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4 Beyond Ratios: Ethical and Nonquantifiable Aspects of Regulatory Decisions
Pages 130-158

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From page 130...
... In CEA, for example, effectiveness measures such as life years or QALYs weight lives saved by considering remaining life expectancy. They thereby assign a greater weight to saving the life of a younger person than an older one, if other factors are equal.
From page 131...
... Aggregate estimates of QALY gains or cost-effectiveness ratios do not indicate the distribution of impacts over time or the magnitude of individual gains. Summed QALYs do not distinguish between health gains made within the course of a single life or across generations.
From page 132...
... When used in CEA for regulatory analysis, the QALY is probably best interpreted in its intuitive sense, as a measure of health improvement or production that facilitates comparisons with other opportunities for health gains. This pragmatic interpretation of the measure avoids the need to demonstrate that the QALY has particular properties consistent with the utility theory that underpins BCA and welfare economics.
From page 133...
... As discussed in Box 4-1, analyses in which monetized estimates of the value of preventable deaths vary by age have been highly controversial. Similarly, CEA using life years or QALYs gained as the effectiveness measure also appears to disadvantage older people, who have shorter average remaining life expectancies during which they can benefit from interventions.
From page 134...
... In addition, reporting disaggregated estimates of regulatory impacts by key age and population characteristics -- such as income, race, gender, or other factors relevant to the particular intervention -- also increases the transparency of the justification for and implications of the regulatory action. Both strategies facilitate ethical deliberation.
From page 135...
... The appropriate evaluative standpoint from which to determine the relative values of different health states, conditions, and disabilities in CEA 3These HALY measures are discussed in Chapter 3.
From page 136...
... Although these findings suggest that it is important that the health state index values be derived from a population comparable to the one of interest, it may turn out to be less of an issue in practice than in the abstract. As illustrated by the case studies, regulatory analysis involves comparing health status with and without the condition of interest.
From page 137...
... . If health state index values are intended to represent the relative effects of different conditions on people's lives rather than reflecting apprehensions and prejudices about those conditions, then values elicited from people lacking knowledge about the conditions may be biased.
From page 138...
... Later in the chapter we consider the circumstances under which the lesser values placed on health improvements among those with impaired health or disabilities can be ethically problematic. Individual Preferences and Societal Values As noted in Chapter 3, empirical research suggests that each elicitation technique -- standard gamble, time trade-off, category rating, and person trade-off (PTO)
From page 139...
... . The results of PTO exercises suggest that values other than the maximization of potential aggregate health benefits, as measured by conventional QALYs, affect decisions to allocate health improvements among groups.
From page 140...
... At the same time, it is important to keep in mind the potential biases in the valuation of some health states due to unfamiliarity, lack of experience, or because the states carry stigma. The rationale for using health state values elicited from community-based sample surveys in regulatory analysis is to reflect the preferences and values of the population likely to receive the benefits and/or bear the costs of the intervention.
From page 141...
... These dimensions may affect the justification for regulatory action as well as the value placed on the resulting risk reductions. For example, as discussed in Chapter 1, regulation may be justified in cases where there is an externality, such as in the case of pollution that imposes health risks that are not controllable by the individual affected.
From page 142...
... The degree to which one can control exposure to a hazard, and whether or not the hazard results in harm, can affect acceptability of the hazard and the value placed on risk reductions. Many risks are regulated because they are not subject to significant personal control and individuals can do little or nothing to protect themselves.
From page 143...
... Nonquantifiable Impacts The economically significant health and safety regulations subject to OMB's requirements for CEA will have some risks that can be quantified (e.g., in terms of cases averted) and valued (e.g., in terms of QALY gains or willingness to pay for risk reductions)
From page 144...
... DISTRIBUTIONAL CONCERNS ABOUT RISKS AND REGULATORY INTERVENTIONS By itself, a QALY-based CEA cannot address an important and difficult set of distributional questions and choices, including how much priority we should give to the sickest or the worst off in valuing health effects; when we should allow modest benefits to many people to outweigh significant benefits to fewer; when we should allocate resources to produce "best outcomes" as compared with giving more people fair chances at some benefit; and how the costs and benefits of regulatory interventions are distributed within the overall population. Both CEA and BCA can provide
From page 145...
