The structure of a market for organs

 

A variety of arrangements pertaining to the recruitment, management and compensation of people wishing to sell their organs and tissues have been proposed. While all of these systems use the basic tool of pricing to provide individuals with an incentive to consent to organ removal, they differ substantially when it comes to ideal operating structure or environment. This is since some systems have specific aptitudes that make them better suited to the handling of either living or cadaver donors, while systems may be deemed more equitable or efficient in the manner in which they allow for organs to be distributed between different parties once purchased. This section examines some of the more feasible ways in which a market for organs could be established.

 

i) Conventional market trade

The simplest way to increase the supply of available organs is to provide direct cash incentives to people so that they agree to part with their organs. In the case of living organ sales, which usually concerns kidneys, the person who sells the organ is the individual hosting the desired asset in his or her own body, while in the case of a cadaver organ sale, the seller should usually be a family member of the deceased in whom the right to negotiate an organ sale has either been predetermined by law or in whom such a right has been transferred to while the deceased was alive. While a living organ sale only has one buyer and seller combination, with cadaveric organ sales, there is a possibility of multiple buyers and a single seller, since a range of tissues and organs that can be extracted from the deceased may be put up for sale for use in different recipients. In either case, a conventional exchange of property rights will take place, where the owner of a particular organ will agree to trade the ownership of that particular property right in exchange for a satisfactory payment.

An interesting point is that if sales are allowed from both living and cadaveric sources, it is likely that organs acquired from dead donors, such as kidneys, would be sold at a lower price than organs obtained from living donors, due to the obvious lack of need for them expressed for them by their now dead hosts. Under such conditions, living donors are likely to be driven out of the market due to their higher expected asking prices, although it is possible that the opposite effect of living donors receiving a higher price could also happen. This is likely to occur since the ability to reduce the ischemia time with a living donor organ and opportunity to provide recipients with a better antigen match than a random cadaver organ could be of value if patients wish to recover as soon as possible from their illness with the least chance of graft failure. Essentially, what we will then have are two competing (yet highly substitutable) products, with the fundamental virtue of living donor organs being their expected greater quality while the strength of cadaveric organs may lie in their relatively lower price[1].

One concern with a system of free trade is that it could lead to “profiteering” among some sellers if they realise that their organs are especially well matched to those of a potential buyer. Knowing this, sellers might engage in opportunistic behaviour by holding up the sale for ever increasing amounts of money, as they know that given the life and death nature of a transplant, the buyer may have no option but to pay them a higher price for an organ. The solution in this situation may be to set a price cap on the amount of money that can be paid to any seller for an organ. While this may be fair in the sense that it prevents some patients from losing a large portion of their wealth in their venture to receive a transplant, it comes at a substantial cost to society, as the imposition of price controls can lead to a limited number of organs being supplied on the market. This is since some people may not be willing to part with their organs in any case except if they are able to receive a higher price than is allowed by the law, with lower prices inevitably leading to lower levels of supply.

As was noted in the previous section, one fear about organ selling is that it can result in a state of adverse selection, where the seller may not disclose details relating to his overall medical history to the buyer, much like a paid blood donor would not tell a blood bank about his health, with the result being that buyers could inadvertently be infected with diseases such as HIV. There are clear differences between paid blood donors and organ sellers though, with the most obvious point being that organ selling is a once off event, not a frequently performed type of activity. This therefore means that the seller has less of a financial incentive to hide information from the buyer[2]. In addition, in a properly functioning market, a buyer is able to conduct a much greater battery of tests on a paid organ donor than is possible on a paid blood donor, thereby increasing his prospects of determining whether there are defects with the purchased organ. It is also possible to enter a clause in the contract stating that payment will be made to the seller only if a predetermined period of time, such as 6 months, has passed without the organ recipient registering any signs of infection that could be transmitted via the purchased organ[3]. With such a constraint, sellers will have very little reason to sell organs that they know are of poor quality if they realise that they are not going to get any financial benefit from such an action[4].

 

ii) An options market in organs

An interesting proposal for acquiring organs is to introduce a futures market for organs, where “healthy individuals would be given the opportunity to contract for the sale of their body tissue for delivery after death”[5]. Under such a system, people are approached to consider the issue of organ removal while they are still in good health and capable of entering into a contract out of their own free will, rather than waiting until they reach a hospital in a state of unconsciousness, where the burden of agreeing to a sale is transferred to their relatives. The advantage of this system of trade is that it ensures that neither medical staff nor the family have to confront the delicate matter of whether or not organs are to be sold, as a clear, irrevocable decision on this matter has already been taken by the deceased.

