Results for “organ transplant”
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The Oocyte Cartel

The Society for Assisted Reproductive Technology (SART) represents more than 85 percent of the assisted reproduction industry. SART requires that its members work only with agencies that limit compensation to egg-donors to around $5000 or a maximum of $10,000 (figures decided upon by the ethics committee of an affiliated organization, The American Society for Reproductive Medicine (ASRM)). In other words, ASRM-SART acts as a buyer’s cartel.

In 2011, Lindsay Kamakahi launched a class action suit against ASRM-SART challenging  their horizontal price-fixing agreement as per se illegal under the Sherman Antitrust Act. ASRM-SART tried to have the case dismissed but a judge recently denied the dismissal in the process making it clear that the plaintiffs have a good case.

ASRM-SART argue that their maximum price is really about protecting women and that compensation “should not be so excessive as to constitute undue inducement.” Egg donation does involve extensive screening, time and some health risks. One would think, however, that the proper response for those interested in protecting women would be to ensure that the women are fully informed and that they are paid high wages not low wages.

The paternalistic policy of the ASRM-SART especially rankles because it applies only to women, sperm donations are not regulated. Of course, sperm donation isn’t risky but we also don’t see laws limiting the wages of miners to protect miners (mostly men) from “undue inducement.” The societal expectation seems to be that men are appropriately motivated by self-interest but women may be appropriately motivated only by altruism.

I am in agreement with Kimberly D. Krawiec who writes in her excellent paper Sunny Samaritans and Egomaniacs: Price-Fixing in the Gamete Market:

It is ASRM’s paternalistic and misguided attempts to control oocyte donor compensation through the same type of professional guidelines that courts have rejected when employed by engineers, lawyers, dentists, and doctors that should raise an ethical red flag.

pricecontrolsrentsASRM-SART surely believe that they are doing good but I think it no accident that they also do well from a policy that reduces the price of their inputs. A price controlled below the market price generates rents. In the traditional analysis, the rents are dissipated away by long-lines, a form of rent seeking (see Modern Principles–first edition now a bargain!). It’s also possible, however, for suppliers to grab up the rents, especially suppliers of complementary goods.

For example, it’s often been pointed out that in the organ donor market the hospitals, surgeons and executives all get paid and paid well; the only person not getting paid is the person who provides the transplant organ. But we can say more–one of the reasons the hospitals, surgeons and executives get paid well is precisely that the donor is not paid. The shortage created by the price control drives the demander’s willingness to pay upward and some of the difference between the willingness to pay and the maximum legal price is captured by the suppliers of complementary inputs. How do we know? In the 1990s, entry into the transplant business grew much faster than did the supply of transplant organs. In fact, transplants were so profitable there was a rush to transplant that increased the number of centers but drove down center volume thereby reducing patient survival rates.

Similarly, by limiting egg-supply the suppliers of assisted reproductive services may be able to increase their share of the total gains from trade.

Although ASRM-SART may profit from restricting donor compensation there is another issue at large, the repugnance constraint. The repugnance and disgust centers of the brain are old and deep and often revolve around issues of body integrity, body products, hygiene, sex and death. Birth treads uneasily in many of these waters already and egg donation adds to this volatile mix issues of gender, personhood, identity and genetics all of which prime for a repugnance storm. The plaintiff’s case is sound but if the antitrust laws prevent ASRM-SART from limiting prices–or saying that they limit prices–and if egg donation were to become even more of a market in everything might there not be a backlash and an outright ban on compensated donors, as is the case in many other countries and for transplant organs in this country? I hope not but it is a real possibility.

The ban on compensated transplant organ donation has led to hundreds of thousands of excess deaths. A ban on compensated sperm and egg donation would lead to a dearth of lives.

No-give, No-take in Israel

In Entrepreneurial Economics I argued for a “no give, no take” system for organ donation–people who signed their organ donor cards would be given priority over non-signers should they one day need an organ. The idea has an element of justice to it but the primary goal is to increase the incentive to sign one’s organ donor card.

