TCS Daily


By Pavel Kohout - December 9, 2004 12:00 AM

Information may have the value of life or death, of creating a good life or a half-life. A recent visitor to a Czech web forum illustrated this with a personal comment:

"My wife's uncle suffered from glaucoma. He visited several hospitals around the country, including the prestigious ones such as Central Military Hospital in Prague. He was simply told to be prepared for total blindness in a few years.

"Just by good chance he once listened to an interview with a glaucoma expert on the radio. We found out how to contact the expert (she's a Czech living in Germany) and called her private clinic. Soon he underwent surgeries on both eyes. He can read newspapers and drive his car again. Total cost did not exceed the equivalent of $400, not including four travels to and from Fürth im Wald, a small town nearby Czech border."

To have information or not to have it. To be healthy or to be crippled. In this case, the patient was lucky enough to be tuned to the right radio station at the right time. Another story tells of a patient who found information on how to cure his type of cancer on the internet - and his life was subsequently saved by a courageous doctor who decided to ignore standard, government-prescribed procedures that would only delay the patient's death by a few months.

Can anybody count the death toll caused by lack of information? For each story with a happy ending, there are many more nightmare scenarios: blind eyes, wheelchairs, funerals. So why is it that most governments restrict information on health care and pharmaceuticals? Don't bureaucrats realize that information saves lives?

To answer this uneasy question, one must realize that there are two basic models of health care. First, there's the market-based model. The patient is a subject in a client-professional relationship. The other model is based on rationing. The patient is an object that is being treated without knowing what is going on. We might call this system the "veterinary model of health care", since a pig or a calf in a factory farm has a similar lack of freedom of choice. The livestock receives "free" health care - of course, we humans know it's not quite for free.

The veterinary model of health care does have some undeniable merits. It has worked well in poor countries with little-educated populations. If there's one doctor per 10,000 people, as in Kenya or Niger, rationing in health care may be an efficient way to spend limited budgets. A little money can save a lot of lives. The effect is quick and visible.

During the 20th century, this model was popular throughout Europe. It helped to eradicate tuberculosis and other deadly diseases at reasonable costs. It has an "ideological" advantage, too. It's egalitarian, which is a major benefit in the eyes of the powerful European left. It concentrates power and knowledge in hands of the privileged few. How convenient for socialists of all colors. Also, this model helps to keep medical care relatively cheap, which is a major advantage. Even bloated welfare state budgets are not limitless.

However, in developed economies, rationing and limited access to information has gradually lost its raison d'être. The market is the now most efficient way of health care financing. People are wealthy enough to pay for basic treatment. Competition and free markets lead to improved services. The best way to finance expensive treatment is via competing insurance companies. People should have access to the full range of information to be able to make decisions. The poor are better off, too, because higher spending by wealthier people improves the state of the whole health care system - newly developed drugs gradually become available for all. Many life-extending medicines would never have been invented without privately funded research.

However, the "veterinary" way of thinking has deep roots in the minds of EU bureaucrats. They complain that drugs are too expensive and that health care spending is going through the roof. Human vets try to keep cheap medical care regardless of the collateral damage. They think that uninformed people will not demand modern medicines. Thus, oddly enough, the right of free exchange of information, in the Charter of Basic Rights, does not apply to patients' rights to access drug information.

This is not only an interesting legal problem, it is also a case study on the theory of information. Diagnosis and cure is an information-demanding process. The more information a patient has on his or her illness and available therapies, the more it's likely that the best solution will be found. True, for a lazy or a sloppy doctor it's not easy to work with a well-informed patient. The information can't do any harm. But incomplete or distorted information can do much harm - and this is precisely what the drug information ban leads to.

True, well-informed patients are likely to demand more expensive medications. However, who has the moral right to keep people from spending their money on health care? Somebody might be worried about "exorbitant" profits of "Big Pharma". But this is overstated. Between 2000-2004, the Dow-Jones Pharma index has lost 30 percent in dollar terms. More money goes on research and development than to shareholders' pockets.

Money invested by big pharma in R&D is crucial. Frank Lichtenberg of Columbia University has published a series of working papers measuring the effects of health care expenditures. Among his findings: In the U.S., $1 spent on drugs saves $3.65 in hospital care costs. Median longevity increased from 64.6 to 71 years from 1960 to 1970. "The growth would be negligible or zero without the pharmaceutical innovation," he writes. Mortality before the 65th year of life has declined by 13 percent from 1970-91 (when expressed by "man-years"). "The decline of mortality caused by innovation has been projected to all age groups," concludes Lichtenberg.

It's unreasonable to want perfect health care for nothing more than chicken feed. EU bureaucrats should stop treating their citizens like pigs and cows.

The author is an associate of the Center for Economics and Politics (CEP), Prague.


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