, so why don’t health economic models? Is vanquishing disease a less valid way to improve lives than addressing carbon emissions? Why would we use comprehensive math to capture the comprehensive value of climate technologies but simplified math designed to underestimate value for biomedical technologies? How we value the future should be the same regardless of what we are considering doing today to improve it.
How to measure what matters most
The fact is, we can measure the long-term societal benefit of biomedical innovation by using the principles we now apply to evaluating technologies to curb carbon and there are health economists who urge that we do.
Roughly $50 billion a year is spent on new cancer therapies, which amounts to under 50 cents per day for every American. Since medicines go generic, we’re not paying for the same medicines every year. If we’re still paying $50 billion per year in 20 years, it’s largely for entirely new and better medicines. So, 50 cents per day buys us progress. And yet, if one asked Americans what the Cancer Moonshot goal is worth to them - to reduce mortality due to cancer by half - it’s hard to imagine that the answer would be less than 50 cents per day. It’s probably more. But by doing simplified math that makes the $50B per year sound too high (by ignoring that medicines go generic, the value of avoiding financial ruin on hospital bills, the value of reducing caregiver burden, and emotional loss associated with a cancer diagnosis, and other dimensions of cancer), health economists are essentially trying to mislead Americans into investing less than 50 cents per day to solve this problem.
Similarly, how much would we collectively be willing to pay to avoid another pandemic? Or reduce the risk of being diagnosed with Alzheimer’s or our children being born with an incurable rare disease?
We know that new medicines to control, cure and prevent Alzheimer’s cancer and rare diseases come at a high price per unit, but that doesn’t mean they aren’t worth it to our society in the long run or that proper insurance can’t make them affordable to those who need them today. It is tempting to try to check their budgetary impact in the short-term by assessing whether new treatments will offset their costs. But if we applied that approach to investing in technologies to reduce carbon emissions, we would all be driving 1972 Impalas and producing billions more tons of carbon each year, despite the smog and climate consequences.
It is time to ensure that we value investments in eliminating the devastation of disease in the same way we assess technologies that rein in climate change. We must appreciate biomedical innovation for all the direct and indirect benefits it offers humanity today and, in the future, because math that does anything less can be bad for our health and the health of future generations. Let’s all pay more attention to the work of health economists and hold them accountable for taking what matters to all of us into their count.
Please click here for important RA Capital disclosures.
Related reading
