How many economists does it take to screw in a lightbulb?

  • by: |
  • 03/13/2008
If the lightbulb is meant to shine a light on the value of new healthcare-related technologies in the context of healthcare technology assessment (HTA) -- then the answer is "one."

And the "one" is Dr. Frank Lichtenberg of Columbia University.

According to Frank, for HTA to yield valid decisions in practice, it is necessary to have reliable estimates of:

and VSLY (Value of a Statistical Life Year)

And his main point is that the devil is in the details.

He believes that incorrect estimates of some or all of these key inputs are often used:

ΔCOST is frequently overestimated
ΔQALY and VSLY are frequently underestimated

And due to these estimation biases, health technologies that are truly cost-effective may often be rejected as cost-ineffective.

Per the recent debate over the utility of new cancer treatments, he makes a very interesting point -- that even though, over the past 30 years, the U.S. Mortality Age-Adjusted Rates for cancer have remained relatively constant -- (leading to such mainstream media headlines as Fortune Magazine's "Why have we made so little progress in the War on Cancer?” and NEJM articles like "The effect of new treatments for cancer on mortality has been largely disappointing” -- the often ignored reality is that 5-year relative survival rates, for all cancer sites, have increased from 50.1% in 1975 to 65.9% in 2000.

For more specifics on both the economic impact of new treatments and their impact on cancer survival, please see the paper that Dr. Lichtenberg wrote for the Center for Medicine in the Public Interest in 2007:

Click here:

Then go to the heading "Reports" and click on "Value of Cancer Drugs."

Lichtenberg cites two crucial studies, pointing out how health care economists must seriously reconsider the outdated estimates of a QALY:

Viscusi and Aldy: The value of a statistical life for prime-aged workers has a median value of about $7 million in the United States

Viscusi, W. Kip and Joseph E. Aldy, “The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World,” The Journal of Risk and Uncertainty, 27:1; 5–76, 2003.


Murphy and Topel: The value of a life year is $373,000.

Murphy, Kevin M., and Robert H. Topel, “The value of health and longevity,” Journal of Political Economy, 2006.

Attention must be paid. Hello NICE. Hello IQWiG. Hello Senators Baucus and Conrad.

Here is Dr. Lichtenberg's presentation on these issues -- spelled out and supported by both facts and examples:

Download file

If the devil is in the details (and it is) -- it's time for a deep dive beyond simplistic and self-serving "comparative effectivess."

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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