Something I\’ve grumbled on about for some time now.
Yes, medical treatment is largely a service and given Baumol\’s Cost Disease one that is going to increase in price relative to manufactures over time. The problem is that productivity in services increases more slowly than productivity in manufactures and yet wages are set on the average productivity in the economy.
Now this is undoubtedly true at one or some level of truth. But it is still possible to increase productivity in medicine dramatically: by mechanising the treatment.
An example I\’ve used before is that at one point the cure for a headache was a comely maiden bathing your forehead with a damp cloth. Now we\’ve got aspirin. We\’ve mechanised the treatment of headaches.
An example from the papers today:
Such cases are not rare in cancer. A disease called chronic myelogenous leukaemia (CML) once carried dismal survival figures: most patients died within three to five years. But a new drug called Glivec has transformed this form of cancer. CML patients who respond to Glivec appear to live nearly as long as patients without any form of cancer; their life expectancy is virtually identical to age-matched men and women. And yet, notably, Glivec does not cure CML; it converts this leukaemia into a chronic disease. The leukaemia cells remain abated as long as treatment continues. If the drug is stopped, even for a few weeks, the leukaemia cells return in the bone marrow and blood. For CML patients on Glivec, then, leukaemia defines their normal state of living. They live, age, bear children, work, travel and celebrate holidays in the shadow of CML, and in the company of an orange pill that keeps them alive.
One way of describing this is that we\’ve mechanised the treatment of this form of leukaemia.
So far, so what?
But this does have implications for the future: we\’re continually told that the cost of medicine is going to rise over the decades to come. Part of this is obviously true, given a generally older population. But part of this projection is built upon the idea that treatments themselves will continue to become more expensive, not just that we will need to be offering more treatments. And as above, it isn\’t necessarily true that treatments themselves will become more expensive.
That might sound odd given that Glivec can cost up to $98,000 a year: but just wait until it\’s out of patent and see that price drop. And note also that it\’s pretty much the poster boy for the new method of drug creation:
Imatinib was developed by rational drug design. After the Philadelphia chromosome mutation and hyperactive bcr-abl protein were discovered, the investigators screened chemical libraries to find a drug that would inhibit that protein. With high-throughput screening, they identified 2-phenylaminopyrimidine. This lead compound was then tested and modified by the introduction of methyl and benzamide groups to give it enhanced binding properties, resulting in imatinib.
There are a number of factors puching medicine to be more expensive: an ageing population, the fact that we can now treat many more diseases than we used to an that general inflation of services. But there\’s another rather powerful force pushing the other way, that we are getting much better at mechanising our treatments, moving from hugely labour intensive interventions for many diseases to simple pill popping.
It\’s a little early to claim to know which will win out but over the long term I\’d certainly be willing to bet on the mechanisation winning out over the other three.