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Discount Rates for Costs and Benefits

The committee’s analytic model uses a discount rate of 3% per year for the costs and benefits of vaccine programs. This might seem to be simply an economic or accounting matter, unrelated to any ethical or value judgments, but it is not. Use of a discount rate for economic resources that represent the costs of producing a benefit is not ethically controversial. If an investment of resources produces an economic benefit or return—for example, in money—it is more valuable if that benefit is produced immediately than if the same economic benefit is produced 10 years hence. In the first case, the economic return can be invested over the subsequent 10 years and so will yield a substantially greater sum at the end of that period than in the second case, where the same initial return is not produced until the end of 10 years. Likewise, if a benefit—either an economic benefit or a direct improvement in people’s health status—will be produced at some fixed time in the future, say again 10 years hence, it is better to be able to pay the costs of producing the benefit as late as possible—for example in 10 years instead of immediately—because the funds can then be invested to earn a return in the meantime until they must be expended; fewer current dollars are necessary to produce a given sum of money to pay the costs of the benefit if they are not needed until some time in the future.

The ethically controversial issue is whether a given degree and period of improvement in well-being is of greater value the sooner it occurs, and of less value the longer its occurrence is delayed. If two vaccines are typically given at the same age, but the first prevents a disease with a given burden within the first year after being given, while the second prevents a disease with the same burden in the 10th year after being given, is the health benefit of the second vaccine of less value than that of the first? Haemophilus influenzae b (Hib) vaccine, which is given to infants to prevent meningitis in the first year or two after vaccine administration, is an example of the first sort. Hepatitis B vaccine given to infants to reduce risk of liver cancer in adulthood is an example of the second sort. Applying a discount rate directly to benefits of health interventions measured as changes in well-being leads to the conclusion that the first vaccine provides a greater health benefit.

It is important to be clear about the nature of this issue, and not to confuse it with two other issues. First, the later improvement in well-being may be worth less than the immediate improvement if there is more uncertainty about realizing the benefit because of its later occurrence. Future benefits and costs should be discounted for their uncertainty. However, later effects on well-being are not necessarily less certain than immediate effects.

Second, sometimes a near-term improvement in well-being, such as restoring or preventing a person’s loss of a particular function now as opposed to 10 years hence, will be of greater value because the improvement will have a positive impact on the person’s level of function and well-being over the intervening 10 years. This difference in well-being because of the time at which the restoration or prevention of loss of function occurs will be captured directly by apply-



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