News Story

Michigan Officials Skeptical of Controversial Drug Rationing Program

Who decides what another year of life is worth to a person?

A system designed to evaluate the cost effectiveness of drugs used to treat relatively rare ailments could lead to rationing for life-altering therapies and illegal discrimination against disabled and mentally ill patients. That’s one finding from a new analysis from a Boston-based think tank. The system it looked at is not currently used in Michigan, but policymakers here, as elsewhere, are looking for ways to hold the line on rising drug costs incurred by social welfare programs, including Medicaid.

Researchers at the Pioneer Institute examined a method of rating drug therapies, the “quality adjusted life year” measurement, also known by the initialism “QALY.” If managers of government-run health systems like state Medicaid programs, use it, the researchers say, they may end up violating the Americans with Disabilities Act.

QALY assessments have been likened by some to the rationing boards used in nations with government-run health care systems. The Institute for Clinical and Economic Review, an influential independent health policy group, has encouraged both private insurers and state governments in this country to use them.

William Smith, a co-author of the Pioneer Institute analysis, said Medicaid programs that use the assessments could be on perilous ground, because many Medicaid recipients are disabled.

The key measures in a QALY assessment are especially difficult to gauge for those patients, he said. They attempt to calculate how much the drug in question increases the quality and quantity of a patient’s life.

If, for instance, a drug therapy significantly improved a disabled patient’s quality of life but did not completely eliminate the need for a wheelchair, its score could be downgraded, Smith said.

“The QALY’s preference for treatments that restore patients to a 100% quality of life will disparately impact patients with disability who will find treatments that do not meet this threshold, but may nonetheless be extremely valued by patents with disabilities,” the Pioneer analysis found.

Michigan’s Medicaid program does not use QALY, said Bob Wheaton, spokesman for the state Department of Health and Human Services. He also said he could not comment on “a system or methodology that we are not actively using.”

Currently, only one state, New York, uses a drug evaluation system explicitly based on QALY standards. Advocates for that approach claim the state saved $85 million from doing so. But the state has also been in a drawn-out dispute over costs with the manufacturer of a drug to treat cystic fibrosis, which some patient advocates said limited its availability.

Smith said he is concerned that Medicaid programs, under heavy pressure to cut costs, will inevitably respond to the lure of an ostensibly objective measure of efficacy, even if it cannot fully account for the plight of individual patents.

“I’m very skeptical about using a single formula for every situation,” Smith said. “Every drug is different. Every patient is different.” He added, “I’m not arguing against cost containment, especially when the cost is borne by taxpayers. But this particular system poses real dangers to people with disabilities.”

The Pioneer Institute report added that if any state were to adopt the QALY methodology, a legal challenge under the ADA would be nearly certain.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.