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14/07/2019
Speaking at CEDA’s Economics of prevention event, he said there are “five paradoxes that relate to prevention within vaccines that help understand the decision making that flow from those paradoxes, and what some of the difficulties are.”
“We need to have a debate that involves everyone – the manufacturers, government, academia, all levels of government…(and) importantly consumers. They need to have a voice in this and how we actually go forward with better policy than what we already have, which is good, but we believe it could be much better.
“The first is the Simple Prevention paradox – when prevention is working, nothing is happening.
“The danger of that is we don’t do anything because we become lax and there have been many periods in our history when we have taken our foot off the pedal and things have started to unravel.”
Professor Nolan said one of the problems is that while vaccines are available, the disease or illness it is used for may be unpredictable, waxing and waning over time but funding decisions are made on the conditions of the day.
“In two- or three years’ time in order to get to the point where justification of investment might reach a threshold, many people may have to die or have (a) serious illness in order for us to be persuaded to use an intervention we have already got in our hands.
“That is the paradox…and that is a fundamental issue for vaccines.
“The second issue is to do with some of the technical aspects of economic analysis. The first is the evidence for funding is constrained by this unrealisable certainty.”
Professor Nolan explained the concept of Herd Immunity – a form of indirect protection from infectious disease, whereby the immunisation of a proportion of a community protects other portions who are not immune.
“The paradox here is until you have introduced a vaccine into the community you can’t actually measure Herd Immunity and you can’t introduce it to the whole community in some frameworks…until you have the evidence for Herd Immunity. So, you’re stuck – this is the catch 22,” he said.
“The third (paradox) is the willingness to pay. At the moment, formal community valuation if you like, of an intervention, a vaccine, is not formally codified in terms of a metric, that feeds into a cost effectiveness framework.
“State governments have provided the evidence that this is an important determinant because…(they) have been pressured by their own communities.”
As the service providers, Professor Nolan said state governments are more proximal to voters, so they often fund vaccines ahead of the National Immunisation Program (NIP). Examples include whooping cough, meningococcal disease and childhood influenza.
“Willingness to pay and how we codify (that) is…something I think we need to pay attention to and that should be part of study and debate…other than the formal econometric analysis,” he said.
“Fourthly, there are some technical issues around the current economic framework.
“One is this issue of societal versus payer perspectives for the cost and benefit side of what happens with vaccines.”
Professor Nolan said this included for example the cost of lost employment which occurs downstream as an impact of having a preventable disease.
“The quality of that evidence is not often judged to be strong enough to be able to be added to that equation," said.
“And then, what is called the discount rate – the extent to which the expenditure now produces future savings is reflected in the calculation of the economic model.
“At the moment we're using a discount rate which is a substantially higher than a number of other more progressive countries including the UK.
“Finally, one interesting aspect of how the onus of proof works in Australia, is the companies themselves have the burden of proof to show that their vaccine is cost effective.
“You might argue that is okay for a drug, for a particular target population.
“But for a whole population…you could also argue that really that burden of proof should be on government.
“I think this is an area where we do need to have some policy analysis and look at the benefits.”
Speaking from the prevention perspective of road safety, Transport Accident Commission (TAC) CFO, Tony Dudley, discussed the Towards Zero strategy.
“The TAC’s long-term aim is to see that there's no one killed or seriously injured on our roads, it's a very ambitious strategy and we're aiming by 2050 for that to come true,” he said.
Mr Dudley said that in the past the cost of undertaking the preventive measures were weighed up against the cost and societal costs of road trauma, using a benefit to cost ratio to determine the return on investment.
“In the past we've always taken an economic rationalist sort of view of things in terms of getting the cost-benefit, so we look at reducing road trauma as an investment.
“More recently in Victoria we followed what the northern European and particularly Sweden, are doing in their approach where every human life is assumed to be sacrosanct.
“Decisions around design and operation of the transport system are made with safety as a key consideration, whereas in the past safety would have been one of the considerations along with mobility, environmental issues and those sorts of things.
“We're putting in front of that the value of someone's life.
“To do that though and to move forward it takes political leadership. Fortunately, in Victoria we've had the backing of state government.
“We wanted to reset the community agenda in relation to how we thought and talked about road trauma.
“What we need to do is start that conversation and debate, strong leadership from our leaders, to be able to drive the message and make sure that…everyone is accountable for what they do.”
Also speaking at the event was The Australia Institute Chief Economist, Rod Campbell, who said economics can often exclude the community from the debate.
“I will be an evangelist for cost-benefit analysis if it's actually serving and reflecting community values and if economics stops being a barrier,” he said.
“There is a huge amount of economic analysis that is commissioned by interest groups, it's carried out by consultants who have a vested interest in giving their clients the opinions they want and…economics is about putting a value on your opinions.
“Australia is one of the richest communities, living at the richest time in our history, we can actually afford to do pretty much anything – we can't afford to do everything – but we can afford to do pretty much anything.
