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P E R S P E C T I V E
F U T U R E  E L D E R L Y 

26 September 2005  
  

What Do We Want From Our 
Investment In Cancer Research?

A departure from the focus on how much money
Americans spend to defeat cancer.

By Scott Ramsey

ABSTRACT:

U.S. spending for cancer is increasing rapidly, because of the aging society, greater use of screening services, and new treatments that come with very high price tags. In this Perspective I argue that projections of the impact of medical innovation on health care budgets are not only difficult but ultimately meaningless. Rather than focusing on cost, the research and policy communities should consider a value-based approach towards developing and adopting cancer therapies, whereby innovations in cancer are viewed by gains in survival and reduced morbidity relative to their price.

Why should we invest in cancer research? More than thirty years ago President Richard M. Nixon answered this question by saying that the need for a national cancer program “springs from fear and hope”—fear of suffering that cancer brings to patients and their families, and hope that the research community would be able to find ways of preventing and treating cancer.¹ Interestingly, President Nixon also cautioned that “we must put on the armor of patience,” because finding a cure for cancer “wouldn’t come quickly.”

Today cancer is still feared, and we continue to hope for breakthroughs, but we have also added a new paradigm to the cancer research agenda: “Curing” cancer will save our health care system from going bankrupt. Should we worry about cancer bankrupting the system? Certainly, we can expect to see an increase in the number of Americans with cancer as the U.S. population ages. Cancer has already replaced heart disease as the leading cause of death in the United States, in part because of the aging society and improvements in the prevention and treatment of coronary artery disease.

Cancer is also getting much more expensive to treat. One well-known reason is that most “breakthroughs” come with a very high price. Several recently approved chemotherapy agents for cancer come with price tags that are 300–500 percent higher than the costs of traditional treatments.² We are also treating more intensively, with greater use of combination chemotherapy regimens, second- and third-line therapies for those who fail to respond to initial treatment or relapse, and post-treatment chemoprophylaxis (such as tamoxifen after successful treatment of early-stage breast cancer).³

A less-discussed reason has to do with national trends in cancer incidence and survival. Stage-specific survival rates have increased for many cancers, albeit modestly, during the past ten years. Although this is, of course, desirable, it raises the lifetime costs of care, since treatment and monitoring costs are prolonged. Moreover, a greater percentage of eligible people are participating in cancer screening programs. While cancer screening identifies more people at earlier stages of cancer (where cures or improved survival are possible), it also increases the number of cancer survivors (with their attendant ongoing care and surveillance costs). We also now recognize that screening produces an “overdiagnosis” problem; that is, cancers found through screening that would have otherwise never have been diagnosed before the person died from other causes. Of course, once someone is told that he or she has cancer, most will choose treatment, and this will be costly. This appears to be a particular problem for prostate cancer, the most common cancer among men, although it almost certainly occurs in every other cancer for which we screen.⁴ Overdiagnosis is one reason why policy analysts contemplate whether it is desirable to establish stopping ages for cancer screening technologies.⁵

Perhaps given all of these trends, no one would be surprised to learn that direct medical care spending for cancer care increased from $96.1 billion in 1990 to $189.8 billion in 2004 (in inflation-adjusted dollars).⁶ Worried, but not surprised. How will Medicare—the primary health insurer for 56 percent of all Americans who are diagnosed with cancer each year—continue to pay for cancer care if the costs of treating it nearly double every fifteen years?⁷

This leads us to the paper by Jay Bhattacharya and colleagues on how various scenarios for technological changes in cancer care might influence future Medicare spending.⁸ The authors consider five separate scenarios for technological change, which range from “wide-eyed optimism” to “excessive pessimism.” From my perspective, are all equally implausible, but this does not appear to be the point; rather, the authors wish to show readers that even in the best of all possible worlds (that world appears to contain an amazingly low-price vaccine that prevents cancer from ever developing), Medicare outlays per capita barely budge.

How could this be? The answer, of course, is that people who are spared from a cancer death go on to develop and die from other diseases, and the cost of treating those conditions is also rising. To paraphrase John Maynard Keynes, in the long run, we are all expensive before we die, and there seems to be no way around it.

