Cancer Costs Have Nearly Doubled in Less Than 20 Years

Roxanne Nelson

May 11, 2010

May 11, 2010 — Total medical costs of cancer care have nearly doubled during the past 20 years, despite a shift away from inpatient care. In 1987, the total medical cost of cancer (in 2007 American dollars) was $24.7 billion, but by 2001 to 2005, the cost increased by 98%, to $48.1 billion, according to a study published online May 10 in Cancer.

The cost of cancer care has remained relatively constant.

However, the authors point out that, compared with overall medical expenditures, the cost of cancer care has remained relatively constant. In 1987, it encompassed just 4.8% of the total $513 billion spent on medical costs, and increased only slightly, to 4.9% of the overall $979 billion spent from 2001 to 2005.

The escalating costs of new therapies have received a great deal of recent attention, as previously reported by Medscape Oncology.

But drug and other treatment costs were not the primary reason for the increase in cancer care spending, explained Florence Tangka, PhD, a health economist with the Centers for Disease Control and Prevention, and lead author of the paper.

"It was mainly due to the number of new cancer cases and the number of cancer patients who are living longer," she told Medscape Oncology.

Dramatic Increase in Number of Cases

Dr. Tangka and her coauthors found that the number of cancer cases had risen proportionately more than medical expenditures, indicating that increasing cancer costs have primarily been driven by an increased number of cases and not by the cost per treated cancer case.

This dramatic increase in cancer cases is largely due to new cases diagnosed in an aging population, the authors report, along with increasing cancer prevalence. For some cancers, improvements in treatments have led to better survival rates and, thus, more people living with the disease.

Another finding is that cancer-related treatment has shifted away from the inpatient setting and toward the outpatient setting. The share of total cancer costs resulting from inpatient admissions dropped from 64.4% in 1987 to 27.5% in 2001 to 2005.

The share of cancer costs increased for both private insurers and Medicaid. For private insurance, cost share increased from 42% to 50%, while the share of patient out-of-pocket costs declined from 17% to 8%. Cancer costs paid for by Medicaid remained low, but tripled from 1% to 3%, during the study period.

The authors note that despite the aging population, the share of cancer costs paid for by Medicare remained fairly constant between the 2 time periods (33% vs 34%).

Downplayed Results

An expert approached by Medscape Oncology for an independent comment said the report has several important findings, which he feels the authors have tended to downplay.

Oncologists lately have been bashed selectively for spending too much money wastefully.

"First, they report that while the cost of cancer care doubled, so did the cost of all healthcare," said Daniel P. Sulmasy, OFM, MD, PhD, Kilbride-Clinton Professor of Medicine and Ethics at the University of Chicago in Illinois. "This is important for oncologists to know because oncologists lately have been bashed selectively for spending too much money wastefully."

But this report suggests that oncologists are not increasing their spending any more than the rest of medicine, he added.

"Second, the authors have shown that the bulk of the increase in the cost of care has come through an increase in the prevalence of cancer and an increase in the number of people who are insured," said Dr. Sulmasy. "The cost per patient has actually decreased somewhat, largely through shifting care to the outpatient setting from the inpatient setting."

This finding suggests that patient care might be more efficient, although it could also mean that patients are being diagnosed earlier and aren't as sick, he explained.

Current Costs?

The study did not find treatment to be a driver of the escalating costs of cancer care, but it only includes data to 2005, which omits the time period when some of the most expensive cancer drugs have come on the market.

As previously reported by Medscape Oncology, the majority of new agents that have received approval during the past 4 years cost more than $20,000 for a 12-week course of therapy. Oncology agents have now become the best-selling class of drug, with annual sales of $19.2 billion in the United States, according to 2008 figures from IMS Health, in Plymouth Meeting, Pennsylvania.

