Regulatory
Health Protection: Analytical Challenges
By
John D. Graham, Ph.D., Administrator, Office of Information and Regulatory
Affairs, Office of Management and Budget, US Executive Office of the President
Remarks
Prepared for Resources for the Future Conference, "Public Health
and the Environment", April 19, 2002, Washington, DC.
Thank
you very much for the opportunity to speak today. As many of you know,
I am a strong advocate of the formal tools of regulatory analysis, such
as risk analysis, decision analysis, cost-effectiveness analysis and
cost-benefit analysis. I believe these tools can help us accomplish
more public health protection at less cost than will occur without good
analysis. Although these formal tools have much insight to offer, it
is fair to say that their influence to date has been limited. What steps
can be taken to enhance the roles of formal analysis in decisions about
public health, without giving undue credence to these imperfect tools?
I recognize
the skepticism expressed by some that formal analysis will never have
a dominant role in policy making. There is certainly an inevitable and
proper role for a variety of factors in policy decisions. For example,
my limited experience in government has already taught me a strong lesson
regarding the powerful role of the lawyer in policy making. Yet I remain
an optimist, perhaps a naive one, about the potential for formal analytic
tools to make a stronger contribution to public health policy.
In order
for this potential to be realized, much work needs to be done. I believe
we need a combination of both intellectual progress in the field and
institutional innovation in how analysis gets done. Please let me explore
these themes in concert.
Health
Risk Assessment
First,
there is an enormous challenge in gauging the likelihood and severity
of an emerging health threat. Sometimes there is ample basis for public
concern about an emerging hazard but there may be a very limited historical
basis for determining the magnitude of the hazard. Examples that come
to mind are bioterrorism, mad cow's disease and antibiotic resistance.
In order to perform good risk assessment of these threats, we need much
better information about the most susceptible subgroups and communities
in society because it is exposures to these groups that may determine
the overall public health significance of an emerging hazard.
A closely
related issue is identifying the most important sources or causes of
health problems. In the case of particulate air pollution, we often
make the simple assumption that all fine particles are equally toxic,
regardless of their precise diameter or chemical composition. Yet fine
particles from different sources -- say, motor vehicles and powerplants
-- vary somewhat in their typical size distribution and chemical content.
We often make "the-all-particles-are-equal" assumption because it is
analytically tractable, not because it is biologically plausible. Indeed,
it is quite possible - perhaps probable - that some particles are more
toxic than others, information that could play an important role in
setting priorities and doing good benefit-cost analysis.
Which
institutions in society should be responsible for this applied risk
assessment research? One might think that university-based scientists
could offer analytic solutions to these challenges and they often do.
Yet these emerging health hazards, including the identification of sources
and causes, often require collaboration of scientists from multiple
disciplines. They also entail a willingness to develop and validate
mathematical models that provide speculative yet useful forecasts about
what is possible or probable.
Many universities
do not reward faculty and students who tackle messy problems of this sort.
I am aware that EPA is supporting some constructive efforts in this arena.
I also believe that it is critical for the public and private sectors
to work together to support first-rate, peer-reviewed science. Organizations
such as the Health Effects Institute, the International Life Sciences
Institute, the Chemical Industry Institute of Toxicology and the Electric
Power Research Institute provide an excellent forum for work to be done
in collaboration with university scientists. I am pleased to see that
RFF is contributing to a new line of work on the issue of antibiotic resistance.
We need to work harder to strengthen the scientific quality, credibility
and policy relevance of these organizations.
Health
Risk Evaluation
Second,
we need better tools to compare the health benefits of policies to their
economic costs. Going beyond health risk assessment, this field might
be called health risk evaluation. By evaluation, I mean the analytic
process of scoring or rating health effects in terms of overall burden
on society and quantifying the benefits of health policies in monetary
or other units that capture the preferences of the public.
The central
intellectual challenge is to account for the adverse effects of both
morbidity and mortality in a single numerical index, recognizing that
some bouts of sickness are more severe than others and some deaths may
be considered more tragic than others. Although answers to these questions
require value judgements, the social sciences have much to offer in
providing possible answers.
In the
developing world, the World Health Organization has promoted a metric
called the disability-adjusted life year, or the DALY. Diverse health
problems from infectious disease to trauma are scored in terms of the
number of DALYs that a society loses. The scoring of each health condition
is based on three factors: the number of life years lost compared to
the Japanese experience, weights are applied to
each
healthy life year to reflect productivity at work and at home, and
weights for each unhealthy life year are applied to capture the degree
of functional limitation imposed on a person. Although my description
of DALYs has been simplistic, the tool continues to be refined in
various ways.