The options market is very similar to the system of contingent organ donation that is currently used to allow people to donate organs, with the only difference being that instead of signing an organ donor card where they agree to give away their organs for free, people sign a contract where they are understood to agree to organ removal in return for remuneration. Here, different approaches to compensating sellers who enter into such contracts have been proposed[6]:

- an upfront payment to the seller at the time of signing for the unrestricted right to gain access to the cadaver in order to remove organs at the time of death;

- a payment to be passed on to the deceased’s estate or designee at time of death in return for access to the cadaver and the right to remove organs;

- a payment to the deceased’s estate or designee to be made payable only if organs are actually extracted from the seller’s body, with fixed amounts being paid for different organs.

While all three options may have equal financial benefit to the seller, to the buyer, the final payment structure is preferable to the earlier choices due to a couple of factors. First, it excludes payment to the majority of people who do not die in conditions suitable for donation, with the buyer having no need to worry about the occurrence of any adverse selection should the seller suddenly take up activities that could damage his organs and render them unusable, as in such a case, he has the option of simply paying the seller nothing if the organs cannot be used. Second, it greatly lowers the problems of transaction costs, as the negotiations for trade only need to take place at the end of a person’s life, rather than on a regular basis should contracts need to be completed.

 

iii) Rewarded gifting

To some willing organ sellers, as with potential blood sellers, direct payments may not be suitable as a form of compensation or may carry a stigma precluding them from engaging in this activity, even though they have no other objections to the sale of their organs. In such circumstances, a less direct form of compensation may be required, with the concept of “rewarded gifting” being useful in describing the indirect payments that are sometimes made to living donors[7]. While critics of organ payment may believe that this is a contradictory and undesirable term, as it suggests that people should not be rewarded for giving gifts that should only be offered out of altruism, they are wrong due to their reliance on a restrictive understanding of altruism. As an examination of altruistic motivations revealed, this term may be entirely acceptable, as it simply reflects the fact that donations may often be made due to self-interested objectives that are not always evident at first. In addition to being a suitable way of compensating actual organ sellers, the provision of indirect incentives also serves as a good way of recruiting and managing individuals who may have an interest in providing organs for transplantation purposes but who do not actually end up doing so.

One way of providing an indirect benefit to living providers of kidneys that has been successfully employed before is to offer them a medical insurance policy, with such a benefit being equally suitable for unrelated living organ sellers and for related living unpaid donors[8]. The special value of this incentive is that it can serve as a form of insurance policy to cover any medical expenses that may be incurred by the seller should he himself have the unlikely misfortune to suffer from failure of the remaining kidney at a date subsequent to donation. Alternatively, people who have been nominated as beneficiaries by the organ seller can receive some form of non-cash benefit from the sale of an organ. In a couple of cases, it has been recorded that individuals turned to selling their organs in order to raise funds to pay for a medical procedure that was urgently required by one of their relatives. In this situation, it may be possible for the seller to reach an agreement with a buyer, especially if it is a medical centre that intends to transplant the purchased organ into a client, that in return for the provision of the required organ, the anointed relative will receive the appropriate level of assistance from the centre to treat his or her condition. Other indirect benefits that could be provided are the provision of education scholarships, subsidised accommodation and food for a guaranteed period or a cash payment to a charity chosen by the seller. Finally, if the organ seller is from the Third World and the buyer from a developed nation, the buyer might undertake to sponsor the entrance of the seller into the more developed state (which may be especially suitable if the organ buyer is a national government agency)[9].

In the case of cadaveric organ sales, the set of available compensation options is substantially greater, with several ways existing of compensating the family members of the deceased without forcing them to worry about benefiting directly from the death of a loved one. One approach that has been widely mentioned is to provide a set payment to cover the funeral or final medical expenses (up to a certain level) of the deceased organ provider, although it would also be possible to cover the repatriation costs for a cadaver if the donor is not a national of the state where organ removal took place. An alternative approach, which is suitable if the state is the only legal buyer of organs, is to provide a tax rebate that can be used to reduce any estate duty or assessed dues that might arise out of the dead person’s economic activities during his last year of life. A less tangible form of compensation, which is largely altruistic in nature, would involve some form of recognition by the state that the person concerned had performed a heroic deed of benefit to the nation, with the donor being rewarded with something equivalent to the posthumous decorations issued to military servicemen[10]. Obviously, some of the indirect benefits provided to living organ sellers can also be used when dealing with dead organ sellers with the relatives of the seller receiving, for example, medical insurance for a certain number of years following the death of the organ seller.