Israel recently adopted this policy by giving extra points on the allocation system to people who previously signed the organ donor card. In the case of kidneys, for example, two points (on a 0-18 point scale) are given if the candidate had three or more years previous to being listed signed their organ card.  One point is given if a first-degree relative had signed and 3.5 points if a first-degree relative had previously donated.

It’s early but so far the policy appears to be very successful:

Due to the population’s surge of interest in obtaining an organ donor card, the Adi-National Israel Transplant Center has extended through March 31 the deadline to register as a donor and receive special benefits.

…During the past few weeks, Adi’s phone system has collapsed several times due to the high demand.

Since Adi decided to give preferential treatment to those registering as a potential organ donor, tens of thousands of people have registered, raising the number of potential donors to over 600,000. Until last year, the rate of registration was among the lowest in the Western world.

Hat tip to David Undis whose excellent group Lifesharers (I am an adviser) is implementing a private version of no-give, no take in the United States.

Here is my piece on Life Saving Incentives and here are previous MR posts on organ donation.

Bone Marrow Bounty Hunters

Amit Gupta has leukemia and needs to find a  bone-marrow transplant. Gupta is the founder of the do-it-yourself photography site Photojojo and the collaborative-working community Jelly and many of his high-tech friends have jumped to his aid including Seth Godin. Here’s Virginia Postrel:

[Godin offered] to pay $10,000 to anyone who became a match for Gupta and made the stem-cell donation, or to give the money to that person’s favorite charity. The offer, he says, was “a chance to say to my readers, ‘Hey, I care about this. A lot. Money where my mouth is.’”

He picked $10,000 because, he says, it’s “enough money to matter to both the giver and the recipient, without being enough money to sue over, cheat over or corrupt.”

Gupta’s friend Michael Galpert, one of the co-founders of the photo-editing site Aviary.com, quickly matched Godin’s offer. “I would do anything that could contribute to helping save his life,” he says.

With $20,000 at stake, the cause did indeed take on new urgency….There was only one problem. The offer was illegal.

Paying a marrow donor is currently illegal under the same law that makes paying organ donors illegal, despite the fact that marrow donation (technically blood stem cells from marrow) is much more like blood donation or egg donation than donating a kidney. (To avoid the law Godin has modified his offer.) Fortunately, the law might be overturned.

In February, the 9th U.S. Circuit Court of Appeals heard arguments in a lawsuit challenging the constitutionality of the ban on valuable consideration for bone-marrow donations. The suit was brought by the Institute for Justice, a libertarian public-interest law firm, on behalf of plaintiffs who include patients, parents of sick children, a doctor who does bone- marrow transplants and a charity that would like to offer incentives, such as scholarships, to encourage more donations.

The lawsuit argues that since marrow cell transplants aren’t significantly different from blood transfusions, the federal government has no “rational basis” for outlawing the kind of compensation that is perfectly legal not only for blood but also for other regenerating tissues, such as hair and sperm, not to mention eggs, which don’t regenerate. This disparate treatment of essentially similar processes, it maintains, violates the Constitution’s guarantee of equal protection. A decision could come down any day.

The Matchmaker

The Boston Globe’s Leon Neyfakh has a good piece on Alvin Roth:

Roth has always been interested in the idea that sophisticated theories can be used to solve practical problems. As a graduate student at Stanford University, he earned a doctorate in operations research, which uses math to help organizations run more smoothly. Roth was just 19 when he started at Stanford, having quit high school without graduating at the age of 16 and finished Columbia University in three years. At just 22, he got a job as an assistant professor at the University of Illinois, and in 1977, at just 25, he was granted tenure there….

In the years since, Roth has emerged as a rare figure in the academic world: a theorist willing to dive into real-world problems and fix them. After helping the med students, he designed a better way to assign children to public schools — the system now used by both Boston and New York. He also helped invent a system for matching kidney donors with patients, dramatically increasing the number of donations that take place each year. More recently, he and one of his students have been talking with Teach for America about improving the system it uses to deploy volunteers around the country.

