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Ethical issues in the economics of rationing healthcare A . M A Y N A K D CentreJor Health Economics, University of York, York. UK

Introduction The scarcity of resources is ubiquitous and affects all human decisions. Economics provides a framework to analyse how scarce resources are allocated between competing activities in all spheres of human activity. All decisions involve opportunity costs, i.e. a decision to provide a hip replacement uses resources that could have been used to fund a prostate operation. All choices involve sacrificing the value of the next best alternative use of scarce resources.

Economists analyse such issues in terms of resource allocation, addressing the issues of what should be produced, how goods and services should be produced, how much of each of the goods and services should be produced and to whom these goods and services should be allocated. The ‘dismal science’ of economics, as it was described over 100 years ago, can inform such choices and the ultimate goal of such analysis is to ensure that society’s scarce resources are used to produce the maxi- mum benefit at the least cost, i.e. efficiency.

The concept of efficiency in healthcare can be conten- tious. The processes of resource allocation are redesig- nated using terms such as ‘prioritization’ and ‘rationing’, which emphasize what is obvious and ubiquitous: scarc- ity and all decisions involving opportunity costs. The phrase ‘there is no such thing as a free lunch’ (i.e. all resourcing decisions have opportunity costs) has a stark meaning in the healthcare sector. It means that some patients will be left in pain and discomfort, and some- times left to die, because the opportunity costs of treat- ment are too high, and scarce resources would produce more ‘health gains’ if deployed in other treatments.

Inevitably, doctors may seize on such issues to press emotively for increased resourcing of their activities. Their interventions may be effective, i.e. health gains would be produced, and such benefits may be demon- strated in well designed and executed trials. Why, they argue, should patients be left in pain and discomfort and to die when such demonstrably beneficial interventions are available? The answer to such a question is that the rationing that deprives potential patients of care from which they could benefit may be efficient and ethical.

The roles of evidence about effectiveness and cost-effectiveness An American physician, Dr Erich Loewy, wrote to the New England Journal of Medicine in 1980 and argued that the economic dimension in clinical choice was unnecess- ary and clinical practice based on economic measures was no better than that exercised by German doctors on the victims of the Nazi era [l]. He argued:

Of late an increasing number of papers in this and other journals have been concerned with ’cost-effectiveness’ of diagnostic and therapeutic procedures. Inherent in these articles is the view that choices will be predicated not only on the basis of strictly clinical considerations but also on the basis of economic considerations as they may affect the patient, the hospital, and society. It is my contention that such considerations are not germane to ethical medical practice, that they occupy space in journals that would be better occupied by substantive matter, and that they serve to orient physicians toward consideration of economics. which is not their legitimate problem. It is dangerous to introduce extraneous factors into medical decisions, since consideration of such factors may eventually lead to consideration of age, social usefulness, and other matters irrelevant to ethical practice. The example of medicine in Nazi Germany is too close to need further elucidation.

It is incumbent on the physician (especially in a critical situation) to practise not ‘cost-effective’ medicine but medicine that is as safe as possible for that patient under the particular circumstances. Optimisation of survival and not optimisation of cost-eflectiveness is the only ethical imperative. To select diagnostic tests on the basis of cost-effectiveness is a deliberate statistical gamble: to use diagnos- tic tests in an unthinking medical fashion is poor medicine, not because of cost but because unthinking medicine is dangerous for the patient. Ethical physicians do not base their practices on the patient’s ability to pay or choose diagnostic and therapeutic pro- cedures on the basis of their cost. It may be argued that the welfare of society is threatened by escalating medical costs: indeed, that argument at Erst appears to introduce a dilemma. Yet a large proportion of our ills are due to smoking, heavy drinking, and overeating, and the consequences of these indulgences consume a large proportion of medical-care dollars. It is unfair to deprive those who have not been overindulgent of the best medical care while allowing the overindulgence of others to consume the available money. Furthermore, our society clearly has money to spend on luxuries and baubles. A physician who changes his or her way of practising medicine because of cost rather than purely medical

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considerations has indeed embarked on the ’slippery slope’ of compromised ethics and waffled priorities [ 11.

The aggressive repudiation of the economic approach to the evaluation of alternative diagnostic and thera- peutic interventions remains, in a more implicit form, in some areas of current clinical research practice and debate. Thus clinical researchers in cancer remain more concerned with the effects of competing interventions on tumour size rather than the effects these treatments have on the patients’ quality and length of life and their comparative costs.