The provision of indirect incentives can also be used as a lure to make people consider the issue of donation and register as potential organ sellers, even if they do not eventually provide organs. In this case, we have an adaptation of the aforementioned options market, where payments are made to sellers regardless of actual collection, with various ways existing for large numbers of people to be given a small payment by a buyer even though the expected total fees borne by the buyer are lower than the expected benefits associated with transplanting the organs acquired. For example, vehicle premiums are often loaded against drivers who are under the age of 25 or who use certain forms of transport (e.g. motor-cyclists), as these individuals have been calculated to be high-risk insurance candidates. On the other hand, they constitute a good pool of potential organ donors, so they could be targeted as organ sellers due to their relatively greater probability of dying in a motor vehicle accident. In return for a deduction in their monthly insurance premiums or the reduction of excess charges on their insurance claims, these motorists can cede the right of organ removal to their insurers for the duration of their insurance contract, provided their deaths are linked to road traffic accidents. To motorists, these incentives may prove highly desirable, as they are guaranteed a stream of income for no discernible payment of their own, while to buyers, they can guarantee a certain inflow of organs that can be statistically calculated in much the same way as other risk variables. Furthermore, such specialised insurance incentives need not be restricted to motorists, as they can also be offered to other categories of people with a greater probability of dying in circumstances that can lead to organ removal, such as people who work in dangerous jobs (e.g. construction workers) or who take part in certain high risk sports (e.g. equestrianism and white water rafting)[11].

While the provision of these incentives may be of value to any insurers that can sell the collected organs to other parties, they are likely to be especially desirable to those companies that operate general insurance branches alongside health insurance subsidiaries or which have links to hospital chains[12]. This is since a form of vertical integration with respect to the acquisition and transplantation of an organ can be practised – when an organ from a cadaveric seller who was covered by one of the insurer’s policies is collected, it can be passed down the supply chain, where it may be transplanted into a patient covered by the medical insurance branch of the company or it can transplanted into an outside patient at the affiliated hospital. To the buyer, such an arrangement can enable it to maximise its profits, as it is not required to negotiate over the price of an organ that becomes available due to the guaranteed access that exists to organs.

 

iv) Tied organ purchases

One of the major arguments concerning organ selling is that it is not an equitable system, as it favours rich recipients over poor recipients due to differences in their respective financial status. Here, the solution that has usually been proposed to resolve this particular problem has been to ensure that organ buying was only undertaken by a monopsonistic government agency[13]. Under such a system, any purchased organs would be shared by recipients of all income classes, as these patients would remain subject to the traditional allocation mechanisms that are in force when only altruistic donation are used. Such an approach to organ buying would seem to meet the requirements of all parties, for while efficiency could increase through a greater supply of organs, current equitable concerns would continue to be satisfied as no patient would be discriminated against on the basis of income.

What remains unresolved with such a system of organ procurement and allocation is that different individuals each continue to have their own private valuations of a particular organ. Unfortunately for them, while they may each be willing to pay different amounts of money for an organ, the allocation criteria that are used will remain in force, with no feasible way existing of bypassing the restrictions that exist on using the market. This problem can be overcome to some extent if we slightly alter the manner in which a person is able to buy an organ. Rather than just allow the buyer to purchase a single organ for himself, as happens with a normal market transaction, a condition may be attached to any purchasing activities whereby funds to buy an organ for a poor recipient must also be made available by the buyer. For example, if a person pays R50,000 for a kidney, then an additional R50,000 must be placed in a trust fund where it can then be used to purchase a kidney from another seller for a poor patient currently waiting for a transplant. With such an arrangement, all parties benefit – while the rich buyer is happier since he now gets the organ that he desires, the poorer recipient is also better off as he too may have received an organ sooner than was anticipated[14]. In addition, an external benefit is also created for those patients still on the waiting list, as these now have two fewer people competing with them for any donated organs, rather than one person, as would be the case with a normal market transaction.

In addition to these methods, new ways of acquiring organs are always likely to be invented, with efforts to develop systems that appear to get the “proper” mix of equity and efficiency being proposed, even though, when the desired criterion is efficiency, unhindered trades between the two parties concerned are likely to lead to the most desirable outcomes in the long run. In the following section, we conclude our discussion of organ transplantation by looking at ways in which the entire organ transplantation system in South Africa could be improved, with particular emphasis being placed on increasing the supply of available organs.

 

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