… Inspired by Roth’s work, these rising economists are also setting their sights on real-world problems. Some are looking at dating websites; others are interested in how universities could do better at scheduling their students’ classes. Like Roth, all of them envision a world in which economists, as unlikely as it may seem, are recognized as society’s mechanics.

One minor note, kidney exchanges are great but I wouldn’t describe the increases as “dramatic.” We will need, in addition, other ideas to alleviate the shortage of transplant organs.

Optimizing Kidney Allocation: LYFT for LIFE

Under the current system, kidneys are allocated to patients primarily based on the time that the patient has been on the waiting list and the quality of the match.  If we evaluate these criteria "locally" there's nothing obviously wrong but if we step back and think globally, that is think about what the ultimate goal of the transplant system should be, then the current system is deeply misguided.  Suppose that we want the transplant system to maximize total life expectancy or, as it is known in the literature, to maximize the life-years from transplant (LYFT).

The current system does not maximize life expectancy.  In the current system, a 60 year old patient can be given a 20 year old kidney–that's a waste because the life expectancy of the kidney is longer than that of the patient; it's like putting a new clutch in a car that is rusting away.  If we had 20 year-old kidneys to spare, this wouldn't be a big problem.  But we don't have 20-year old kidneys to spare, so we also give 20-year old patients 60-year old kidneys which means the kidney is likely to die early taking the patient along with it.  If we want to maximize total life expectancy, younger people should get younger kidneys.

Here is a simple example to illustrate the principle.  Suppose that the life expectancy of both patients and kidneys is 75 years of age so everyone dies when they are 75 or when their kidney is 75, whichever comes first.  Thus, if we allocate the 20 year old kidney to the 60 year old patient and vice-versa we gain a total of 30 years of life expectancy.

Kidney
Age
Patient Age Life Years
20 60 15
60 20 15
30 years Total

But if we allocate the 60 year old kidney to the 60 year old patient and the 20 year old kidney to the 20 year old patient we more than double life expectancy to 70 years in total.

Kidney
Age
Patient Age Life Years
60 60 15
20 20 55
70 years Total

It's not just age that matters, it turns out that the longer a patient has been on dialysis the less is their life expectancy after transplant (dialysis stresses the body so the sooner we get someone a transplant the better).  Although it may seem unfair, if we want to maximize total life expectancy we are doing the wrong thing by giving more points to patients who have been on the list longer.  

An optimized allocation system that took into account these considerations would increase total life
expectancy (modestly but significantly, about 11,500 extra life years) but it wouldn't benefit every individual.  Maximizing life expectancy would shift organs away from older people and people who have been on the waiting list a long time towards younger people.  As a result, some patients have argued that LYFT is unfair.  The Office of Civil Rights is even asking whether LYFT might violate age discrimination laws.  

But consider, would the older patients have objected to LYFT when they were younger?  If not, shouldn't their objections be discounted?  More formally, consider how people would vote behind a veil of ignorance.  By definition a LYFT approach maximizes total life expectancy, so without knowing the specifics of who you are or when you might need a transplant it's likely that behind a veil of ignorance just about everyone would favor LYFT.  Thus, in my view LYFT is a fair and ethical system. 

Here are previous MR posts on kidney transplant policy.

April Speaking Events: Tyler Cowen, Alex Tabarrok

Here is a list of events that Tyler and/or I will be speaking at in the near future.

  • Tyler and I will both be at the APEE conference in Las Vegas, April 11-13.
  • Tyler will be speaking on “The Economics of the Jobless Recovery” at Emory University on Thursday April 22, 4-5:15 pm.  More information here.
  • Tyler and I will both be speaking at the Fifteenth Annual University of Kentucky Teaching Workshop on Saturday April 24.  I will be talking about “Seeing the Invisible Hand” and Tyler will talk about the “Impact of the Financial Crisis on the Teaching of Macroeconomics.”  More information and registration here.

