Drug costs and the value of a life year

How much is life extension worth? This week's New York Magazine includes an article on new cancer drugs whose gist is pugnaciously summarized on its cover as investigating "The Cancer Drug Racket." Inside, the clever title of the story is "The Cost of Living," and on the first page, the author reports a back-of-the-envelope scaling up of a new cancer drug's cost to $303,000 per year of life saved (not including the services required to administer the drug). Although this is a large number, I didn't find it that unreasonably large relative to estimates derived from the willingness to pay to avoid mortality risks.

Surely the big issue is who pays this or not, and how do they choose? Another great quote is had later in the article with this gem:  To a health-care-policy analyst like Peter Bach, it is the story of a market so jerry-rigged with regulations that, as a graduate-school professor once told him, “the beautiful thing about health care is that it has every market failure you’ve ever heard of—plus two or three more.”