Kadcyla

Last week the National Institute for Clinical Excellence (NICE) rejected the drug Kadcyla, produced by pharmaceutical giant Roche, which provides an extra 6 months of life to breast cancer sufferers, because at £90,000 it is too expensive. It highlights a number of issues.

The first issue, of course, as a number of patients pointed out, is how can you put a price on a person's life? But, perhaps the real question here should be, even if you could arrive at a method for making such a decision, who should make it? Under capitalism, money and profits are ranked more important than the lives of millions every day. It was known for a long time that asbestos, for example, was lethal, but many industries depended on its continued use, in order that they could continue to make profits. As a result, the facts about asbestos were kept quiet, and large numbers of workers have died from working with it, as a result. Even until quite recently it was being used in products such as Artex, and some types of floor tiles. The orthodox theory of markets requires that buyers and sellers should have perfect knowledge, but if workers are denied the knowledge of what damage to their health might result from certain types of jobs, how can they decide whether to sell their labour-power for that purpose, or how much to charge for it given those risks?

But, the issue in relation to Kadcyla arises from another cause. Kadcyla is a commodity like any other, sold into the market. Patients who want Kadcyla, and who can pay for it, could buy it, i.e. they could constitute effective demand for it. The point here is that very few people could afford to pay the market price required. This is one reason that developed capitalist economies created welfare states, because in so doing, and thereby collecting tax and social insurance from millions of workers, they can average out the risks that each person faces, and thereby ensure that those who do require expensive treatment can obtain it, without every individual having to set aside huge amounts to cover their own particular risks. That means that various kinds of drugs and treatments can be profitably developed that otherwise would not have been, because the potential market for them would otherwise not have been big enough.

But, the issue now arises, as these drugs and treatments become ever more extensive, but ever more expensive also, how to ration out the funds available. A market, in which every individual consumer acts as an independent unit resolves this simply on the basis of price. Either you are able and prepared to pay the price for a commodity or you are not; you buy it or you don't. But, when the consumer is instead a collective consumer, and the funds available to that collective consumer are contributed by individuals, the question necessarily arises how best to use the available funds to maximise utility, or what Marx calls use value.

This is the dilemma that a socialist society would face; how to make decisions on behalf of all that maximise the utility of all. NICE was established to perform this function within the context of a capitalist society, and a state capitalist health service. However, much some people may talk about “Our Health Service”, this incident once again illustrates that it is not “Ours” at all, but a health service under the direct ownership and control of the capitalist state, and geared, therefore, to meeting the needs of capital not labour. We are not even allowed to determine what the funds of this health service should be, let alone how those funds should be spent.

Many people watching the interviews of patients, now deprived of the treatment, will feel the deepest sympathy with their plight. If we really did have a health service that was “ours”, that was owned and controlled by workers, the task of making the decision of whether funds should be used to buy Kadcyla, or for some other purpose, might not be made any easier, but it would at least mean that the decision was our decision, and not the decision of state bureaucrats, based on maximising profits.

But, this is the second issue that Kadcyla raises, which is how would we deal with such issues under socialism. The reality is that Kadcyla shows the kinds of decisions that a socialist society would have to make every day. NICE has decided not to allow the NHS to buy Kadcyla, because it is too expensive for the utility it provides to society. We may want to disagree with its decision, but the basis of the dilemma remains. A socialist society would have to also decide whether the resources it had to devote to making the drug available, provided greater utility for society than if those resources were used in some other way. For example, if those resources could only be made available by not providing drugs or treatment that kept children alive, who would want to make that decision?

This issue is not resolved by arguing that Roche, or any other drug company should simply make the drug available at a much lower price. In a capitalist economy, all drug companies will require to make at least the average profit on the capital they invest. In fact, a drug company may need to make higher than average profits, because it has higher risks than other companies. The company may spend years developing a drug that is never effective, and cannot be marketed. It may also develop drugs that its later found have serious side effects that leave it open to being sued for large amounts of money. This is rather like the issue I highlighted a few weeks ago about house builders. In a capitalist economy firms will not supply more of any commodity, unless they believe that they can sell it at a price that brings them the required profits. No amount of moralising by politicians will change that. If they don't like it, they have to accept that they have to create a different type of economy than capitalism.

But, the issue is not that simply resolved even within the context of a socialist economy either. In a socialist economy, society could decide to allocate its resources in whatever proportions it chose. If it was decided that we should have more Kadcyla, and less chocolate, we could simply allocate resources accordingly. The question of price would then be immaterial, we would just produce however, much Kadcyla was required and make it available as supply. But, in reality, it is not that simple either.

The other issue that Kadcyla illustrates is the extent to which the nature of production and consumption has changed under modern capitalism, and that would be extended even further under socialism. Like many new commodities, such as smart phones and other bits of technology, as well as commodities such as entertainment, the real value of Kadcyla resides not in the materials used for its production, nor in the machinery required for its production. Its value resides in the thousands of hours of labour put into its development by large numbers of highly skilled scientists. The labour of these scientists is what Marx calls complex. That is the value that society places on it, is a multiple of the value created by ordinary, unskilled simple labour.

In a market economy, this comes down to the question of how much consumers are prepared to pay for the product of this labour. But, it is an important issue for a socialist society too. Pharmaceutical companies employ tens of thousands of these scientists in total. If a socialist society wanted to produce more of these drugs, we would need to employ even more. But, the cost to society is not just the wages paid to the particular workers – and in the first stage of Communism, before there is an abundance of society's needs, its likely that highly skilled scientists will still expect to be paid much more than a production line worker – the real cost is all of the resources that have to be put into creating that worker.

It requires resources to provide high levels of education, which in itself requires an increased allocation of society's resources to producing more teachers, more schools, more lecturers, more universities, more laboratory equipment and so on. It requires society to provide the resources to feed, clothe and shelter all of these workers while they are themselves being trained and educated, before they even begin to put any value back into society themselves in exchange. All of the resources allocated to these requirements are thereby resources that are not being used to produce all of the other goods and services that society requires, or the means of production that would enable society in future to increase its productivity, and be able to produce an expanded range and quantity of goods and services.