Patient Empowerment and the Collective Action Problem

In an insightful paper with human interest but also public policy implications Jasmin Barman-Aksözen writes:

My parents and I searched throughout my entire childhood for an explanation of why I frequently had unbearable burning pain after spending even short periods of time outdoors on a sunny day. This pain was incapacitating and often left me in agony for days, during which I was unable to go to school, to sleep, to tolerate even weak light exposure, or the body heat of my parents as they tried to comfort me. Not a single pain killer provided any relief, and the only option for me was to wait alone in a darkened and cooled room until the pain sub-sided. Of course, we tried everything that physicians recommended; still, not even high sun protection factor sunscreens helped prevent the symptoms despite the fact that they were obviously caused by sunlight. It must have been hard for my parents to see me in such a painful state without being able to alleviate or prevent it. What’s more, the worst thing was that classmates, teachers, and even physicians did not believe me when I told them about the symptoms; I even brought photographs showing myself with swollen and burnt hands and face. Yet, this didn’t stop some from making fun of me when I wore long clothing, hats, or used an umbrella on sunny days to protect myself from the sun’s rays. Eventually, after I was sent to see a psychologist for my “made-up symptoms,” I could no longer tolerate the derision and being treated with such condescension, and decided to stop sharing my experiences with healthcare professionals altogether.

Finally, a full 26 years after the first symptoms, Dr Google provided the answer! In April 2006, I found myself yet again unable to sleep because, despite all precautionary measures taken, I had burnt myself in the strong sunlight of spring. I entered the combination of my symptoms in the Google search mask and, surprisingly, there was a new link in Wikipedia with an expression I had not encountered before “Erythropoietic Protoporphyria.”

The made-for-tv aspect continues as Barman-Aksözen earns a PhD, moves to Switzerland to join the world’s leading lab studying these issues and, yes, develops the first effective treatment!

Afamelanotide was approved for the treatment of adult EPP patients in the European Union (EU) at the end of 2014.

But now is where reality and public policy step back in.

In April 2019, most EPP patients in Europe, however, still do not have access to the only treatment for their condition and are still unnecessarily suffering from fre-quent excruciating pain, social isolation, and impaired life choices. What went wrong? Before a newly approved medicine reaches patients, most European countries per-form a Health Technology Assessment (HTA) to evaluate the benefits in relation to the costs of the new product in order to support decisions on whether it should be reimbursed by the respective national health systems.

Getting the drug approved is only the first step. Now they have to get the medical authorities to pay for it and that means they have to show the drug is not only effective but cost effective given the disability. Barman-Aksözen goes on to describe her efforts to get the drug approved for actual use. She doesn’t put it this way but essentially she has to solve the collective action problem and form a lobbying group to make the case that patients with her disease, EPP, face a serious disability. It’s easy to measure death, however, but hard to measure the “disability weight” on say blindness. The WHO says blindness has a disability weight of .195 today, but in 2004 they gave it a weight of 0.594. Hmmm. One study of Afamelanotide suggests it has a cost of £373,000 per DALY averted, which is high, even though the article recommends adoption. Many meetings ensue in which the case for and against Afamelanotide is made. The process is slow. Years go by. Much depends on seemingly minor choices in how to present the data.

I was reminded of Mancur Olson’s discussion in the Rise and Decline of Nations:

Distributional coalitions make decisions more slowly than the individuals and firms which they comprise [and] tend to have crowded agendas and bargaining tables…The accumulation of distributional coalitions increases the complexity of regulation, the role of government, and the complexity of understandings, and changes the direction of social evolution.

In other words, socializing health care means socializing decisions about how to allocate health care. A difficult tradeoff.

Addendum: The FDA has yet to approve Afamelanotide.

Hat tip: Joe P.


It is perfectly reasonable for a purchaser or payor (EU governments) to perform the Health Technology Assessment for reimbursement or payment, or else you would be ingesting apricot kernels to cure your cancer. Similarly, it is not unreasonable for the FDA to screen drugs.

From the post, it also appears that the EU has approved the drug in 2014, but the decision is on whether governments will pay for it.

So, its not an approval issue, but a payment issue in the EU; and would not be a payment issue in the US, provided your private insurer is willing to reimburse.

As for collective action, a number of disease related organizations, cancer, diabetes, etc. are lobbyists for reimbursement. Which is also why drug companies contribute to their cause.