The Department of Health has invested money in increased research and development [2]. In part, these resources are used to finance the Cochrane Collaboration whose prime movers, Ian Chalmers and David Sackett, are creating an international network of research groups, each of which will focus on a particular area of clinical activity [3,4]. Each group will collect trial data in their area, systematically review it to determine what is effective and what is unproven, and then disseminate details of what is demonstrably evidence-based medicine (EBM) and what is unproven.

In many areas there have been few randomized con- trolled trials (RCTs) and the scope to evaluate the knowledge base is limited. However, where such analysis has been undertaken it has been possible to identify effective therapies, many of which have not been adopted in clinical practice [5]. It has also proved possible to identify areas of practice in which there is no knowledge base. There appear to be many areas of practice where clinical choice appears to be random but patients are not entered into systematic RCTs to determine the effec- tiveness of competing therapies!

The proponents of this approach are aware that the results of their work are difficult to translate into clinical practice. The determinants of clinical behaviour are poorly researched and the impacts of clinical guidelines and advice are uncertain [6,7]. What is more certain is that clinical behaviour can be altered, as is well demon- strated by the ability of the pharmaceutical industry to target peer group leaders and alter the prescribing habits of practitioners.

The proponents of EBM have an ambiguous attitude towards the relevance of economics in clinical decision- making and patient management. Many doctors now accept the argument that in their role as managers they can and must base their choices not merely on the evidence of effectiveness produced by mechanisms such as the Cochrane Collaboration but also on evidence of cost-effectiveness.

The logic of this position is simple: for instance, if an elderly person with muscle pain due to rheumatism can use drug A, which gives 5 h of pain relief, or drug B

which gives 10 h of pain relief, the doctor who is determined to maximize effectiveness alone will prescribe drug B. However, if drug A costs 25 pence per dose and drug B costs 120 pence per dose, and the side-effects are identical, drug A is preferred as it is the most cost- effective: it produces pain relief for 5 pence/h (adjusted for side-effects), whilst drug B produces the same effect at an average cost of 12 pencelh. The relevant decision- making data are, of course, the incremental cost- effectiveness ratios. Drug A costs 5 pence/h. Drug B costs 120 pence for 10 h, i t . it is 95 pence more expensive (120-25) and produces an extra 5 h of benefit. Thus, the marginal cost-effectiveness of drug B is 19 pence/h and it is not a cost-effective option.

While doctors may be comfortable about such logic at the level of the healthcare system, i.e. the National Health Service (NHS), they seem less certain of this argument at the level of the hospital and clinical practice. The ‘guidelines industry’ is growing rapidly worldwide and it is noticeable that it focuses on the use of effective- ness data alone to produce criteria to judge the worth of clinical practice. Thus Grimshaw & Russell [8] reviewed the evidence base for published guidelines and ignored completely the cost implications of this work. As a consequence these authors and others worldwide may be establishing criteria to create accountability in clinical practice which produce cost-ineffective care and the waste of scarce NHS resources.

This inefficiency may be complemented by the ambiguity of clinicians about the relevance of cost- effectiveness data in terms of treating individual patients. In principle, the logic of cost-effective practice should permeate all levels of decision making, from the system (the NHS) to the bedside (the individual patient). In practice, some doctors argue that the guidelines should guide overall practice but that individual practitioners should be free to differ from them if they believe that the evidence and values underlying the guidelines are sus- pect. In this situation, if guidelines are based on the best evidence about cost-effectiveness and a professional con- sensus about the values used to complement the evidence base when creating the guidelines, the practitioner is demanding the right to deviate from the professional consensus and practise in ways which the majority of his or her clinical peers may regard as inefficient.

There will be some (many!) circumstances where a practitioner’s behaviour is not informed by a guideline. In this case, to take account of scarcity, the individual practitioner will need to practise EBM, and the EBM should be influenced by the evidence base about cost- effectiveness.

The identification of the effectiveness of competing medical and surgical interventions provides an evidence base that is a necessary but not a sufficient basis to

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THE ECONOMICS OF RATIONING HEALTHCARE 61

determine which patients will be treated how and when. The sufficient condition for allocating scarce resources to competing patients is that the intervention, either diagnostic or therapeutic, is cost-effectiveness.

Is evidence-based medicine unethical?

If it meets only the necessary condition of effectiveness and ignores the sufficient condition of cost-effectiveness, EBM may produce treatment patterns that are inefficient. Such behaviour may be defended on the grounds of clinical freedom and the doctors’ desire ‘to do their best’ for the particular patient who they are treating. This individual ethic has been challenged not only by econom- ists but also by clinicians for many decades. Thus, over 20 years ago Cochrane argued:

Allocations of funds and facilities are nearly always based on the opinions of senior consultants, but, more and more, requests for additional facilities will have to be based on detailed argument with ‘hard evidence’ as to the gain to be expected from the patients’ angle and the cost. Few can possibly object to this [9 ] .

