Ethical Considerations in

Healthcare Costs
Joshua Kornbluth, MD
June 13, 2016
Disclosures
• Research funded by:
• Pfizer, Inc
• Vivonics, inc
• Site PI on NINDS-funded studies
Goals
• Educate
• Encourage critical thinking and decision making
• Withhold judgement

• Resource allocation and Rationing

• Pharmaceutical influences
 Philosoph
Economics
y

Politics &
Medicine
Policy
Healthcare
Ethics
A Tale of Two Tumors
• Jake-1 has a good job, moderate savings, insurance through his
employer
• Exercises, eats healthy, routinely sees his PCP – pays co-pays
• He has vague symptoms, CT and PET scan is ordered, insurance pre-
auth takes 4 weeks
• He is found to have colon cancer
• Rec’d: extensive surgery + chemo ($100k/yr!)
• Depletes his family’s savings, takes a second mortgage on the house,
can’t work, barely making by on disability insurance
A Tale of Two Tumors
• Jake-2 has no job (on the books), no home, no credit
• EtOH abuse, smokes 2 PPD
• Shows up to the ED with complaints of abdominal pain
• Routine bloodwork shows severe anemia and admitted
• While admitted he gets a CT which shows similar tumor
• Gets Medicaid and ultimately has same surgery and Chemo Rx
recommended
• Medicaid pays, he incurs minimal out of pocket expenses
A Tale of Two Tumors
• Jake-1 and Jake-2
• Is one more deserving of the treatment?

• Who decides?
• You?
• Policy-makers?
Healthcare Ethics
• Set of moral principles, beliefs and values that can guide us in making
choices about medical care

• Autonomy: to honor the patients right to make their own decision

• Beneficence: to help the patient advance his/her own good
• Nonmaleficence: to do no harm
• Justice: to be fair and treat like cases alike
Healthcare History
• Europe. Late 1800s: Social
insurance
• Compulsory sickness insurance
• Income stabilization and
protection against wage loss of
sickness, not payment for
medical expenses
• Used as a political tool
• USA: 1800s
• Federal Gov’t: let the states deal
with it
• State Gov’t: let private and
voluntary programs deal with it
• Roosevelt: supported health
insurance but very little done to
advance it
Healthcare History
• Debate on national health insurance continues until the 1920s
• NEJM 1932: Recommendations of the Committee on the Costs of
Medical Care
• Economists, philanthropists, physicians
• More resources should go to healthcare but stressed voluntary not
compulsory health insurance
• AMA hated it
• JAMA editor called it “an incitement to revolution”
Healthcare History
• 1945: Harry S Truman
• “Millions of our citizens do not now have a full measure of
“I put it to you,
opportunity it is and
to achieve un-American to Millions
enjoy good health. visit the
do sick,
aid
not nowthe
haveafflicted
protection oror comfort
security againstthe dying?
the economic
effects of sickness. The time has arrived for action to help
I thought
them attain thatthat wasand
opportunity simple Christianity.”
that protection.”
• Proposed that every wage earning American pay
monthly fees or taxes to cover the cost of all medical
expenses in time of illness
• Communism, the AMA and the “un-American” plan
Healthcare History
• 1965: Lyndon B Johnson
• Medicare for the elderly
• Medicaid for the poor

• 1986: Regan  COBRA

• 1988: Medicare Rx drug benefit
• 1989: that’s repealed
• 1997: Clinton’s expansion of Medicaid to moderate income families
• 2003: Rx coverage back under Bush
• 2010: ‘Obamacare’
US health care spending: 1962-2008
2500

2000
Dollars (billions)

1500

1000

500

0
1962 1966 1970 1974 1978 1982 1986 1990 1995 1998 2000 2008
Year
Source: HCFA, CMS
Health spending vs GDP in OECD nations
United

Per capita health Spending ($PPP)*

6500
6000 Belgium
States
Luxembourg
5500
Australia
5000 Norway
Switzerland
4500 Austria Iceland
4000 Canada
France
3500 Germany Netherlands Denmark
Greece
3000 Italy
Ireland
Czech New Zealand
2500 Republic
Portugal Finland
Spain Sweden
2000 Japan United Kingdom
Slovak
1500 Republic Korea
1000 Hungary
Poland
500 Turkey Mexico

0
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70
Per capita GDP (thousands $PPP)*
*Purchasing power parity
Source: OECD in Figures, 2006, 2007
The problem with $$
• Ethical framework is in a lot of ways easier when applied to a single
moral agent
• Terry Schiavo, Nancy Cruzan, Karen Ann Quinlan
• Overall medical ethics has moved towards giving priority to the
principle of autonomy over that of beneficence (Understanding Health Policy: A Clinical Approach. 6th ed)