A precursor
to the DALY, the quality-adjusted life year or QALY, is now the standard
measure of health policy effectiveness used by academics in North America
and Europe. It is similar to the DALY but differs in three important
ways. First, the loss of life expectancy from each condition is derived
from actuarial data or life tables for a relevant target population
rather than from the Japanese experience. Second, each year of healthy
life is weighted the same, regardless of when in the lifespan the loss
occurs. This assumption is defended on grounds of fairness and analytic
simplicity. Finally, the weights for different health states are typically
derived in surveys of community residents or patients who have experienced
the condition. Early work on QALYs was very simplistic in its use of
utility theory and in its use of survey methods but the quality of QALY
research is improving.
Both the
DALY and QALY methods, due to their very assumptions, place more emphasis
on risks affecting middle-age adults and young people than risks of
the chronic diseases of old age. This emphasis is not necessarily consistent
with the current investment patterns in the US health care system, where
billions of dollars are devoted to health care late in the lifespan.
And economic critics of DALYs and QALYs argue that these methods depart
from classical assumptions.
For example,
a standard economic view is that consumer sovereignty should be respected:
if well-informed senior citizens -- who often have substantial assets
and precious few remaining life years -- have a large demand for modest
health gains, so be it. And there is a growing literature in economics
aimed at quantifying the monetary benefits of reducing different diseases
and health impairments. Yet these willingness-to-pay tools face a host
of ethical and technical criticisms.
At the
most basic ethical level, concerns have been raised about whether a
person's income level or asset position should be permitted to influence
how much a governmental study values their health status. Others have
argued that a fair allocation of public resources throughout the lifespan
should be determined in a so-called "veil of ignorance," where people's
views are not influenced by their current age or health status. Yet
there are certainly some practical problems with implementing that idea!
At a technical
level, substantial progress has been made in estimating willingness
to pay for health protection. Yet questions have also been raised about
whether stated willingness to pay by survey respondents is adequately
sensitive to the amount of risk reduction and the context of risk reduction.
In light of these many difficulties, OMB does not currently require
agencies to value health gains and losses in monetary units and some
agencies, such as OSHA and NHTSA, have refrained from this practice.
I believe
that an organization like RFF should convene a conference on health
risk evaluation to assess the state of the field and make recommendations
on future research and analytic practice.
Modest
Steps By OMB
At OMB
we see health policy occurring at a variety of federal agencies: FDA,
EPA, USDA, CMS, CDC, to name just a few. These agencies are now using
a wide range of analytic practices that are not always mutually consistent.
Rarely are these analytic practices rooted in statute.
OMB has
an important role to play in fostering a greater degree of consistency.
Yet agencies sometimes have important reasons for doing things differently
and OMB's challenge is to appreciate when these distinctions have merit.
We recognize, for example, that EPA considers policies that promise
important ecological benefits that are not captured in any measure of
human health benefit.
In the
Bush Administration, we support development of health regulations that
are based on sound science and economics. We are certainly not allergic
to regulation; indeed, we view it as a critical tool of national policy
-- as critical as government spending and taxation. My Office in particular
strives to prompt and approve good health rules while improving flawed
rules and stopping harmful ones. We see better formal analysis as a
critical step toward more effective, fair and efficient health policies.
In my
first year at OMB, we have taken two modest steps to promote more analytic
rigor and consistency in health policy throughout the federal government.
You can learn more about these stops on OMB's web site.
First,
OMB recently established analytic guidelines for health risk assessment
that cover all the federal agencies. The guidelines, based on two rounds
of public comment and interagency review, are rooted in principles found
in the Safe Drinking Water Act Amendments of 1996. A notable feature
of the guidelines is a requirement that agencies, when faced with scientific
uncertainty about important health issues, prepare central estimates
of risk as well as upper and lower bounds on the true yet unknown risks.
Each federal agency engaged in health risk assessment is now preparing
specific guidelines that adopt or adapt the formulation found in the
Safe Drinking Water Act. When these guidelines take effect in October
of this year, the public will be provided an opportunity to challenge
any health risk information disseminated by a federal agency that does
not adhere to the OMB and agency guidelines. Agencies will be expected
to provide a prompt and objective response to these challenges.
Second,
OMB - in collaboration with CEA - has initiated a process to refine
the guidelines for regulatory analysis that agencies must follow when
preparing economic analyses to support rules. In this first phase, we
have asked for public comment by late May on specific analytic issues
- including health risk evaluation -- that should be addressed in OMB's
re-evaluation of existing guidance. Examples of issues we intend to
address are the methods of valuing human health effects and the proper
discount rate to apply to future benefits and costs. We will prepare
a proposed revision to OMB's analytic guidance that will be released
for public comment, interagency review, and external peer review. The
final OMB guidance will then be used by my Office to judge whether the
regulatory analyses prepared by agencies are adequate. Please consult
OMB's web site for more details about the comment period that extends
through late May.
Looking
forward, in order to enhance the roles of science and economics in health
policy, we must do something that is as obvious as it is critical: improve
the technical and ethical foundations of the tools used to inform policy
makers. Organizations like Resources for the Future have played an influential
role in the past and I only see that role increasing in importance in
the years ahead.
Thank you
for the opportunity to speak today and I look forward to your questions
and comments.
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