ECO 605 Discussion 3.1: Quality versus Cost Relationship

An example of a medical treatment that has increased in quality over the past few decades is chemotherapy. This increase in quality has also resulted in a higher price for chemotherapy. The quality increased because the chemotherapy is able to more precisely attack tumors while leaving nearby, healthy cells relatively unharmed (Mayo Clinic, 2022). This then may allow for a surgery where the tumor is removed or for radiation to kill the tumor cells (Mayo Clinic, 2022).

The quality increased due to scientific and medical advancements. The price increased because the research for these advancements is expensive and giving these medications is expensive. Globally, over $150 billion U.S dollars are put towards cancer research and treatment (Mayo Clinic, 2022). Chemotherapy agents also need to be administered by highly trained personnel. There are cancer treatment centers all across the United States that patients attend on a scheduled basis to receive their chemotherapy. The system that has been established around cancer treatment is expensive and requires specialized equipment and additional education for healthcare workers in the hematology/oncology field.

Reference

Mayo Foundation for Medical Education and Research. (2020, March 5). Chemotherapy. Mayo Clinic. Retrieved January 14, 2022, from https://www.mayoclinic.org/tests-procedures/chemotherapy/about/pac-20385033

In medical treatments, there is a link between quality improvement and increase in cost of the treatment. For instance, any new cancer drug will be expensive. Cancer is a very deadly disease. There is no easy cure for cancer. Therefore, the cancer drugs are expensive. Pharmaceutical companies do have a lot of costs that go into developing an effective cancer treatment, such as the expense of discovering the drug and then testing it for safety and efficacy. This process can take years and millions of dollars to complete. To bring a drug to market, especially a cancer drug, is so expensive. Pharmaceutical companies do have many more failures than successes and the years’ research and development costs are factored into the cost of the drug. These companies, like any other, need to make a profit to stay in business. They exist as much to make money as they do to provide drugs for the diseases their products treat. In the United States, the average price of cancer drugs for about a year of therapy increased from $5000 to $10,000 before 2012 to more than $100,000 by 2019 (Kantarjian et.al.,2020). Due to increased medical advancements and researches, the quality is increased with the invention of new drugs. The life span of people living with cancer increases because of these new drugs. The treatments are expensive, but they extend life for many patients in meaningful ways.

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References

Kantarjian, H., Steensma, D., Rius Sanjuan, J., Elshaug, A., & Light, D. (2020). High cancer drug prices in the United States: Reasons and proposed solutions. Journal of Oncology Practice, 10(4).

An example of medical treatment that has increased in price due to the increase in quality would be the newer Hepatitis C (HCV) medications. These newer medications, direct-acting antivirals (DAA), have a 95% or higher cure rate, a shorter duration of treatment,

ECO 605 Discussion 3.1 Quality versus Cost Relationship

and are minimally invasive with fewer side effects. The development of new technologies and treatment of viruses resulted in this higher quality of care. This also accounts for the increase in price to offset the cost of development. The object of any medical treatment should be to offer the highest quality outputs (Hicks, 2021). Many patients are cured with an eight-week course of DAA medication. It also retails for between $26,000-94,00 per course of treatment (Grove & Erlich, 2018). The development of these new DAA medications has dramatically changed the quality of care and quality of life for HCV patients.

The previous treatment, interferon and ribavirin had a 54-63% efficacy rate, was much more invasive and there were several complications (Feuerstadt et al., 2010). The treatment duration was also very long and a large number of patients discontinued due to side effects and lower cure rates. The average price for treatment was also $2,000 per regimen and largely out-of-pocket (Feuerstadt et al., 2010). After the development of the DAAs this treatment became largely obsolete as it was no longer in the best interest of the patient. Lower income and rural areas would still use this treatment due to price, but it was no longer best practice, and several insurers were covering the majority of the cost for the DAA medications.

It’s not often that primary care providers can tell a patient they have been cured of a chronic illness. With the introduction of the DAA medications this is now possible and can help prevent further deaths of HCV patients. I treat HCV patients in my office and many of them tell me how apprehensive they were to try a new HCV treatment after the experience they have had with the previous treatment. It’s a very rewarding experience when I get to tell them they have been cured.

Feuerstadt, P., Bunim, A. L., Garcia, H., Karlitz, J. J., Massoumi, H., Thosani, A. J., … & Reinus, J. F. (2010). Effectiveness of hepatitis C treatment with pegylated interferon and ribavirin in urban minority patients. Hepatology, 51(4), 1137-1143.

Grover, A., & Erlich, D. R. (2018). Glecaprevir/pibrentasvir (Mavyret) for the treatment of chronic hepatitis C. American family physician, 98(10), 601-602.

Hicks, L. (2021). Economics of health and medical care. Jones & Bartlett Publishers.

Discussion 3.1: Quality vs Cost Relationship

An example of a medical treatment where an increase in quality results in increased costs is with microdermabrasion. Quality improvements, such as the operator skill, the products used, along with the experience will all increase the associated cost for the treatment. While one could say that a person could do a microdermabrasion treatment at home, products available off the shelf will not be medical grade and obtain the same results over time as those provided by a licensed medical esthetician working within a dermatology office. The experience and the skill level of the esthetician would also increase treatment cost because of the number of hours spent training and applying it on-the job to multiple persons where fine-tuning occurs and increased positive results ensue. That same experience and skill level would apply to the products used – there are many more levels of ingredients and with that, knowledge of the effects would also increase cost.

Utilizing our textbook, there are a few different factors where increased quality correlates to increased cost for the example of microdermabrasion treatments. Costs of production resulting from changes in the price of inputs relates to higher quality products being used resulting in increased costs paid. Changes in technology used in the production of goods or services provided. This relates to the machine used for microdermabrasion, multiple types at a dermatologist versus very few at the local Walgreens or CVS. Changes in the general environment (economic, physical) would relate to having few experienced and skilled estheticians which would increase treatment procedure under licensed medical provider establishments.

Hicks, L. L. (2021). Economics of health and medical care. (7th ed.), Chapter 6, pages 93-103. Jones & Bartlett Learning. ISBN-13: 9781284183535