... · We use the three case studies -- on food safety, air quality, and child restraints anchoring -- to provide examples of how risk-related concerns might be summa rized in a regulatory impact analysis. Food safety.
From page 146...
... Children, elderly people, those who are chronically ill or especially susceptible to a particular risk, low-income or minority communities, and local populations affected by a geographically concentrated risk or intervention are relevant subpopulations that may merit special consideration. Box 4-3 refers to the case studies to illustrate how information about populations disproportionately affected by a risk or an intervention might be presented in a regulatory analysis.
From page 147...
... · The unborn or future generations · Infants and young children · Elderly people · Persons with disabilities or preexisting health conditions · Those particularly vulnerable to the risks of concern Members of minority groups · · Members of low-income groups · Those residing in particular geographic locations Below are some brief examples of distributional considerations in the cases of food safety, air quality, and child restraints anchoring, based on information provided in the agencies' regulatory analyses. Food Safety: The juice processing regulation prevents foodborne illnesses, which can be especially severe for persons with poor immune system function, including people with human immunodeficiency virus, people receiving chemotherapy, and organ transplant recipients.
From page 148...
... In addition, members of these groups may be particularly susceptible to certain kinds of risks targeted by regulations, such as pesticide controls and workplace safety practices. The exclusion of the groups just mentioned from routine population health surveys is also a problem for the valuation surveys underlying generic HRQL indexes, and calls into question the extent to which they can be assumed to represent accurately the values of the general population.
From page 149...
... One of the most difficult issues to address is whether and how to disaggregate the general population in calculating gains in health due to a regulatory intervention. Both OMB guidance and the PCEHM's recommendations for the reference case CEA direct the use of general population averages rather than health state index value estimates for subpopulations.
From page 150...
... The reduction of average HRQL that occurs with increasing age produces the same general effect in comparisons between life extensions among 20-year-olds and 70-year-olds. An alternative to assessing QALY gains based on comparison to actual health status is an approach that assumes that affected individuals would be in optimal health as a result of the intervention.
From page 151...
... The Treatment of Future Generations in CEA Although many regulations have the potential to affect future generations, those where the costs are incurred primarily in the near term but the benefits occur largely in the future (or vice versa) pose particular ethical issues, especially if the effects of the policy are not easily reversible.
From page 152...
... As indicated in the table, the option without a lag between costs and benefits will be more cost-effective in present value terms when compared to another option with equivalent, but more delayed, benefits.9 This difference in present values increases as the discount rate increases.10 Future Generations When risks are imposed or benefits accrue in the distant future, the ethical concerns and issues related to discounting are more difficult and less satisfactorily addressed. Moral obligations to future generations should be considered separately from the question of discounting practices.11 Present 7In the majority of rules considered in the Committee's review of current practices (Robinson, 2004)
From page 153...
... ing undiscounted impacts, and their timing, along with a discussion of impacts on future generations, as OMB (2003a) advises, allows decision makers to identify situations where concerns about long-term impacts suggest that decisions should not be based simply on the discounted present value of the results.12 Such presentation is necessary because otherwise, discounting may lead the present generation to impose extremely high costs on future generations, resulting in undesirable welfare losses as well as inequities between generations (Revesz, 1999)
From page 154...
... Representing the interests of future generations in current policy discussions is difficult but ethically obligatory. Future generations will be affected by current decisions, particularly if the consequences are not easily reversed.
From page 155...
... . A variant on this approach would transform the health state index values into values that reflect societal values for giving priority to the worst off, which could be done by compressing the values of less severely impaired
From page 156...
... In light of these concerns with adjusting health state index values to reflect distributional considerations, the Committee endorses a different strategy. In our view, standardizing the presentation of quantified analyses and their data inputs, assumptions, and methods offers the best chance for informed and transparent regulatory decision making.
From page 157...
... Many of the issues underlying regulatory interventions, both matters of fact and of values, are points of disagreement. A fair and transparent process of this sort adds legitimacy to the results.
From page 158...
... The choice of QALYs as the basis for measuring the production of health through regulatory interventions entails certain value commitments and ignores others, and these limitations should be made explicit in regulatory analysis. While some societal values regarding the distribution of health benefits could be incorporated through quantitative modifications of health state values, such adjustments are of questionable validity and make the quantification of health improvements more difficult to interpret.


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