No Give, No Take in Israel

In January, Israel will become the first country in the world to give people who sign their organ donor cards points pushing them up the transplant list should they one day need a transplant.  Points will also be given to transplant candidates whose first-degree relatives have signed their organ donor cars or whose first-degree relatives were organ donors.

In the case of kidneys, for example, two points (on a 0-18 point scale) will be given if the candidate had three or more years previous to being listed signed their organ card.  One point will be given if a first-degree relative had signed and 3.5 points if a first-degree relative had previously donated.

In Entrepreneurial Economics I argued for a point allocation system like this–which I called a "no give, no take" system–as a way to increase the incentive to sign one's organ donor card.  One advantage of a no-give, no take system over paying for organs is that most people find this type of system to be fair and just–those who are willing to give are the first to receive should they one day be in in need.  

The new policy will be widely advertised in Israel and will be transitioned into place beginning in January.  I think this new policy is very important.  If organ donation rates increase in Israel, I expect that other countries will quickly follow suit.

By the way, is it peculiar that the two countries in the world with the best organ donor systems are now Israel and Iran?

Hat tip to Dave Undis whose Lifesharers group (I am an advisor) is working on implementing a similar system in the United States.

More Assorted Links

Austin Frakt reviews Modern Principles: Macroeconomics.  Austin's blog, The Incidental Economist, covers game theory, investment planning and health economics among other topics.

Here is an updated version of my paper Life Savings Incentives: Consequences, Costs and Solutions to the Organ Shortage.  Did you know that it is legal to offer compensation for donating a whole body (e.g. for research purposes) but not legal to compensate an organ donor to save a life?  Crazy.  Alvin Roth links to a survey of transplant surgeons indicating increasing support for legalizing some forms of compensation (Roth also links to a recent radio interview with yours truly.)

House built from Lego, yes really.  

Kidney Donor Chains

Virginia Postrel has an excellent piece in the online Atlantic on the shortage of transplant organs, it includes a very good discussion of both the promise and limitations of kidney swaps and donor chains.  Imagine that Mrs. Smith and Mr. Jones each need a kidney transplant.  Mr. Smith is willing but due to an incompatible blood type unable to donate a kidney to his wife.  Similarly, Mrs Jones is willing but unable to donate a kidney to her husband.  In a kidney swap, Mr. Smith donates to Mr. Jones and Mrs. Jones donates to Mrs. Smith.  Everyone is happy.

Donor chains extend this idea.  We start with an altruistic donor willing to give to anyone – by careful arrangement it's then possible to produce many transplants.  Recently, a single donor led to a chain of ten transplants!

Despite the promise of these techniques they are being underutilized.  Amazingly, the National Kidney Registry, which coordinates swaps and chains, has donors who are waiting to give.  A clear reminder that $500 bills aren't always picked up as quickly as we would like. 

Even the maximal use of swaps and chains won't solve the crisis, however. For that we are going to need better incentives to encourage more donors.

Dutch Treat

THE Dutch health minister, Ab Klink, is considering a recommendation to offer
free health insurance for life to anyone who donates a kidney for transplant.

The award would be quite valuable, worth about $1500 a year or $24,000 in present discounted value (30 yrs, 5% discount rate, no increase in health care costs).  Becker and Elias predict a large increase in organ supply at $15,000 so the Dutch are in the ballpark for a good test.  More here.

Thanks to Dave Undis of LifeSharers for the pointer.

Repugnance is Repugnant

Many people find the idea of selling human organs for transplant to be repugnant which is why Roth argues that we should focus more on improving efficiency through kidney swaps.  I’m all in favor of swaps and have also suggested that one argument in favor of no-give, no-take rules is that they are ethically acceptable to more people than organ sales.

