Features Australia

Vaccine gamble in the lottery of life

Why not roll the dice on the rollout?

5 June 2021

9:00 AM

5 June 2021

9:00 AM

People take pharmaceutical shots and pills that promise better health and wellbeing, despite the risk of rare but catastrophic side-effects, like dangerous blood clots from the contraceptive pill, or febrile neutropenia from immunotherapy. The personal risk is worth the personal benefits, net of financial costs. For pharmaceuticals on the PBS, only a small co-payment is required. The PBS is a splendid social insurance scheme that limits the private costs of bad luck.

For a drug to get on the PBS, the Treasury’s cost per dollar of private benefits, measured in Quality Adjusted Life Years, must not exceed a benchmark. No weight is given to the public benefits that may flow from the drug treatment—what we economists call positive externalities or beneficial spillovers. This neglect of spillovers is justified because they are generally relatively small, which is not the case for immunisations against communicable disease.

Since 1997, the National Immunisation Program has provided free access to eligible people, thus reducing the spread of the disease to others. In some instances—for example, flu shots—the private benefits are large enough to encourage participation sufficient to generate most of the potential spillovers. However, this has proven not the case with the AstraZeneca vaccine.

AstraZeneca (AZ) is the only vaccine available to most Australians over 50. It offers something between 65 and 80 per cent protection against infection but has caused about seventeen serious blood clots, with one death. This has added to AZ hesitancy: because of the risk of side-effects, the private or personal benefits and costs are more finely balanced, especially for the well elderly.

To boost AZ vaccination rates, official medical spokespersons have compared the probability of death from Covid-19 if not AZ-vaccinated with the chance of dying from the vaccine itself. Unfortunately, uncertainties about the probabilities bedevil the comparisons.

Outside of Victoria, to date ninety Australians have died from the virus, for an incidence of 4.7 per million people. Given improvements in quarantine and in contact tracing and disease treatment, as well as the mandated and voluntary changes in public behaviour, this seems an upper-bound estimate of the probability that an unvaccinated resident would die of the disease over the next year or so. However, the risk for the over-50s would be higher.

Vaccination with AZ, if 65 per cent effective, would reduce the risk of a death-dealing infection from that 4.7 to 1.6 per million. However, an AZ shot carries a risk of death from the vaccine itself which, on numbers from the Australian Technical Advisory Groups on Immunisation, could be around three per million vaccinations for the over-50s. Thus, the total risk of Covid-related death if AZ vaccinated could be as high as 4.6 per million, close to the probability of an unvaccinated death.

Given the uncertainty surrounding these probabilities, it is not irrational for someone over 50 to refuse the AZ jab on selfish grounds, particularly if they are in reasonably good health.

To encourage AZ vaccination, other than through urging, the government must increase the private benefits or reduce the private costs. To be effective, a direct grant to the fully immunised seems likely to have a high cost. In contrast, under the ‘Vax-a-Million’ lottery scheme, Ohioans, once fully vaccinated, are enrolled in a weekly and ongoing lottery offering $1 million to each of five winners: the sooner vaccinated, the more chances of winning. This scheme, which has a very low cost in aggregate, has led to a sudden 26 per cent increase in the rate of vaccinations, although in circumstances where the Covid-related risks are much greater than here.

However, the Ohio scheme does not offer insurance against a much-publicised private cost of AZ, which is the risk of blood clots: a person who dies from the vaccine or is seriously damaged by it will have a lottery ticket but no greater than the average chance of winning a prize. It can therefore result in an inequitable outcome that some people who are acting in the public interest bear disproportionate costs for so doing.

On fairness grounds, therefore, the federal government should consider providing public insurance against an otherwise uninsurable rare catastrophe, one resulting from a vaccination program that not only provides some protection to the vaccinated, but also offers spillover benefits to society generally.

The scheme could take the form of offering sizeable compensation of, say, $1m for anyone who takes an AZ jab and then has a serious blood clot within six or eight weeks; and $10m to the estate of anyone who dies from clotting that is medically attributed to the vaccine.

Compensation along those lines would be no different from the insurance we routinely provide to those who take risks on behalf of the community. However, it could focus even more public attention on the dangers of an adverse reaction to the AZ shot: in behavioural economics terms, the provision of the compensation would ‘frame’ the choice – AZ vaccinate or not – in a negative way that partly undermines the public objective of encouraging AZ vaccinations.

The very fact of the government granting compensation would tend to give the rare side-effect a greater salience.

The Ohio lottery, with highly publicised news each week of the lucky winners, creates and reinforces the image of an upside from vaccination, along with an incentive to get in early. The resulting ‘buzz’ may well be more than enough to offset any negative framing effect of the proposed compensation scheme.

The government should seriously consider both schemes, for there are gains to combining them. Neither would be particularly costly, but together they may speed the day when external borders are opened, and sudden lockdowns, with their devastating social and economic costs, are a thing of the past.

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