I am confused as to what you are trying to comment on. You just repeated what the article said.

Ricardo, I read the post as saying that government is unnecessarily impeding the approval and use of an effective drug. Perhaps you didn't.

Alex had me until the last, ever-present line about the FDA.

I don't get it. This drug is for a very rare disease and was developed at great cost. Someone will have to pay for that, and at the price demanded by the manufacturer it is very unlikely to be the patient.

Despite the impressive story behind its development, the drug appears to have pretty limited efficacy. So governments and insurers are reluctant to pay for it over the innumerable alternative uses of health dollars.

Coming from a country with a very good socialised medical system, I see this as things working pretty much as they should. Short of patients self funding (which they won't), what is the alternative?

Isn't economics about making rational choices?

I should add - I'm a doctor who sees patients who are in similar situations with rare diseases. I do my best to advocate for access to new treatments, but every disease now has a lobby group doing the same thing. There has to be some independent arbiter of what gets funded and what doesn't.

The last line is a factual statement! Maybe you are reading more into it than I intended.

As would be this line, assuming it the last one under discussion - 'In other words, privatizing health care means privatizing decisions about how to allocate health care. A difficult tradeoff.'

It is a distinction without meaning, since it is obvious that whenever finite resources need to be allocated, the allocation, regardless of the process, will inevitably lead to difficult tradeoffs.

A fact noted below by several people before 10:30am.

There are two issues here. One is who pays for the costs of this new drug. The problem with taking that cost out of the health care system is that other patients will suffer when the funds aren't available for their health problems.

The second problem is quick approval of this new drug. After all what could go wrong if we just forced the FDA to approve the drug? A simple one word answer: thalidomide.

It is! I did not mean to imply otherwise.
I just don’t understand the libertarian critique of this situation.

Also, in looking at the paper, you will find: ' Based on the assumed small effectiveness, the G-BA came to the conclusion that the additional benefit of the afamelanotide treatment is small, which would have made reimbursement by German health insurers very unlikely.,,,The G-BA committee finally changed their assessment from “small benefit” to “not quantifiable,” which is in line with EMA’s approval under exceptional circumstances. Because the manufacturer and the representation of the German health insurers could not reach an agreement over the pricing of afamelanotide, an arbitration board was called to facilitate a pricing agreement which would balance the budget impact on the German health system against a reasonable return on investment for the manufacturer. After a pricing agreement was reached, the manufacturer of afamelanotide adopted a uniform approach using the German agreement as the basis for its pricing policy in other European countries. Since April 2017, afamelanotide is reimbursed in Germany, and all adult EPP patients are entitled to access the treatment."

England also found a small benefit: Similar to our experience with German bodies, the NICE committee also concluded that the afamelanotide treatment would only provide a “small benefit” and, based on this assessment, did not recommend reimbursement by the National Health Service (NHS) in their preliminary Final Evaluation Determination.19 EPP patients during the committee meetings shared their firsthand experiences with the afamelanotide treatment, which they described as being nothing less than life-changing, and stated that, under treatment, they were able to spend several hours outdoors on sunny days in contrast to the few minutes without the treatment. These testimonies were confirmed at the committee meetings by the expert physicians from the British Association of Dermatologists (BAD), by the written statement of IPPN and, in addition, by 34 online comments from national and international EPP patients and carers submitted during the consultation phase. In its submission, the IPPN further explained the recalculation of the original trial results by the EMA. The NICE committee in their documents of the proceedings commented that the patient and expert physicians input “was noted” and “has been considered.”20 We were therefore rather surprised to learn that even after the second committee meeting, NICE maintained their negative recommendation and initial interpretation of a small benefit."

The question I have is this: is this a collective action issue or a marketing campaign; is it a pricing dispute; is it a small benefit.

What Bill describes is the fundamental problem with clinical trials whose endpoints are subjective. Patient reported outcomes have to be carefully judged in order to demonstrate efficacy. It's also much more difficult to assess efficacy with very small patient populations where the statistics often unreliable.

"So, its not an approval issue, but a payment issue in the EU; and would not be a payment issue in the US, provided your private insurer is willing to reimburse."

"provided your private insurer is willing to reimburse" is the key clause but it also is not quite correct. Insurers usually cover more than they would be willing to in a free market because of "adequacy" regulations that have usually been interpreted very broadly by the courts. If only there were more emphasis on cost-effectiveness in the US (by both the government and insurers)...

