Dementia and Cost-Benefit Analysis

May 20, 2022

Academic publishing, Ageing, Author Articles, behavioural economics, Economics, Economics Finance, Elgar Debates, Health

Robert J. Brent, Professor of Economics. Fordham University, New York, USA

Dementia is a cognitive disorder that leads to symptoms that interfere with a person’s ability to carry out activities of daily living. As of 2020, there were 6.2 million persons in the US with Alzheimer’s, which is the main type of dementia. Because of the rapid aging of the population, the numbers with any type of dementia is projected to double by 2050. Worldwide, over 55 million have dementia and this is projected to be 152 million by 2050. There are over 10 million new cases of dementia each year, which implies that there will be a new case every 3.2 seconds.

Much of the increase will be in developing countries. Already 60% of the people with dementia live in low- and middle-income, but by 2050 this will rise to 71%. These figures are based on the latest estimates by Alzheimer’s Disease International.

However, the reality is that almost everyone is, or will be, affected adversely by dementia, either as persons with the disease, or as caregivers of family members or friends with the disease. Women will be more affected by dementia than men, because more women than men have the disease, and the main caregivers are women. Many women will have to give up their jobs at the peak of their careers to care for loved ones. The total estimated worldwide cost of dementia was US$ 818 billion in 2015, which represented 1.09% of global GDP at that time. The annual global cost of dementia is now above US$ 1.3 trillion and expected to rise to US$ 2.8 trillion.

Given the large, and rapidly rising, scale of the numbers with dementia, and the enormous costs of the disease, it makes sense to ask whether anything can be done to alleviate this disease at this time. According to the medical profession, nothing has yet been created that can alter brain pathology, so little that is lasting can be done. It is true that Aduhelm has just been approved by the FDA for intravenous infusion in June 7, 2021 (the first drug approved for Alzheimer’s in 18 years). But, this was approved with little reported help to patients, using the “accelerated approval provision”, which allows the authorization of drugs without persuasive proof of benefit if they are for serious diseases with few treatment options. Apart from the fact that there was little scientific evidence for the positive impact of the drug, the problem with the authorization was based on the misconception that few alternatives existed at this time. If the medical definition for dementia based on brain pathology is used (for example tau tangles and amyloid proteins for Alzheimer’s) then, yes, little can be done. But, the brain pathology, medical definition is not useful outside the medical field. The more useful definition, which we started with at the beginning of this blog, was whether people can carry on with their activities of daily living (ADL). From this perspective, brain pathology is neither a necessary, nor sufficient, definition for dementia to exist. Someone can have the brain pathology, yet carry on with their ADL. And, just as important, what does it mean to say that, because someone does not have any of the brain pathology signs of dementia, that dementia does not exist, even when ADL cannot continue?

Once one switches to a behavioural symptoms definition of dementia related to ADL, it turns out that there are many interventions that already exist, which makes the Aduhelm special circumstances approval based on “few treatment options” invalid. Thus, many non-pharmaceutical interventions have been found to be effective. The well-known ones relate to a person’s diet, a person’s sleep patterns, and the extent that someone does physical exercise. More recently, new interventions have been found to be effective by the ADL definition, and these involve years of education, services provided by being eligible for Medicare, hearing aids, vision correction, not living in a nursing home, preventing elder abuse and having cognitive rehabilitation. The new interventions increase ADL by altering one’s memory, orientation, judgement and problem solving, community affairs, home and hobbies, and personal care.

The medical field has almost exclusively been preoccupied with identifying effective interventions for dementia. However, even if a pharmaceutical medication, like Aduhelm, were found to be effective, dementia policy requires much more than this. An evaluation of a dementia intervention requires that it be found socially worthwhile. This is where economics comes into the equation. Should society spend valuable resource to finance the pharmaceutical intervention? The inputs and outputs that produce an effective intervention must be valued in monetary terms to end up as benefits and costs. If the benefits exceed the costs then, and only then, can an intervention be judged socially worthwhile. The company that sells Aduhelm has been priced at US $56,000 a year. Any benefits of Aduhelm must exceed US$56,000 to be worthwhile.

However, this is not the end of the story for an economic evaluation. Any excess of Aduhelm’s benefits over costs, it’s net-benefits, must be compared with the next best alternative to this medication. It turns out, that many of the non-pharmaceutical, new interventions have very large net-benefits. For instance, hearing aids costs about US$ 2,238 per year and therefore are much cheaper than Aduhelm. The dementia benefits of hearing aids were 1.12 times greater than the costs. To be judged better than hearing aids, Aduhelm must produce annual benefits that exceed US$ 62,720. Note that the dementia benefits of hearing aids were just a small part of the total benefits of hearing aids. With the quality of life benefits of hearing aids added on top of the dementia benefits, the total benefits were almost 30 times greater than the costs. Vision correction had dementia benefits that were 2.4 times greater than its costs. With the life-saving benefits of buying glasses added to the dementia benefits, benefits were 18.6 times the costs. Clearly, when an effective pharmaceutical intervention has been identified, it must be found to have large monetary benefits to be able to compete for public or private funding with the new interventions for dementia.

To summarize: the medical definition of dementia involving brain pathology is not helpful if it means that nothing can be done to reduce dementia at this time. The more fundamental, behavioural definition of dementia, in terms of ADL being restricted, is much more informative, at it means that there already exist many effective interventions. Finally, just being found to be effective should not be the benchmark for a pharmaceutical intervention to be worth funding. It must also be found to pass a cost-benefit test, and be comparable with the net-benefits of the existing alternatives.