Nevertheless, I think Roth assumes too quickly that repugnance is a constraint to be respected rather than an outrage to be denounced and quashed.  People’s repugnance at inter-racial dating or homosexual sex is no reason to prevent free exchange – the same is true for organ donations.  Repugnance itself can be repugnant.

Is it not repugnant that some people are willing to let others die so that their stomachs won’t become queasy at the thought that someone, somewhere is selling a kidney?

What people think repugnant can change rather quickly with changes in the status-quo.  Adam Smith said that in his time there were "some very agreeable and
beautiful talents of which the possession commands a certain sort of
admiration; but of which the exercise for the sake of gain is
considered, whether from reason or prejudice, as a sort of public
prostitution."  What were these talents that people in Smith’s time thought akin to prostitution?  Acting, opera singing and dancing.  How primitive, how peculiar.

In the not to distance future I think people will look back
on the present and think us
primitive and peculiar.  Letting thousands of people die while organs that could have saved their lives were buried and
burned.  So much unnecessary pain; all for fear of a little exchange.  How primitive, how peculiar.  How repugnant.

The Price is Right

One of the most bizarre aspects of the organ shortage is that it is illegal to pay for cadaveric organs for use in transplants but it is legal to pay for cadavers.  That’s right, it’s illegal to pay people to donate their organs for the purpose of saving lives but medical schools can pay people to donate their bodies so that plastic surgeons can practice their nip and tuck.   

In a remarkable paper forthcoming in Cato’s Regulation and reported in the Washington Post, economists David Harrington and Edward Sayre take the argument one step further.  Medical schools regularly offer to pay funeral expenses for whole body donation.  So does the offer of payment deter altruistic donation and decrease the supply, as we have been told could occur if we were to compensate organ donors?  Of course not.  In fact, Harrington and Sayre note that the offer to pay funeral expenses is worth more in states where the funeral industry is heavily regulated and thus prices are high and, just as predicted in Econ 101, the supply of whole body donations is higher in those states.

It’s time to lift the price control on human organs, relieve the shortage and save lives.

Rent Seeking Kills

It’s illegal to offer compensation for a transplantable human organ.  As a result of the price control there is a shortage of organs and thousands of unnecessary deaths.  None of this is news to readers of this blog.  The price control on organs, however, kills in another less well recognized manner.  The reduced supply of organs raises their value.  Organ donors can’t capture that value so who does?  Transplant centers.

    Transplant centers are artificially high profit centers because they capture some of the rents generated by the shortage of organs.  As a result, there are too many transplant centers in the United States and each center performs too few transplants.  Practice makes perfect so when a transplant center performs only a few operations a year lives are lost.

Medicare requires that transplant centers perform 12 transplants a year to be certified but many programs are in violation of that standard with little consequence.  Medicare is even thinking of reducing the standard from 12 per year to 9 in 30 months.  As one specialist says "I wouldn’t take my car to be serviced by someone who repaired nine cars over the past three years.  Would anyone do that?"

This Washington Post article has more on the excess number of centers although it doesn’t draw the connection between the organ shortage and the incentive to build a center.  Here’s some data, from the article, on centers local to Washington.

Transplants

Dutch Treat

Holland’s Health Minister has proposed a system for organ donation similar to what I have called (in Entrepreneurial Economics) "no-give, no-take."  Under the proposed system people who sign their organ donor cards would receive points which would raise them on the waiting list should they one day need an organ.

My main argument for no-give, no-take has always been efficiency, it would increase the incentives to donate.  It’s fairness, however, especially as it intersects with the politics of immigration that is driving the change in Holland.   

The Liberal VVD minister defended his proposal by pointing out that
Muslims often refuse to donate organs based on religious beliefs. This
is despite the fact they are willing to receive an organ if they are
ill. "That creates a bad feeling," he said.

"If you say: ‘I refuse to donate an organ because of my religion,
but I don’t want to receive one either’, than I will respect it. But I
won’t respect a one-sided attitude of receiving and not giving. I find
that problematic," Hoogervorst said.

Thanks to Dave Undis for the pointer.