Let me now introduce an apparently radical thought to this discussion: Let’s stop worrying about how much money we spend on cancer. Americans continue to support cancer research, and nobody really expects that the fruits of that research to be inexpensive.⁹ I would certainly pay handsomely to never have to worry about dying from cancer, and I suspect that most others would as well. Furthermore, it is not at all clear that future advances in cancer treatment technologies will break anyone’s bank. Yesterday’s breakthroughs certainly have not. In spite of changing demography, the share of cancer care among all personal health expenditures has actually fallen over time, from 4.96 percent in 1971 to 4.50 percent in 2005.¹⁰

I suggest that we shift our focus away from the cost of cancer innovations and instead consider a more fundamental question: What types of innovations do we want our cancer research infrastructure to pursue? Given that we cannot control the pace of cancer research or easily predict where the breakthroughs will occur, a portfolio of investments in several promising areas seems prudent. Traditionally and today, the great bulk of cancer research at the National Institutes of Health (NIH) and in the pharmaceutical industry has been directed toward treating cancers that are clinically diagnosed, usually at relatively advanced stages. Opinion leaders are now questioning the wisdom of that strategy.¹¹ Specifically, the National Cancer Institute (NCI) and others are now funding major initiatives to identify cancer at its earliest and most curable stage. These range, for example, from basic research in identifying serum biomarkers indicating that an early cancer is developing to a large clinical trial of computed tomography (CT) scanning to detect early-stage lung cancers.¹² Although the dollars directed toward these initiatives are very small compared with the NIH’s overall cancer research budget, they do represent an important shift in focus for the agency.

In designing a research portfolio, one might want to consider the potential cost-effectiveness of different technologies under development. Here, Bhattacharya and colleagues’ “wide-eyed” optimistic scenarios prove illuminating. Thinking now in terms of years of life gained as well as additional dollars spent, we find from their analysis that some hypothetical technologies provide far more value than others, when measured as marginal costs per year of life gained. In their analysis, cancer vaccines and early detection appear to provide the best potential value, although I caution that their assumptions regarding the cost of these technologies ($100 per vaccine and $0–$118 for early detection) are far too optimistic to enable one to put great faith in their value relative to the other options.

Finally, it is important to step back and consider all medical technology growth and the future financial solvency of Medicare. The pace of real spending growth in Medicare is now outstripping general productivity growth in the economy. Given current trends, Medicare spending will greatly exceed revenues in less than fifteen years.¹³ Most economists agree that technological innovation is the primary driver of the increase in medical care spending. Of course, rapid technological growth is occurring throughout medicine, not just in cancer. Medicare and the federal government are thus facing a future in which they will have to reduce benefits, raise beneficiaries’ premiums, or increase general taxes to support the program. In all likelihood, federal legislators and administrators will decide to employ a combination of these unpleasant remedies. This means that many patients may be unable to access potentially beneficial new cancer technologies, because of coverage restrictions. This fundamental problem has not yet been addressed by policymakers, and it is almost a taboo subject among those in the cancer research and practice communities. Many have argued that Medicare will eventually have to adopt a cost-effectiveness model of rationing coverage, whereby new technologies offering the most health value for expenditure are covered, while others with positive benefits but poor value are not.¹⁴

There are signs that Medicare is preparing to use cost-effectiveness information for reimbursement decisions. For example, the Medicare Payment Advisory Commission (MedPAC) recently offered suggestions for how Medicare could incorporate independent cost-effectiveness analysis into its coverage process.¹⁵

Cancer breakthroughs will not save Medicare’s financial picture. However, it is in the interest of both the cancer research and practice community to engage policymakers as they consider methods to encourage the development and adoption of innovations that offer the most health value for expenditure, while discouraging adoption of those that offer poor value.

The views provided are solely those of the author.