There is a difference between FDA determining that a drug is "safe and effective" and a bureaucracy calculating the value of the benefit produced by that drug relative to its cost, and determining whether you can have it based on that calculated cost/benefit ratio.

Because, determining "value" in this way is inherently political and not scientific. A well-organized group (e.g., parents of autistic children) is likely to get even costly treatments of questionable value approved, whereas those who have a rare medical condition and are poorly represented (if at all) are likely to find that, absent political clout, treatments for this rare condition likely will be considered to not be worth their cost.

A democratic government is political; how could it not be? Therefore it inevitably makes decisions based on political considerations.

Progressives of old thought government bureaucracies could be insulated from politics; they were wrong.

'There is a difference between FDA determining that a drug is "safe and effective" and a bureaucracy calculating the value of the benefit produced by that drug relative to its cost, and determining whether you can have it based on that calculated cost/benefit ratio.'

As noted below by Eric - 'ALL Payers need to be convinced of the cost-benefit analysis prior to initiating coverage of a drug' That obviously includes the bureaucracy calculating the value of the benefit produced by that drug relative to its cost, and determining whether you can have it based on that calculated cost/benefit ratio, of a for profit health insurer.

Don't fall for the silly framing. Any time a finite resource is allocated, there are tradeoffs, and those tradeoffs become political questions. This is just as true for a for profit American health insurer as it is for the NHS.

Private insurers also rate the effectiveness of treatments and determine the contents of their formularies. They don't just pay for anything and everything. In fact in the US they are often more restrictive than the public programs.
And overall we will gave some sort of process to determine the approval of drugs. The FDA dates from long before Medicare.

'most EPP patients in Europe, however, still do not have access to the only treatment for their condition '

Yes, they do. As noted just a couple of lines further on - 'Now they have to get the medical authorities to pay for it.' The question of who can pay is clearly not about access - at least if one is familiar with the American health care system.

It is fascinating to see someone simply ignore the fact that those patients are free to pay for the medication themselves, as if someone who grew up in Canada has internalized the idea that 'medical authorities' pay for medications, instead of patients. It is plain that those who allocate resources need to make decisions about allocations, as resources are not infinite. A process that occurs with for profit health insurance companies in the U.S. for the same basic reason, who face precisely the same difficult tradeoff, though they do need to ensure profit for shareholders, of course.

Luckily, American patients, who do not have to suffer the problems of essentially universal European health care systems, are not confronted by this cruel situation. Of course this addendum goes almost without saying when reading a post from Prof. Tabarrok concerning pharmaceuticals, Europe, and the U.S. - 'Addendum: The FDA has yet to approve Afamelanotide.'

At "The annual costs of therapy with SCENESSE® range between €56,404 and €84,606 per EPP patient per annum." it's available to some people, but certainly not many.

Well, the article says this concerning one of those 600 affected Americans - 'When Beck’s condition worsened and her life closed in on her, she decided those costs were worthwhile.

She and her husband took out a loan against their home in Cromwell, Conn., held fundraisers, and accepted donations. “It’s been a serious lesson in how to be thankful and how to receive graciously,” said Beck, an occupational therapist and mother of four. “When someone you know who’s 90 years old sends you a $5 bill, it breaks your heart.”

The roundtrip airfare to Zurich, plus the therapy, ran the family $120,000 over the course of a year. But she can endure lightbulbs now, and her cover-up clothes sit folded in a dresser. Even the sun — which she avoided since before she could walk — is no challenge.'

Has she thought of suing the manufacturers of light bulbs? No doubt Bernie and the other clowns wold encourage her.

Just to clarify, FDA approval only governs marketing and the availability of institutional payment. American doctors are entirely free to prescribe the drug, though.

Well, the article says this - 'For now, because it hasn’t yet been approved yet in the U.S., any American who wants to use the drug has to pay their own way for the medication and travel costs to get it.'

Ah yes... where the doctor is free to prescribe the drug but the patient is not free to buy the drug in the US. Kind of a distinction without a difference, no?

Reimbursement issues are always complicated whether it is in Europe where national health authorities or in America where it is third part insurers. While FDA has not approved this drug, it's not clear to me whether Clinuvel has applied for licensure to the FDA. Since this is the only known treatment for the disease, I'm reasonably sure that this would receive an accelerated review by FDA.