For example, the cost of treating colorectal cancer has dramatically risen over the past few years, and the cost of new agents and regimens have jumped 340-fold, compared with traditional therapies. The cost for 6 months of systemic therapy for colorectal cancer can range from less than $100 for combination fluorouracil/leucovorin administered daily for 5 days every month, to more than $50,000 for weekly treatment with cetuximab (Erbitux, ImClone/Bristol-Myers Squibb). Oncologists have therefore come under increasing pressure to address these economic issues with their patients.

The study results also conflict somewhat with reports of patients struggling with out-of-pocket costs, and even having to file for bankruptcy. Last year, a report by the Kaiser Family Foundation and the American Cancer Society (ACS) illustrated how factors such as high cost-sharing and lifetime maximums are all insurance practices that leave cancer patients vulnerable to high out-of-pocket healthcare costs.

According to the Kaiser Family/ACS report, the median total out-of-pocket treatment cost for breast cancer patients is $2,616, although one study found that 5% of patients with private insurance had incurred total out-of-pocket costs that exceeded $31,000.

But the current study shows that the fraction of expenditures accounted for by out-of-pocket payments has decreased, not increased, Dr. Sulmasy pointed out. "A great deal of concern has been expressed recently about employers and insurance companies passing more costs off to patients. These data suggest that this is not true."

Despite the findings of this latest report, lead author Dr. Tangka agrees that physicians do need to be more cognizant of the cost of the therapy they provide. "I believe that clinical decisions about treatment will continue to be more likely made based on effectiveness rather than cost," she said. "I believe oncologists need to be aware of the cost and discuss this with patients. Making uninsured or underinsured patients aware of potential costs to them for treatment may be helpful."

Variations Among Payers, Outpatient Costs Rise

Dr. Tangka and colleagues conducted their analysis using data from the 1987 National Medical Expenditure Survey and pooled data from the 2001 to 2005 Medical Expenditure Panel. They used econometric methods to estimate cancer-attributable medical expenditures by payer and type of service.

The increase in cancer expenditures varied substantially across the different payers:

  • Medicaid costs increased by 488% ($1.3 billion)

  • Costs to private insurers increased by 137% ($13.8 billion)

  • Medicare costs increased by 99% ($8.1 billion)

  • Costs paid by other public programs increased by 25% ($459 million)

  • Costs paid by patients, including copayments and deductibles, and costs for the uninsured declined by 7% ($288 million).

Another major trend that occurred over this time period was a move from more costly inpatient to outpatient settings. But for all payers, the decline in inpatient expenditures has been accompanied by an increase in cancer-attributable outpatient expenditures, say the authors. Some payers have also experienced an increase in cancer-attributable prescription drug costs.

During both time periods, prescription drug expenditures administered outside of the inpatient setting accounted for a low percentage of all cancer-attributable costs, but increased for patients with private insurance (from 1.4% to 7.0%) and for out-of-pocket payers (from 5.2% to 27.7%).

For all payers, prescriptions accounted for 6.1% of all cancer-attributable medical expenditures in the 2001 to 2005 period, an increase from 1.8% in 1987.

Product of Success

Society will either need to decide that costs must be controlled . . . or it will need to accept that the price of medical success, ironically, is increased medical costs.

"The data suggest that efficiency measures have not been able to offset the increases in the prevalence of disease and the increased number of people insured," said Dr. Sulmasy. "Our society's very success in simultaneously increasing income and medical care and the length of life of the population is driving up the cost of healthcare far more than efficiency measures seem able to keep pace with."

"Accordingly, society will either need to decide that costs must be controlled, which will necessarily result in denying services to patients, or it will need to accept that the price of medical success, ironically, is increased medical costs," he added.

The study was supported by the Centers for Disease Control and Prevention. The authors have disclosed no relevant financial relationships. Dr. Sulmasy reports being recently appointed to the Presidential Commission for the Study of Bioethical Issues, and states that these are his own personal views and should not be understood to represent the views of the Commission.

Cancer. Published online May 10, 2010.


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