Perverse incentives and health

Dr Jason Fung explains why 'there is so much money being raised for heart disease or cancer or diabetes, and why there is so little real medical progress.' As he says, 'there are many ways that Big Pharma pays doctors':

• The most common are speaker’s fees and consulting fees. ...
• The second form of graft is consulting fees. The company will pay the doctor for his/her ‘advice’ as a consultant on how to market a drug. Of course, the company cares not at all about what he/she says. It is an opportunity to give these doctors a 2 hour advertisement disguised as a consultation. For this the doctor is paid $2000-$5000. ...
• The most insidious form of corruption is ‘research’ money. While it sounds great, it is usually another thinly disguised form of bribery. Some research project is usually set up with little or no academic merit. The universities setting this up are well paid. The doctors who participate are well paid. Best of all, research meetings are held regularly in lovely locations like Vienna and Hawaii. ‘Researchers’, of course, are invited to participate, all expenses paid. The public only sees that the company has donated ‘research’ money and that the doctor is doing ‘research’. These shenanigans happen every day, in every university. If you’ve ever wondered why there is so much money being raised for heart disease or cancer or diabetes, and why there is so little real medical progress – this is the reason.Clinical Practice Guidelines or Legalized Bribery?, Dr Jason Fung, November

He's mostly referring to the United States, but perverse incentives pervade even government-run healthcare systems. By default, health expenditure is influenced by groups of medical specialists with little incentive or capacity to see improvements in the overall health of a large population as an objective. As well as the substantial money flows described by Dr Fung, funding decisions are also heavily influenced by the public profile of a disease or its victims, rather than on what would best meet the needs of society. Health is about a lot more than what Big Pharma does, or how governments allocate healthcare funds. It’s also a question of diet, exercise, transport, and culture. Recent research shows, for instance, the beneficial effects on health of green spaces in our cities (see here (pdf) for instance). The way government is structured, with its discrete funding bodies, makes it unlikely that such benefits will influence funding decisions.

We cannot expect a government nor any single organisation, even if they were ethical and altruistic, to identify the huge numbers of variables, with all their time lags and interactions, that influence the nation’s health. We can, though, devise a system that rewards people who explore and implement the most cost-effective health solutions, even when circumstances and knowledge are changing continuously. I have tried to do this with my essay on Health Bonds, which would aim to distribute scarce government funds to where they would do most good, as measured by such indicators as Disability Adjusted Life Years.

Incentives matter, and current incentives have nothing to do with achieving society's broad, long-term goals. Instead, they accrue to those who maximise the narrow, short-term goals that have more to do with the financial success of big companies than the health of ordinary citizens.