There is also a major inaccuracy in the link Prof. Tabarrok posted. The compound was not discovered by Clinuvel, but rather scientists at the University of Arizona originally as a sunless tanning agent. It also had to be formulated into a sustained release form as it is rapidly cleared from the body and since it has no, or limited, oral availability must be injected. A lot of work had to go into the formulation of the drug.

I don't know what the world wide number of patients is who suffer from erythropoetic protoporphiria is but the number in the US is about 600 from the article I've read. this really complicates pricing decisions as manufacturing costs and profit have to be amortized over a very small patient base. Pharmaceuticals of this type will never be inexpensive.

The technology was patented by the University of Arizona however Clinuvel developed the drug referred to (after some failures by previous patent holders. Once called the Barbie Pill, the technology has a long history).

The disease described in the article is one of many diseases caused by sun exposure and Clinuvel provides estimated patient population size, FDA application status as well as research under way at the Clinuvel website. The issue not raised in the article is the value of research which improves the lives of a small patient population today but leads to a cure for more common diseases.

Since the technology was first patented, the goal has been skin cancer prevention. Melanotan an initial formulation in pill form by a prior patent holder was found to result in natural tanning, burn prevention and increase in libido, e.g. the Barbie Pill.. FDA approval was never sought - the speculation: would the FDA approve a recreational tanning pill.

There's been published literature on this condition for more than 50 years. If she had trouble with this from 1980 to 2006 without a diagnosis from a specialist, sounds like she was in a perfect storm of doctors who do their jobs the half-assed way.

Doctors can only know so much stuff and can only devote so much research to particular patients. As the saying goes, "if you hear hoof beats, think horses, not zebras". I'm going to bet that almost every doctor in the world is ignorant about this condition, and it is probably to the benefit of nearly all patients that almost all doctors are ignorant about this condition.

Had I been consulted as a new doc back in the '70's, I would have had the diagnosis for you at the first visit. I have by now about forgotten about these rare conditions, as I might have only seen a few porphyria related cases over the years. I'm going to send this link over to my daughter, who is now a new doc. And see if they still teach you this stuff in med school.

University medical centers have libraries, librarians, databases, and well-stocked journal collections. Yes, you can see physicians therein, doing research. We're talking about 26 years worth of failure and (unless she's lying) she gets a lead with a Google search. And, unless she's lying, their ultimate response to her problem wasn't to refer her to a specialist at a university medical center, but to accuse her of malingering.

I will ask my dermatologist (who is also a medical school professor). I'll bet he gives me a half hour lecture on the history of the condition, the current state of research, and what he thinks is the best treatment.

Phooey on whoever did not treat her for 26 years.

I work in the pharmaceuticals field, and this is the way it works regardless of whether the payer is a government or private insurers. ALL Payers need to be convinced of the cost-benefit analysis prior to initiating coverage of a drug. The field is called Health Economics and Outcomes Research (HEOR) and it's a critical component to every life sciences company, including those that only have approvals in the US.

'and this is the way it works regardless of whether the payer is a government or private insurers'

Of course it is, but it is important that as many Americans as possible think that it is only 'socialized medicine' that faces such challenges - and is unable to solve them.

'ALL Payers need to be convinced of the cost-benefit analysis prior to initiating coverage of a drug.'

Which is not the same as saying patient/manufacturer/research lobby groups needs to be convinced of anything but their own benefit, even if only potentially. (Which in the case of a disease like ALS, for example, is thoroughly understandable.)

The funny part is that Dr. Barman-Aksözen is not against socialized health care with socialized decisions about how to allocate health care.

It seems her point is including and empowering even more people on the approval of new drugs. Judge yourself:

"- Patients are directly affected by every decision concerning their treatment and, therefore, need to be included in all relevant steps during proceedings on national and international level.

- Especially in rare diseases, patients and disease experts know the most about the conditions and can contribute unique insights. However, their inclusion is only meaningful if they are also accepted as equal stakeholders."

What is the marginal cost of this drug? Patients should pay the marginal cost. Period.

And when price is reduced to marginal cost, and that is the last drug ever produced for a rare condition, are you happy with that?

With monopsony power, the government can set reimbursement rates such that the pharmacy companies remain profitable, but not insanely profitable.