NOTES

1. R.M. Nixon, “Statement about Proposed Legislation to Establish a National Cancer Program,” 11 May 1971, www.nixonfoundation.org/Research_Center/1971_pdf_files/1971_0164.pdf (1 August 2005).
2. D. Schrag, “The Price Tag on Progress—Chemotherapy for Colorectal Cancer,” New England Journal of Medicine 351, no. 4 (2004): 317–319. Deborah Schrag notes that the Mayo Clinic regimen (fluorouracil and leucovorin) costs $63, but FOLFOX combined with bevacizumab (Avastin) costs $21,033. See also M. Herper, “Cancer’s Cost Crisis,” Forbes, 8 June 2004, www.forbes.com/technology/2004/06/08/cx_mh_0608costs.html (1 August 2005).
3. For example, the use of chemotherapy for advanced-stage lung cancer increased from 21 percent to 42 percent between 1994 and 1999. See S.D. Ramsey et al., “Chemotherapy Use, Outcomes, and Costs for Older Persons with Advanced Non-Small-Cell Lung Cancer: Evidence from Surveillance, Epidemiology, and End Results—Medicare,” Journal of Clinical Oncology 22, no. 24 (2004): 4971–4978.
4. R. Etzioni et al., “Overdiagnosis Due to Prostate-Specific Antigen Screening: Lessons from U.S. Prostate Cancer Incidence Trends,” Journal of the National Cancer Institute 94, no. 13 (2002): 981–990; and O. Davidov and M. Zelen, “Overdiagnosis in Early Detection Programs,” Biostatistics 5, no. 4 (2004): 603–613.
5. K. Kerlikowske et al., “Screening Mammography in Elderly Women,” Journal of the American Medical Association 283, no. 24 (2000): 3202–3204.
6. M.L. Brown, J. Lipscomb, and C. Snyder, “The Burden of Illness of Cancer: Economic Cost and Quality of Life,” Annual Review of Public Health 22 (2001): 91–113; and National Heart Lung and Blood Institute, Fact Book, Fiscal Year 2003, February 2004, www.nhlbi.nih.gov/about/03factbk.pdf (1 August 2005).
7. Based on data showing the age distribution of cancer incidence, 1999 to 2002. See National Cancer Institute, SEER Cancer Statistics Review, 1975–2002,“Table I-10: Age Distribution (%) of Incidence Cases by Site, 1998–2000,” seer.cancer.gov/csr/1975_2002/results_merged/topic_age_ dist.pdf (1 August 2005).
8. J. Bhattacharya et al., “Technological Advances in Cancer and Future Spending by the Elderly,” Health Affairs, 26 September 2005, content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.r53.
9. Our patent system is designed to guarantee that developers receive monopoly profits for their medical innovations. Economists caution that expecting profit-seeking firms to price their new products at or below production costs is simply a pipe dream. See R. Frank, “Looking for Truth in All the Wrong Places,” Medical Care 43, no. 8 (2005): 751–752.
10. Brown et al., “The Burden of Illness of Cancer.”
11. R. Etzioni et al., “The Case for Early Detection,” Nature Reviews: Cancer 3, no. 4 (2003): 243–252; and C. Leaf, “Why We’re Losing the War on Cancer—and How to Win It,” Fortune 149, no. 6 (2004): 76–91.
12. Many NIH-sponsored initiatives in proteomics are reviewed in National Cancer Institute, Center for Cancer Research, “NCI-CCR Initiatives, Proteomics,” ccr.cancer.gov/initiatives/proteomics.asp (1 August 2005); and NCI, “NLST (National Lung Screening Trial),” cancer .gov/nlst (1 August 2005).
13. For a summary discussion of Medicare growth relative to gross domestic product (GDP) growth and the threat it poses for Medicare solvency, see M. Pauly, “What If Technology Never Stops Improving? Medicare’s Future under Continuous Cost Increases,” Washington and Lee Law Review 60, no. 4 (2003): 1233–1250. Also see 2005 Annual Report of the Boards of Trustees of the Federal Hospital Insurance Trust and Federal Supplementary Medical Insurance Trust Funds, www.cms.hhs.gov/publications/trusteesreport/tr2005.pdf (1 August 2005).
14. A.M. Garber, “Cost-Effectiveness and Evidence Evaluation as Criteria for Coverage Policy,” Health Affairs, 19 May 2004, content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.284 (1 August 2004); and U.E. Reinhardt, “An Information Infrastructure for the Pharmaceutical Market,” Health Affairs 23, no. 1 (2004): 107–112.
15. See Chapter 8, “Using Clinical and Cost Effectiveness in Medicare,” in Medicare Payment Advisory Commission, Report to the Congress: Issues in a Modernized Medicare Program (Washington: MedPAC, 2005).

Scott Ramsey (sramsey{at}fhcrc.org) is a full member at the Fred Hutchinson Cancer Research Center in Seattle, Washington.

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DOI: 10.1377/hlthaff.W5.R101
©2005 Project HOPE–The People-to-People Health Foundation, Inc.