This op-ed by William Smith appeared in the Washington Examiner on April 18, 2019.
On April 8, at a Harvard Medical School forum hosted by Pioneer Institute, President Trump’s secretary of health and human services was asked whether it was advisable for state Medicaid programs to use “cost-effectiveness reviews” that have become common in Europe. These systems use an economic methodology called Quality Adjusted Life Years, or QALYs, to rate treatments according to their ability to extend and improve the quality of life. New treatments that do not meet certain “cost-effectiveness” benchmarks on that basis are denied to patients.
For HHS Secretary Alex Azar, this was a controversial question to consider at the moment when the Affordable Care Act has come under legal and political pressure from the Trump administration. It is important to note because, when they drafted the law, Congress banned the use of QALYs in Medicare when the term “death panel” was being used to describe government boards using them to deny new drugs to sicker and older patients.
While some of the rhetoric surrounding so-called “death panels” was certainly overheated, it is also true that when QALYs were used in the UK from 1999 to 2011, Britons had some of the worst access to innovative oncology drugs in the developed world. Patients were dying noticeably earlier in Great Britain, and a chastened Parliament was forced to step in. It overruled these cost-effectiveness reviews and voted to fund oncology treatments regardless of their QALY score.
Patient groups and disability advocates in the U.S. have been warning for years that QALYs discriminate against certain patients and could result in denying them the most effective treatments. Under the microscope of QALY, a drug is evaluated against the notion that every patient is healthy and that a drug’s ability to improve and extend life is equal for each of us. But ask an older American, a veteran, or someone living with a rare disease what matters to them in their treatment plan, and the answers you get likely won’t be the same.
Last year, New York Medicaid explicitly adopted QALYs to demand price cuts for a breakthrough cystic fibrosis drug. Other states, such as Massachusetts are also threatening to use European-style cost-effectiveness reviews to set drug formularies.
It presents a difficult scenario for a Republican appointee such as Secretary Azar. Republicans generally favor federalism and, therefore, greater discretion by the states in managing their Medicaid programs.
But on Monday, Azar was explicit in his opposition to the use of QALYs in federal programs. Azar said he had a “special responsibility” to protect patient access to drugs in these public programs and does not “buy into the idea that QALYs” represent an “objectively identifiable notion of value.” Azar insisted that the market determines value, not studies by health economists. He said that the Administration would not oppose the use of QALYs in commercial plans because patients could “vote with their feet” and switch plans if the drug formulary became degraded through QALY reviews.
Azar’s remarks are a distinct message that the federal government will not deny new treatments to Medicaid patients, just as it protects Medicare patients from access restrictions.
As more novel drugs for cancer and rare diseases come to market, government officials are under pressure to act. But rather than price caps based upon arbitrary methodologies such as QALYs, policymakers should be looking to base drug payments upon their actual marketplace value.
Azar’s comments on the use of QALYs point to a major cultural difference between the U.S. and the rest of the developed world. In Europe, patients are regularly denied access to innovative, sometimes life-saving treatments based upon the recommendations of actuaries and bean-counters. European citizens are inured to a system in which government economists make these decisions.
Americans, on the other hand, tend to accept that healthcare may be more expensive, but it is worth the cost to have patients and doctors decide on necessary treatments, rather than bureaucrats and economists. This American cultural preference has one major benefit: the U.S. enjoys the best quality of healthcare in the world, not a pseudo-egalitarian system in which death panels make life and death decisions for patients.