“I think if economists were doing their job better, including the community and reflecting what they wanted, then you'd see a lot more money being put into prevention and vaccines.”
“We need to have a debate that involves everyone – the manufacturers, government, academia, all levels of government…(and) importantly consumers. They need to have a voice in this and how we actually go forward with better policy than what we already have, which is good, but we believe it could be much better.
“The first is the Simple Prevention paradox – when prevention is working, nothing is happening.
“The danger of that is we don’t do anything because we become lax and there have been many periods in our history when we have taken our foot off the pedal and things have started to unravel.”
Professor Nolan said one of the problems is that while vaccines are available, the disease or illness it is used for may be unpredictable, waxing and waning over time but funding decisions are made on the conditions of the day.
“In two- or three years’ time in order to get to the point where justification of investment might reach a threshold, many people may have to die or have (a) serious illness in order for us to be persuaded to use an intervention we have already got in our hands.
“That is the paradox…and that is a fundamental issue for vaccines.
“The second issue is to do with some of the technical aspects of economic analysis. The first is the evidence for funding is constrained by this unrealisable certainty.”
Professor Nolan explained the concept of Herd Immunity – a form of indirect protection from infectious disease, whereby the immunisation of a proportion of a community protects other portions who are not immune.
“The paradox here is until you have introduced a vaccine into the community you can’t actually measure Herd Immunity and you can’t introduce it to the whole community in some frameworks…until you have the evidence for Herd Immunity. So, you’re stuck – this is the catch 22,” he said.
“The third (paradox) is the willingness to pay. At the moment, formal community valuation if you like, of an intervention, a vaccine, is not formally codified in terms of a metric, that feeds into a cost effectiveness framework.
“State governments have provided the evidence that this is an important determinant because…(they) have been pressured by their own communities.”
As the service providers, Professor Nolan said state governments are more proximal to voters, so they often fund vaccines ahead of the National Immunisation Program (NIP). Examples include whooping cough, meningococcal disease and childhood influenza.
“Willingness to pay and how we codify (that) is…something I think we need to pay attention to and that should be part of study and debate…other than the formal econometric analysis,” he said.
“Fourthly, there are some technical issues around the current economic framework.
“One is this issue of societal versus payer perspectives for the cost and benefit side of what happens with vaccines.”
Professor Nolan said this included for example the cost of lost employment which occurs downstream as an impact of having a preventable disease.
“The quality of that evidence is not often judged to be strong enough to be able to be added to that equation," said.
“And then, what is called the discount rate – the extent to which the expenditure now produces future savings is reflected in the calculation of the economic model.
“At the moment we're using a discount rate which is a substantially higher than a number of other more progressive countries including the UK.
“Finally, one interesting aspect of how the onus of proof works in Australia, is the companies themselves have the burden of proof to show that their vaccine is cost effective.
“You might argue that is okay for a drug, for a particular target population.
“But for a whole population…you could also argue that really that burden of proof should be on government.
“I think this is an area where we do need to have some policy analysis and look at the benefits.”
Speaking from the prevention perspective of road safety, Transport Accident Commission (TAC) CFO, Tony Dudley, discussed the Towards Zero strategy.
“The TAC’s long-term aim is to see that there's no one killed or seriously injured on our roads, it's a very ambitious strategy and we're aiming by 2050 for that to come true,” he said.
Mr Dudley said that in the past the cost of undertaking the preventive measures were weighed up against the cost and societal costs of road trauma, using a benefit to cost ratio to determine the return on investment.
“In the past we've always taken an economic rationalist sort of view of things in terms of getting the cost-benefit, so we look at reducing road trauma as an investment.
“More recently in Victoria we followed what the northern European and particularly Sweden, are doing in their approach where every human life is assumed to be sacrosanct.
“Decisions around design and operation of the transport system are made with safety as a key consideration, whereas in the past safety would have been one of the considerations along with mobility, environmental issues and those sorts of things.
“We're putting in front of that the value of someone's life.
“To do that though and to move forward it takes political leadership. Fortunately, in Victoria we've had the backing of state government.
“We wanted to reset the community agenda in relation to how we thought and talked about road trauma.
“What we need to do is start that conversation and debate, strong leadership from our leaders, to be able to drive the message and make sure that…everyone is accountable for what they do.”
Also speaking at the event was The Australia Institute Chief Economist, Rod Campbell, who said economics can often exclude the community from the debate.
“I will be an evangelist for cost-benefit analysis if it's actually serving and reflecting community values and if economics stops being a barrier,” he said.
“There is a huge amount of economic analysis that is commissioned by interest groups, it's carried out by consultants who have a vested interest in giving their clients the opinions they want and…economics is about putting a value on your opinions.
“Australia is one of the richest communities, living at the richest time in our history, we can actually afford to do pretty much anything – we can't afford to do everything – but we can afford to do pretty much anything.
“I think if economists were doing their job better, including the community and reflecting what they wanted, then you'd see a lot more money being put into prevention and vaccines.”