BSE controls final report, 20 December 2000, section 16, Costs
81.Some have argued that any expenditure in this area is justified to save a life, especially from death from vCJD, a highly distressing and invariably fatal disease affecting primarily young people. However, resources are never infinite and even when available, employing them in one area (such as BSE prevention) will reduce the resources available for other desirable activities, such as the National Health Service. The availability of trained manpower to implement and enforce controls is always constrained – if only in the short term by the time it takes to recruit and train an expanded work force.
82. A variety of ways to address this relationship exist, but they are all difficult to apply in an area where the uncertainty about the possible detriment (ie the number of cases of vCJD that will be caused by past exposures and/or the number of cases being prevented by present control measures) are subject to such great uncertainty. Studies of the public's ‘Willingness to Pay’ (WTP) to avert a death in other areas suggest that people are prepared to put an implicit value on the resources that should be committed to protecting people from a given disease or from death. The value tends to vary such that WTP is higher for:
- exposures to the public than for those to workers;
- children than for the general population;
- unpleasant and emotive diseases due to ‘invisible’ and ‘nasty’ agents;
- events that affect large numbers of people at the same time;
- agents that cause disease in the future.
83.In many of these studies there is considerably more quantifiable information on the magnitude of the risk and the size of the possible detriment than is the case here. Some such studies have reported WTP between £1-3 million56,57 per life saved. The British Railways Board’s evaluation of safety in the context of fitting Automatic Train Protection (ATP) was costed at £14 million per fatality averted in 1994, and at that time not considered to be justified in the context of their policy of costing a life saved at £2 million, nor when they increased the cost of a life saved to £3-4 million to take account of the fact that train crashes produce multiple deaths, and these are less acceptable than a series of single ones (as more often occurs in road accidents). Following the Paddington rail crash, it could be considered that the cost of the installation of ATP lies on the borderline of acceptability by society as a whole at present, given the ongoing debate as to whether fitting this system is now justified to prevent train fatalities in the future58. Another way of approaching the problem is by looking at the predicted cost of regulations already in place limiting worker exposure to various chemicals. This also suggests that a figure between £1-10 million per life saved or detriment averted is common59,60,61 for regulations that become law.
84.The estimated total annual direct costs of the BSE controls are of the order of £550 million. The breakdown is given in Table 3 and relates to the costs given in paragraphs 39, 53 and 57 above. When considering costs, there are, in addition to this, indirect costs both to industry (associated with market response issues) and to Government. Some of the latter will include a proportion of the cost of the cattle tracing system (it is not in place to deal solely with BSE) as well as the cost of TSE research undertaken by Government-funded bodies, which is described in more detail in paragraph 11 above. Some of the research costs may involve a redirection of research funding from other areas rather than additional expenditure. This redirection is an opportunity cost since the areas from which funds are moved may lose some benefits.
TABLE 3:
Costs per year - £million
| Over 30 Month Rule | Feed ban | SRM | Total | |
|---|---|---|---|---|
| Industry | 95 | 14 | 18 | 127 |
| Government | 400 | 2 | 23 | 425 |
| Grand Total | 495 | 16 | 41 | 552 |
85.It is unlikely that there will be a consensus on what is a reasonable value to put on preventing one case of vCJD. It would, however, be reasonable to assume that the value would lie at the upper end of the range of values that have been found acceptable in other contexts. For example, therefore, if society felt it was reasonable to spend £10 million to prevent one case of vCJD, the expenditure of £552 million per year would then be justified by preventing a risk of otherwise causing around 55 vCJD deaths per year. This discussion is not to suggest any sort of ceiling on what society is likely to be prepared to pay, but is intended to illustrate the context in which such decisions will be made. We do not propose to make any recommendation in this area, since, as the BSE Inquiry report and many of those we consulted pointed out, it is ultimately for Ministers to decide on the scale of funding in any area.
86.At present between 10 and 20 cases of vCJD are diagnosed per year. Given the long incubation period, most of these cases are likely to be due to exposures before controls began to be put in place in the late 1980s. We do not know how many cases of vCJD will be caused by the exposures of the public so far. Neither do we know how many cases will be averted by the present controls. It is very likely, though, that without the introduction of the controls, the BSE epidemic would have continued to increase and more people would have been exposed to the infectious agent. This, in turn, would have led to more deaths and greater costs to the NHS. Because of the significant decline in the UK BSE epidemic, we can say that even without the present controls, exposures to the BSE agent from the food chain now are probably considerably lower than exposures were when most of the present cases are likely to have been infected.
87.Finally, there are significant, as yet unquantified, social costs of BSE, including the suffering of vCJD victims and their families and NHS costs for the care and treatment of vCJD sufferers. The cost of treating patients with vCJD has been estimated by DH as an average of £45,000 per patient from diagnosis.
88.Direct and indirect benefits are also derived from the existence of the controls, though these are, of course, much more difficult to quantify. The main benefit of all the controls is the protection of the public from exposure through food to the BSE agent. In addition, the existence of the controls may properly reassure consumers, resulting in greater demand for domestically-produced meat and meat products than would otherwise have been the case.
89.It is important to emphasise the considerable uncertainties in any of the estimates of the risks posed by exposures of the public to the BSE agent at present and the uncertainties in the estimates of the costs of the controls in place. However, in light of the discussion above, current expenditure does not seem unreasonable.
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56 - Royal Society. Risk: Analysis, perception and management, London, Royal Society (1992).
57 - Ives et al, The statistical value of life and safety investment. Norwich, Environmental Risk Assessment Unit. University of East Anglia Report No 13 (1993).
58 - British Railways Board: Automatic Train Protection, July 1994
59 - Heinzerling L, Regulatory costs of mythic proportions, The Yale Law Journal 107 (7), 1981-2070 (1998)
60 - Shapiro S A et al, Not so Paradoxical: the Rationale for Technology based Regulation (1991)
61 - Lutter R et al, The cost per life saved cut off for safety enhancing regulations, Economic Inquiry; 37 (4), 599-608 (1999)