• Should limits be set on treatments given to people with high-cost

medical needs, so that other people can receive basic services? 
Consider the Lakeberg twins - 1993
• Conjoined twins sharing one heart and liver, actively dying
• CHOP – team of 18 physicians and nurses performed surgery
• Chance of survival quoted at 1%
• Amy died immediately, Angela survived for 10 months in the hospital
• Cost estimated at ~$1 million
• Medicaid covered <$1000/day
Consider the Lakeberg twins - Dilemmas
1. Physician’s duty of beneficence and nonmaleficence vs distributive
justice
• Strictly Beneficence followed
2. Patient’s autonomy vs society’s claim to distributive justice
• Essentially ignored distributive justice
Scarce Resources
• Nurses • Patients
• Doctors
• Allied health professionals
• Hospital Beds
• ER
• ICU
• OR
• $$$
• Time
Distributive Justice
• Equitable distribution of scarce resources among all socioeconomic
groups and population sectors.
• At its core, the goal is to reduce inequalities
• Justice for the individual vs Justice for the society
Which chemotherapy?
• Jake has colon cancer
Chance of Chance of Cost/yr
benefit % death %

Chemo A 5 5 $1000

Chemo B 50 33 $5000

Chemo C 70 10 $100000
 Balancing Ethical Scales
Chance of Chance Cost /yr
benefit % of death
%
• Autonomy • Chemo C

• Non-maleficence • Chemo A
Chemo A 5 5 $1000
• Beneficence • Chemo C
Chemo B 50 33 $5000
• Justice • Chemo B
Chemo C 70 10 $100000
 Balancing Ethical Scales
Chance of Chance Cost /yr • Justice
benefit % of death
% • you cannot use chemo C
• Non-maleficence
• you must not use chemo B
Chemo A 5 5 $1000
• Beneficence
Chemo B 50 33 $5000 • chemo A is better than nothing
• Autonomy
Chemo C 70 10 $100000 • Patient can chose either chemo A
or nothing
Ethics of Rationing
• Need > availability  rationing
• Some deny that rationing occurs and contend that their professional
obligations require them not to participate in rationing (Strech 2008)
• Others admit to rationing and see just allocation of medical care as
part of physicians’ ethical duties. (Cooke 2010)
• Survey of intensivists: only 60% claimed they provided “every patient
all beneficial therapies without regard to costs.” (Ward 2008)
Proposed Principles of Distributive Jutice

To each person an equal share

To each according to need

To each according to effort

To each according to free market conditions

To each so as to maximize overall usefulness

Principles of Biomed Ethics, 2009
Three important ethical theories
• Utilitarian - greatest good for greatest number (maximise ‘utility’ or
‘happiness’)
• Deontological - cannot ignore duty to one individual for sake of good
of others or society
• Rawlsian – social contract, equal rights to basic liberties, and
social/economic inequalities should be arranged so that the greatest
benefit is offered to the least-advantaged members of society
Ethics and ‘levels’ of rationing
• Theories have varying degrees of applicability at population and
individual level
• Utilitarian and Rawlsian generally ‘population’ level
• Deontological generally individual
• Decision-Making: May adopt different ethical principle at each level
of rationing
 Working with multiple payors
Administrative
$$$ Costs
Trade vs generic
Drug costs R&D
Marketing
Professional fees
Physician &
Surgeon Costs Cost of education

Lights
Hospital Operations HVAC
Environmental

Patients=customers

Gov’t sponsored
research
 Medicare funds spent at the end of life.

Cost considerations
• Jo is 84, has DM, amputations and
multiple strokes.
• Cannot swallow or speak
• Lived in a nursing home for the last 4
years slowly deteriorating
• Her son wants to remove the feeding
tube
• Staff at nursing home feel
starvation/dehydration is cruel and
talk him out of it
• She lives 3 more years costing ~$300k
Cost considerations
• In 2000, estimated 67% of people who died had their last place of care
in the hospital or nursing home
• 33% died at home, with half of patients dying at home cared for by
hospice programs (Teno et al, 2004)
• Family members of patients receiving hospice care at home are more
satisfied with the care than families of patients dying in hospitals or
nursing homes (Teno et al, 2004)
• Patients in hospice programs have lower end-of-life costs than those
not in hospice programs (Emanuel et al, 2002)
• Reduced costs can correlate better care.
Cost considerations
• >80% of a hospital’s budget is not modifiable by providers (Luce and
Rubenfeld 2002)