No public funding of drugs development and production is possible if drugs are sold at marginal costs?

As a dodecapeptide, I would guess the marginal cost is never going to be very low- I could put this together in a day with solid-phase synthesis, but it would be a tedious day, and I would still have to purify the damned thing to meet FDA type regulations for purity, which, in this case, would be HPLC on some sort of scale. Additionally, it appears it only works with a subcutaneous implant, and the effect wears off as the tan fades, and has to be repeated.

If I had to make an educated guess, the marginal cost is probably no less than 10% of the cost of the treatment today, and might well be higher.

The manufacturers redact a lot of this information, but it seems to be £697,510 over the patient lifetime - from the underacted information this seems plausible as the cost of treatment alone is £12,020 per two months and after approximately ten years of treatment on the NHS things get discounted into nothingness anyway.

The biggest “distributionist coalition” I want involved in my health care decisions are my immediate family and my physician (whom I’ve known for 30 years, ever since he opened on day one out of med school and I was 20). And I’d like my wife’s opinion to be weighted more.

In fact, in a way, she herself—like all of us—is her own distributionist coalition, a collection of sometimes competing interests.

Why is this feel-good story even news? (1) inventor invents new drug, viewed with suspicion, (2) society (including government) does not immediately recognize new invention , (3) inventor laments lack of societal recognition (possibly even lack of money coming her way).

Yawn. Same as it ever was. "Science progresses one funeral at a time" is the meme. As I've said before, if we had a better patent policy we'd have flying cars by now...

You should interview the CEO of Clinuvel for MR on this.

>socializing health care means socializing decisions about how to allocate health care


And now you know why it is a terrible idea.

Dear Trans, Insurance is a socializing of risks across a large population. When you purchase insurance, if there is no pre-existing exclusion, you are sharing not only risks, but the costs of your pre-existing condition with other insureds.

Don't get hung up using the word "socializing"--try "risk spreading"

And, don't think that the insurance carrier isn't going to bargain as a purchaser, just as some governments do, and don't think that every carrier puts every drug on the formulary.

Socializing means risk spreading to people who are not voluntary parties to the transaction. If I buy insurance privately, only the other people who buy the same insurance are in the risk pool with me, so they've obviously consented to pay my costs contingent on a loss, just as I've consented to pay theirs. Risk and Insurance 101

A distinction without a difference.

How the hell do you know who in your pool might have, or get, a condition requiring some highly expensive treatment?

You don't know. You buy a policy, assuming you even have a choice and are in an employer-based plan, from one of a small handful of companies based on what you think of the usually small differences in their offerings.

Don't wander off into libertarian fantasyland in describing this.

As your humble commenter has noted before, perhaps it's time we face the uncomfortable truth that we simply don't have the resources to meet everyone's medical needs.

On the other hand, if sufferers of this disease find themselves unable to afford the expensive medication, there's always GoFundMe...

Alex’s post makes a subtle point that most comments here seem to miss. The EU has approved the drug, which means one can get it, it’s the approval for reimbursement by national health care that’s still pending. The US, on the other hand, hasn’t even approved the drug, which means that one cannot get it in the US.

Now, tell me, which side of the Atlantic is more bureaucratic?

Do you know anything about when the company applied? Do you know anything about efficacy or results of foreign clinical trials?

What, if any, knowledge do you have. Or, do you just like to use the word bureaucratic because you learned how to spell it.

Bill, if you had done a simple google search before rushing to your “America First”-style answer, you could have found the answer yourself.

The Company applied for approval in the EU and the US in the same year: 2008.

So, do you have a reason why it was not granted yet.

This is 2019.

The author did not claim that the FDA was acting inappropriately. I suspect that your search revealed the application for the purpose not discussed in this case. Probably sunburn prevention.

'Alex’s post makes a subtle point that most comments here seem to miss. '

Well, it seems you missed this not so subtle point, noted by Bill - 'Since April 2017, afamelanotide is reimbursed in Germany, and all adult EPP patients are entitled to access the treatment.' That agreement is used throughout Europe, at this point, it should be pointed out.

I don't really understand this post. What social or economic system is Prof. Tabarrok proposing which he thinks would infallibly enable people with rare diseases to obtain expensive drugs at prices they could afford?

Maybe the treatment is just too expensive and not good enough. There are different payers for each country in Europe. If they all independently reached to the same conclusion then it is probably true.

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