Over 10 years ago, another doctor argued that the age of clinical freedom was over and that practitioners had to become more accountable [lo].

While the individual ethic of the patient-focused doctor may be very attractive to the individual patient, it is unacceptable from the social perspective. A decision to use resources in a cost-ineffective way, perhaps in defiance of clinical guidelines, means that scarce resources are used in a way which produces few health gains, i.e. enhancements in the length and quality of the patient’s life. Such resources, if used cost-effectively, could produce more health gains for another patient.

Thus inefficient clinical practice deprives potential patients of care from which they could benefit. A decision to treat patient X inefficiently, producing few or no health benefits at high cost, means that patient Y, waiting perhaps in the queue, is left in pain and dis- comfort, which if treated would receive more health gains per unit cost than the care given to X.

Such inefficient practice is unethical. If the proponents of EBM argue that the basis for deciding who shall be treated and who shall not is the production of clinical guidelines and clinical audit-based information of effec- tiveness alone, they may be supporting the continued practice of cost-ineffective medicine, wasting scarce econ- omic resources and being unethical in their practices. Only efficient practice is ethical from the social utilitarian perspective.

The principles and the practice of ethical medicine

While the principle of ethical medicine is that it is cost- effective and uses society’s scarce resources efficiently, the practice is more problematic. The evaluation of the clinical effectiveness of competing therapeutic and diag- nostic interventions is uneven in quality and incomplete. The evaluation of the cost-effectiveness of medical prac- tice is very limited and some of it exhibits bias and a failure to adhere to the principles of good practice in economic evaluation.

The economics profession has been discussing the criteria by which to design and evaluate good quality economic evaluations. Williams listed 19 questions that could be used to appraise economic evaluations 2 0 years ago [ l l ] . These have been developed continuously since, and in 1994 the Department of Health and the Association of the British Pharmaceutical Industry pro- duced guidelines for the practice of economic evaluation of pharmaceuticals (see Appendix 1) [12-141. These indicate explicitly that the results of such evaluations are needed to inform decisions by NHS purchasers about competing and expensive new technologies. The pro- cesses by which these guidelines were produced compare unfavourably with those in Australia and Canada and the authors failed to consider how these rules would be policed and enforced. As ever with relationships between the British Government and the pharmaceutical indus- try, they are voluntary gentlemen’s agreements [15].

While much effort has been put into the development of the principles of economic evaluation in healthcare. there is a noticeable gap between them and practice, i.e. economist researchers, like their clinical counterparts, fail to practise what they preach.

Although there has been an exponential growth in the number of economic evaluations in healthcare. their quality is often poor [16,17]. Lee CL Sanchez [18] reviewed 65 papers taken from six pharmaceutical jour- nals in the period 1985-1990 and, using two indepen- dent reviewers and the Drummond checklist of good practice in economic evaluation, they found that only three of the 10 criteria of good practice were met in more than half of the studies [12,18]. In 55% of the studies, cost savings were confused with cost- effectiveness.

Uhvarhelyi et al. analysed 77 studies taken from two periods, 1978-1980 and 1985-1987 [19]. They used two reviewers and six principles of good practice. In only three studies (4%) was the analysis fully satisfactory, and good practice was better in general medical rather than surgical and medical subspeciality journals. Between these periods, they found no evidence that the practice of economic evaluation had improved.

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Adams et a2. used a multi-stage selection process to examine which RCTs published between 1966 and 1988 included economic data [20]. They found that only 121 of all RCTs in that period (0.02% of the total) included such data. They analysed practice in the design and execution of 51 randomly selected economic studies with two independent observers using the Drummond criteria. They reported, using a scale of 0 to 1, an average completeness score of 0.52 and a mean quality of research score of 0.32. There was no apparent relation- ship between the quality of the conduct of the RCT and their economic components.

Gerard appraised 51 studies that reported cost per quality-adjusted life year (QALY) data and were pub- lished in the period 1980-1991 [21,22]. Most studies were found to be technically deficient.

The characteristics of economic evaluations reported in these studies are not new. The design, execution and reporting of such work is often inadequate and is, as a consequence, a poor basis to inform clinical decisions.

