Rationing by Price

Last month, hepatitis researchers made an astounding breakthrough in the fight against hepatitis C.  A drug named sofosbuvir is claimed to cure hepatitis C  in over 90% of patients with very few side effects. Given that hepatitis affects millions of people in the US and globally–many times more people than are affected by AIDS–this is great news. However, sofosbuvir’s manufacturer, Gilead Sciences Inc.,  is expected to sell the drug for $1,000 per pill. Since the treatment is expected to take several weeks, experts estimate that a full treatment–that is, a cure of hepatitis C–will cost, on average, $84,000.

This hefty price should raise a number of questions about access to healthcare. For one, even acknowledging the fact that Gilead Sciences Inc. has invested large amounts of money into developing this drug, we should ask ourselves whether this is a fair price for a disease that causes suffering to hundreds of millions of people. I think that, independent of what ethical theory that you ascribe to (e.g., utilitarianism, deontology, virtue ethics), there are strong arguments to be made that this is not a fair price. But, here, I’d like to argue for another claim that is often overlooked by proponents of free market healthcare and those who criticize healthcare rationing: charging $84,000 to cure a disease is rationing healthcare (by price), and further, rationing healthcare by price is at least as unethical as rationing by age, pre-existing condition, or employment type.

The verb ration means to “allow each person to have a fixed amount of a particular commodity.” So, to ration healthcare means something like “to allow each person to have a fixed amount–and perhaps that fixed amount is none–of a particular medical treatment.” In recent debates about the Affordable Care Act (Obamacare), opponents of the act claimed that it will lead to rationing of healthcare, particularly to seniors. They argue that government bureaucrats will be the ones deciding whether the costs of a particular treatment (perhaps tens of thousands of dollars) will outweigh the benefits of the treatment (perhaps only months of additional low quality life). It may be the case that government healthcare will lead to forms of rationing; perhaps some government decision makers will decide that a $50,000 treatment for an expected six months of extra low quality life is not worth the cost, when that same cost can be spent in much more efficient ways (perhaps by extending a higher quality life by many, many years). But opponents of this kind of rationing are silent about the form of rationing that is standard practice. We already ration healthcare in the US. When a cure for a condition like Hepatitis C costs $84,000, we are rationing by price: if you do not have the money, your allotment of sofosbuvir is zero. When an insurance company decides that it won’t allow those with pre-existing conditions into the risk pool–a practice allowed before Obamacare–we are rationing by pre-existing condition (got cancer? Oh well!). The question we ought to ask is not, “Is  it permissible to ration healthcare?” since some form of rationing scarce healthcare resources will always take place; rather, we ought to ask, “What form of rationing is most permissible?” Those who think that rationing by market forces is most permissible seem to implicitly assume that those who don’t have the money for a treatment must have not worked hard enough to deserve it. Even a basic understanding of the kind of systematic inequality and lack of social mobility that exists in the US seems to suggest that this is seriously mistaken.

Proponents of rationing by price may rightly ask, “Does the existence of a cure imply that the cure ought to be available to everyone?” To this question, I ask another: if you have the ability to easily save someone’s life, say, by administering a medical treatment, but don’t, are you responsible to some degree for that loss of life?

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January 12, 2014 · 11:54 am

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