Wednesday, May 14, 2008

Money For Your Life

On the economics of longevity:
So on to longevity therapies, where the math is more fuzzy. The value placed on healthy life in the developed world is the better known side of the equation:

So, how much is your life worth? You may think the answer is infinity, that no amount of money could compensate you for the loss of your life. But people do put a price tag on their existence. Workers accept riskier jobs for higher pay, for example. And the rich tend to think their lives are worth more than poor people’s.

Studies of real-world situations produce relatively consistent results, suggesting that average Americans value a year of life at $100,000 to $300,000, said Peter J. Neumann, director of a program at Tufts-New England Medical Center that measures the cost-effectiveness of new treatments.
That's mid-2007 dollars, so adjust accordingly. On the longevity therapy side, we have to look at anticipated benefits rather than actual benefits. No-one will know for certain the benefits of longevity therapies - in terms of additional years of healthy life, and varied effects between patients - for decades following their introduction. Value will be estimated by the marketplace from the available information, such as effects on biomarkers of aging, comparison with known biology, related therapies, and the like, and that value will move over time as estimates are adjusted for new science and new data.

So let's take the hypothetical of a longevity therapy that the consensus believes will add ten healthy years to the average life. Replacing age-damaged mitochondrial DNA might do that in humans, for example. This suggests that to bring a first widespread commercial version to the high-end medical practices of the world, the price tag on the therapy has to be brought down below $1-3 million, or the value of a decade of healthy life.

There are plenty of entities in the marketplace that sell goods and services to wealthy individuals at this sort of cost; you can build a profitable business on these figures, especially if the cost is paid over years. So I think that a fairly brief stage of expensive longevity clinics is to be expected in the early development of working methods to repair age-related damage in the body. I say brief, because the cost of medical services tends to fall fairly rapidly to a minimum set by the wages of the specialist staff involved. High prices in the beginning allow investors to profit by their investment, while also acting as a beacon for other businesses to enter the market, and prices then fall with competition and increased development and efficiency fueled by ongoing re-investment of profit.

The stable state for a medical treatment is that in which many specialist staff are available, and a competitive marketplace exists to train those staff and supply needed raw materials. At that point, the cost is much the same for medical procedures across the tiers of specialist labor and complexity - it's largely down to the wages of those folk performing the work.

Replacing mitochondrial DNA should be a hands-off outpatient procedure, once the technology is mature. Have a sample taken, send it off to the lab to work up a repaired genome and the viral vector, get injected with the vector that will replace your mitochondrial DNA with repaired versions, and then come back for regular testing for a couple of months. That is nowhere near as labor intensive as, say, heart surgery today. So one could look at comparable procedures that require supporting individual lab work on the back end, such as limited genetic testing, and take a stab at the price tag in the $10-30,000 range.

That's a hundred times smaller than $1-3 million, which seems fair for the progression from early version to mature technology, especially in this age of rapidly advancing biotechnology. It's also a hundred-for-one bargain on the consensus expectation of value of life gained, which is a pretty good deal - good enough to tempt a very broad customer base, and enough profit for a large and competitive industry to form.
All of these numbers, of course, are way too big to be covered by any sort of single-payer healthcare system. Also, there's an issue associated with the increments of life-extension. In this post, the author is assuming about 10 years a whack, with the economics becoming viable a a couple of million bucks. But what if the increments are at, say 100 years a whack, with the economics becoming viable, at, say, $50M?

Suddenly you're in a range where only a tiny, tiny fraction of the possibility gets to live, and everybody else gets to die. I don't think we've ever figured out that kind of ethical quandary. That's why this problem makes my list of big ideas that are needed.

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