Why Provenge Proves Everything Wrong With Medicare
On Monday, we talked about Dendreon's (DNDN) $93,000 Provenge treatment, which will now be covered by Medicare, a huge win for the company. But is it a huge loss for everyone else?
Beating Buffett says what everyone is thinking but no one wants to say:
Nobody wants to be the decision maker condemning a terminal patient to death a few months earlier than might be possible. What’s ignored, though, is that funds for treatment for the entire population are finite. If these near-death patients gain up to four months of poor quality of life it comes at the expense of denying billions of dollars of other, more routine care to younger, other beneficiaries that have real long-term prospects for productive lives.
There is no free lunch. Keeping someone alive for an extra 120 days could end up depriving thousands of people their basic health care needs. That our system is designed to prevent any cost/benefit analysis is absurd and ultimately dangerous to the health of the majority of Americans.
If the patients actually receiving this drug were asked to pay out their own pockets (and could afford it) I doubt that they would choose to spend the money that way as opposed to leaving it to their remaining family members. It’s always easy, though, to demand that somebody else pay for any and all treatments you desire and have available regardless of cost.
How do you value four months of someone's life?
Karl Denninger seems to feel this is the very root of our economic malaise, writing:
We cannot have a sustainable medical system in this country so long as the standard for whether you're entitled to some sort of treatment is simply "will it provide any benefit whatsoever irrespective of cost." Dendreon's (DNDN) Provenge is just one of thousands of examples. There are many conditions that are, within medical certainty, a death sentence. Metastatic prostate cancer is one of them. Most pancreatic cancers are another. The fact of the matter is that we can write checks with our medical technology that we cannot cash with our economy. There are two ways to ration any product or service: By price, and by political fiat. We choose to do neither and instead force the cost on others. This practice is bankrupting the country.
Dendreon knew it could price Provenge as high as they wanted, Medicare rules forbid negotiation on prices. So before you go whining about me being a heartless asshole, let's be real about it: maybe if Medicare actually worked logically, I'd have more sympathy for saving it.