• Remaining 20%
• Medications, diagnostic and therapeutic equipment, patient care supplies
• Increasing withdrawal of care will not meaningfully impact costs
• But limiting ICU beds or closing ICUs might! (Scheunemann and White 2011)
 Working with multiple payors
Administrative Costs

$$$ Drug costs Trade vs generic

R&D
Marketing
Professional fees
Physician & Surgeon Costs
Cost of education

Lights
Hospital Operations
HVAC
Environmental

Patients=customers

Gov’t sponsored research

Pharmaceutical Costs
• Cost to bring new cancer drug to market: ~1 Billion (Goozer 2004)
• Failed drugs
• Clinical trials
• Salaries
• Advertising
• Should price be proportional to the benefit?
Pharmaceutical Costs
• Pancreatic CA: Median survival is ~6 months
• If a new drug prolongs survival by 2 months, costs $100,000/yr
• Costs $67k over the 8 months survived
• Or $33,500 per each additional month lived = $400k per additional year lived
• Fojo 2009 - Used this to value cetuximab at $800k/yr of increased survival
• 18 weeks of cetuximab treatment for non-small cell lung cancer extends life by 1.2
months
• At this rate, it would cost $440 billion/yr to extend the lives of 550,000 Americans who
die of cancer annually by 1 year.
• Fojo and Grady Recommended that studies powered to detect a survival
advantage for 2 months or less should only test interventions that can be
marketed at a cost of <$20k for a course of treatment
• 2009- Folotyn for peripheral T-cell lymphoma
• ~5600 cases per year
• Has only been shown to shrink tumors, not prolong life
• 12% had a reduction in tumor size lasting 14 wks
• Cost at the time of approval was ~$30k/month
• MSKCC makes headlines by refusing to use a new drug, Zaltrap
• Twice as expensive but no more effective than Avastin
• The drug study was heavily subsidized by NIH
• Both drugs improve median survival in colorectal cancer by 1.4 months
• Wrote an op-ed in the NY Times
• Sonofi responds by cutting cost of the drug almost in half

• http://www.radiolab.org/story/worth/
 Price in thousands of US dollars
Country (rounded to nearest $0.5 thousand)
Imatinib Nilotinib Dasatinib
Pharmaceutical Costs United
States
92 115.5 123.5
Germany* 54 60 90
United
• Just price vs. free market Kingdom 33.5 33.5 48.5

economies Canada
Norway
46.5
50.5
48
61
62.5
82.5
• If a commodity affects the France 40 51.5 71
Italy 31 43 54
lives/health of individuals, just South Korea 28.5 26 22
price seems more appropriate Mexico 29 39 49.5
• Non-essential commodities: Argentina
Australia
52
46.5
73.5
53.5
80
60
competition can regulate price Japan 43 55 72
China 46.5 75 61.5
Russia 24 48.5 56.5
South Africa 43 28 54.5
But what if we can cure it?
• ~3 million Hep C sufferers in US • 2014: >70,000 patients treated
• For certain genotypes, Sovaldi • States respond
had a >95% cure rate with a 12-
• Mass: require documentation of
week course liver damage before approval
• ~$1000/pill - $84-94k treatment • OR, FL, IL
• Hep C is disproportionately • AZ: public insurance limited to 180
represented in low-income approvals per year
patients
• Arguments that cure can lead to
more ‘productive’ years
 Is It Ethical to Withhold Prevention?
Farley, NEJM 2016
• Scenario 1
• 63F with Lung CA with extensive
mets
• No hope for cure, but radiation
and chemo may give her a few
months
• Tx might cost ~$100k
• If she asks for treatment, most
would agree
Value of extending Human Life
• Scenario 2
• A hospital proposes a smoking
cessation program
• Free nicotine replacements
• Smoking counter advertisements
• Cost might be ~$100k
• Odds are there will be resistance
Vs. Cost of the intervention
Can we (should we) put a $ value on human
life?
• “contribution to society” • What is an appropriate target?
• Financial? • Maintenance of Health?
• Alleviation of Suffering?
• Value to family • Prolongation of life?

• Quality-adjusted-life-year – QALY
• Experts range from $25k-$100k
• Eichler 2004
QALY - schmALY
• Cancer drugs – cost up to $800K/QALY
• Diabetes Prevention Program - $14k/QALY but not covered by some
health insurances and not Medicare
• Free nicotine replacement - <$5k/QALY gained. (Ong 2005)
• Mass media smoking cessation campaigns - $300/QALY gained (Xu 2015)
So what’s the difference?
• The woman with lung CA is a person.
• Personhood and agency
• Autonomy
• Benefecence
• Non malefecience
• Justice
• Prevention campaign -
So what’s the difference?
• We have ethical standards for futility
• What if it only works a little
• American Medical Association Code of Ethics
• “Although physicians have an obligation to consider the needs of broader
patient populations within the context of the patient-physician relationship,
their first duty must be to the individual patient.”
Additional questions for thought
• Should someone face a penalty for not contributing to the pot?
• Should a graded contribution result in a greater benefit?
• Population health vs individual health
• Disparities in access and health education
• Risk-averse vs risk-seeking behaviors contributing to diesase
• Restoration of normal function (Norman Daniels) vs enhancement
Evolution of Justice?
Ethical Behavior in Healthcare Economics
• Rationing of health care and cost containment is necessary,
unavoidable, and ethically complex.
• Macro: Policy
• Micro: patient-doctor relationship
• Improve health
• Reduce inequalities in access
Thank you