Perspectives on the Cost of Cancer Care
Authors: Neal J. Meropol, Kevin A. Schulman
Journal: Journal of Clinical Oncology (2007)

Advances in technology and understanding of cancer biology have lead to the introduction of a variety of new diagnostics and treatments in oncology. Many of these interventions are costly, and concern has recently been expressed that this cost is placing a tangible and increasing burden on patients and our society. There are many stakeholders in this issue, including patients, providers, drug and device developers and manufacturers, insurers, employers, and governments. The objective of this issue of the Journal of Clinical Oncology is to provide an introduction to the various perspectives on the rising cost of cancer care, to encourage informed debate on the topic. The first two articles are opinion pieces written by well-known health economists. These essays address a misleadingly simple question: “Is the rising cost of cancer care harmful to the economy?” These papers offer two perspectives that add texture and depth to the discussion of this critical issue. Mark Pauly argues that cancer spending does not harm the economy and posits the provocative assertion that current spending growth is actually of benefit. He explains that spending on cancer represents only a small portion of our gross domestic product, and that the value to be gained by ongoing investment in improved prevention and treatment strategies may trump cost concerns. In a companion essay, Scott D. Ramsey takes a somewhat different approach, stressing that our society had adopted an “anything at all costs” attitude regarding cancer care, and that demand for cancer care seems less dependent on cost than other health care services. 3 Ramsey argues that this inelasticity creates an incentive for the development of only marginally effective treatments and drives up cost, which ultimately has negative downstream effects given finite societal resources. Both authors emphasize that the evidence base for new treatments must be improved and ultimately used in patient management and perhaps allocation decisions. As an introduction to the concepts presented throughout this issue, the guest editors review estimates of the cost of cancer care and provide an overview regarding the macroeconomic principles that govern health care spending. We describe how the presence of insurance impacts consumer behaviors and how a cancer diagnosis may exert different influences on health care spending compared with other diseases. We outline how increased health care spending affects businesses and our economy, highlighting the potential for rising cost to exacerbate disparities in access. Overall, we seek to frame discussion on the complex and delicate balance that exists between the need to promote incentives for innovation of new cancer diagnostics and treatments and potentially competing societal fiduciary responsibilities. Any discussion of health care cost must consider the role of insurance. In the United States, the largest insurer is the government. Peter B. Bach, Senior Advisor at the US Centers for Medicare & Medicaid Services (CMS), explains the role that Medicare plays in the financing of cancer care. He describes the legal mandates that govern CMS decisions, structures that have historically hindered efficient delivery of care, and efforts underway to eliminate “perverse incentives” and reward quality care. He notes that ongoing efforts to collect data on both costs and outcomes can ultimately be used to reduce variations in resource utilization and improve quality of care. Health care delivery in Europe is distinguished from that in the United States insofar as the predominant model in Europe is a national approach with care delivery involving both the public and private sectors in a universal health care system. Michael Drummond and Anne Mason, health economists in the United Kingdom, describe the methods that European countries use to manage health care budgets and the costs of cancer care. These include governmental price controls, hospital formulary regulation, and formal economic evaluation in coverage decisions. The most well-established system that employs economic evaluation in health care decision making is the Technology Appraisal Programme of the National Institute for Health and Clinical Excellence (NICE) of the United Kingdom. This model is reviewed in detail by Drummond and Mason, with examples of oncology drug coverage decisions. Each of the economic assessments described above suggests that consideration of costs as well as benefits in health care decision making has potential merit. In an effort to inform policy discussions regarding cost-effectiveness analysis in cancer, we have invited two articles from health services researchers regarding this topic. Patrick A. Grusenmeyer and Yu-Ning Wong contribute a primer on the methodologies used to conduct economic analyses in oncology. They first introduce the nomenclature and concepts involved in cost-effectiveness analysis. The authors then illustrate application of these concepts with examples of recently published studies of cost-effectiveness of cancer prevention, adjuvant therapy, and treatment of advanced cancer. Amy B. Knudsen, Pamela M. McMahon, and G. Scott Gazelle next describe the use of modeling to evaluate the cost-effectiveness of cancer screening. They note the special limitations involved in conducting large-scale prospective cancer screening studies, and the types of estimation models used to overcome these limitations. Examples of lung, breast, colorectal, and prostate cancer screening programs are described. A common justification of the high price of cancer drugs is high development cost. Joseph A. DiMasi and Henry G. Grabowski, JOURNAL OF CLINICAL ONCOLOGY O V E R V I E W VOLUME 25 NUMBER 2 JANUARY 1