Much of the literature on economic evaluation is based not on RCTs but on modelling using published effective- ness data and medical opinion. This modelling is prob- lematic, particularly as it seems that much of the clin- ical evidence-base is biased by poor practice in the design and execution of studies. Thus, in the areas of non-steroidal anti-inflammatory drugs (NSAIDs) and depression, the effectiveness knowledge-base is poor and has been used sometimes inadequately by economists

The deficiencies in the economics literature led Mason & Drummond to argue for the use of a much more detailed checklist in the interrogation of cost-effectiveness and other economic studies [24]. The checklist they proposed is being used in the creation of a database of economic evaluations at the Centre for Health Economics, University of York, UK, which will be avail- able to the public by the end of 1995. This will not only give researchers and clinicians access to the literature, it will also facilitate the appraisal of practice, which may act as an incentive for practitioners to do work of a higher quality.

Until there is an increase in the volume of good quality work in the economic evaluation of health, it will be difficult to translate the principle of ethical clinical practice, i.e. that it should be efficient, into practice. Until that happens, clinicians will practise inefficiently and unethically, depriving potential (untreated) patients of care from which they could benefit.

~ 3 1 .

Conclusion Most medical practitioners have been trained on the principle of practising on the basis of evidence about

effectiveness. The rate of technical change and the volume of literature that reports it are such that most doctors can get out of date very rapidly and practise in a way which may bear very little relation to the current base of evidence. The development of initiatives such as the Cochrane Collaboration [3] will, in time, produce an evidence base. The adoption of this knowledge and the use of the techniques of systematic evaluation of the literature will, if adopted primarily by younger prac- titioners, produce a major challenge for older pro- fessionals not used to these techniques and dependent on opinion rather than evidence.

However, unless the evidence-based approach to medi- cine is built not just on effectiveness but evidence of cost-effectiveness, it is highly probable that the Cochrane Collaboration and other such initiatives, e.g. the ‘guide- lines industry’, will produce practices that are inefficient. Such inefficiency will waste scarce economic resources and, because it consequently deprives other patients of care from which they could benefit, is unethical. Such inefficient and unethical practitioners will be targeted by purchasers who may rightly divert contract income from their institutions.

The principle on which scarce NHS resources should be allocated is efficiency. The goal of NHS policy makers is to produce the maximum volume of health gain from a limited NHS budget of €35 billion. The attainment of this goal requires clinicians to allocate their resources cost effectively, i.e. to those patients who can benefit most per unit of cost.

In practice, NHS resources may not always be allo- cated in this way. As Fuchs argued:

At the root of most of our major health problems are value choices. What kind of people are we? What kind of life do we want to lead? What kind of society do we want to build for our children and grandchildren? How much weight do we want to put on individual freedom? How much to equality? How much to material progress? How much to the realm of the spirit? How important IS our own health to us? How important is our neighbour’s health to ua? The answers we give to these questions, as well as the guidance we get from economics, will and should shape healthcare policy 1251.

If such criteria result in resource allocations that are inefficient, such choices must be explicit so that it is possible to determine how much gain in patient health has been foregone to achieve these social (non-efficient) goals. Social values may make it appropriate to be inefficient and unethical but decision makers, whether they are clinicians, policy makers or politicians, must account for such practices and explain why and at what cost their choices reflect social values rather than the efficient use of society’s scarce resources. The usual and basic principle to determine the rationing of healthcare is the efficiency, not the mere effectiveness, of competing

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interventions. The clinician is obliged, if his or her work is to be demonstrably efficient and ethical, to do every- thing for his or her patient that is cost-effective. If a clinician exceeds his or her brief and delivers care that is merely effective, scarce resources will be wasted and patients in the NHS queue will be deprived of cost- effective care from which they could benefit.

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Loewy E. Letter to the Editor. New Engl J M e d 1980; 302: 12 Department of Health. Research for Health: A Research and Development Strategy for the NHS. London: Department of Health, 1991 Sheldon TS, Chalmers I. The UK Cochrane Centre and the NHS Centre for Reviews and Dissemination: respective roles within the information systems strategy of the NHS R&D programmes, coordination and principles underlying collab- oration. Health Economics 1994; 3: 201-3 Sackett DL, Rosenberg WMC. On the need for evidence- based medicine. Health Economics 1995; 4: 249-54 Cochrane Pregnancy and Childbirth Database. Cochrane Updates on Disk. Oxford: Update Software, Disk Issue 2, 1993 Lomas J. Teaching Old (and Not So Old) Docs New Tricks: Effective Ways to Implement Research Findings. Hamilton, Ontario: McMaster University, CHEPA Working Paper Series

Preemantle N, Grimshaw J, Hurwitz B et al. Implementing clinical practice guidelines: can guidelines be used to improve clinical practice? In Effective Health Care 8. Leeds: School of Public Health, Leeds University, 1994, pp. 1-12 Grimshaw JM, Russell IT. Effects of clinical guidelines on medical practice: a systematic review of rigorous evalu- ations. Lancet 1993; 342: 1317-22 Cochrane AL. Effectiveness and Efficiency. London: Nuffield Provincial Hospitals Trust, 1972 Hampton JR. The end of clinical freedom. Br Med 1983;

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Drummond MF, Stoddardt GL, Torrance GW. Methods for the Economic Evaluation of Health Care Proarammes. Oxford:

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of Pharmaceuticals. Press Release 94/25 1. London: Department of Health, 1 9 May, 1994

15 Freemantle N, Henry D, Maynard A, Torrance G. Promoting cost effective prescribing; Britain lags behind. Br Med J 1995; 310: 955

16 Backhouse ME, Backhouse RJ, Edey SA. Economic evalu- ation bibliography. Health Economics 1992; 1 (Suppl)

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soundness of economic evaluation in the pharmacy literature. Am J Hosp Pharm 1991; 48: 2622-7

19 Uhvarhelyi S, Colditz GA, Arti Rani AB, Epstein AM. Cost- effectiveness and cost benefit analyses in the medical literature: are the methods being used correctly? Ann hit Med 1992; 116: 238-44

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21 Gerard K. Cost utility in practice: a policy makers guide to the state of the art, Health Policy 1992; 21: 249-79

22 Gerard K. Setting priorities in the new NHS: can purchasers use cost utility information. Health Policy 1993; 25: 109-25

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Appendix 1 Guidelines for Good Practice in Economic Evalu- ation (Department of Health/Association of British Pharmaceutical Industry) [14].

1. The question being addressed by the study, including the demographic characteristics of the target popu- lation group, should be identified and be set out at the start of the report of the study. The conceptual and practical reasons for choosing the comparator should be set out and justified in the report of the study. The treatment paths of the options being compared should be identified, fully described, placed in the context of overall treatment, and reported. Decision analytic techniques can be helpful in this regard.

4. The perspective of the study should ideally be societal, identifying the impact on all parts of society, including patients, the NHS. other providers of care, and the wider economy. However, costs and out- comes should be reported in a disaggregated way so that the recipients of costs and outcomes can be identified. Attention should be drawn to any signi- ficant distributional implications. Indirect costs should normally be included in a societal perspective although care should be taken to avoid any double- counting and results should be reported including and excluding these costs. The study should use a recognized technique. These include Cost Minimization Analysis (CMA),

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Cost-Effectiveness Analysis (CEA), Cost Utility Analysis (CUA), and Cost-Benefit Analysis (CBA). Any one of these could be appropriate according to the purpose of the study. The report of the study should include justification of the technique chosen. In choosing the method of data capture and analysis, the use of one of, or a combination of, prospective or retrospective randomized clinical trials, meta- analysis, observational data and modelling should be considered. The reasons for choice of method and, where relevant, for choice of trials should be reported. Assessment of the question should include determin- ing and reporting what additional benefit is being provided at what extra cost using incremental analy- sis of costs and outcomes. Outcome measures should be identified and the basis for their selection reported. Where CUA is used, proven generic measures of quality of life are preferred.

9. All relevant costs should be identified, collected and reported. Physical units of resource use should be collected and reported separately from information about the costs of the resources. Costs should reflect full opportunity cost, including the cost of capital

h.

7.

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and administrative and support costs where rel- evant. Average cost data is often acceptable as a proxy for long run marginal cost.

10. Discounting should be undertaken on two different bases: - all costs and outcomes discounted at the pre-

vailing rate recommended by the Treasury, currently 6% per annum; all costs and monetary outcomes discounted at the Treasury rate, currently 6'%, but non- monetary outcomes not discounted.

Both sets of results should be reported. The physical units and values of costs and outcomes prior to discounting should also be reported.

11. Sensitivity analysis should be conducted and reported. The sensitivity of results to all uncertainty in the study should be explored. This should involve the use of confidence intervals andlor ranges for key parameters, as appropriate. The ranges and choice of parameters to vary should be justified.

12. Comparisons with results from other studies should be handled with care. Particular attention should be paid to differences in methodology (such as the treatment of indirect costs) or differences in circum- stances (such as different population groups).

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