The Economics of Improved Cancer Survival Rates: Better Outcomes, Higher Costs

Carin A Uyl-de Groot; Saskia de Groot; Adri Steenhoek


Expert Rev Pharmacoeconomics Outcomes Res. 2010;10(3):283-292. 

In This Article

Costs of the Progress in Cancer

Costs of cancer care account for an increasing amount of total healthcare costs. The improvements in diagnosis, treatment and care have made cancer a more chronic and controllable illness.[12] As a consequence of both the increasing incidence and the increasing survival rates, lifetime costs of care are growing since treatment and monitoring costs are prolonged.[13] However, health economists often state that new technologies are responsible for increasing health expenditures. The benefits of new treatment options usually come at higher costs than older technologies. Conversely, Civan and Köksal conclude that:

"…even if newer drugs are more expensive than their predecessors, they are much more effective so that they reduce total health expenditures by lowering the need for other types of medical services." [14]

Wilking et al. also observed a trend towards more ambulatory treatments and a reduction in the number of hospital days for cancer in Europe. They also conclude that the average duration, per case, of inability to work owing to cancer is decreasing for most diagnoses, which results in lower costs due to production losses.[102]

Nonetheless, total health expenditures will increase because the number of patients eligible for new treatment strategies is often larger than the number of patients who were treated in the previous situation. In addition, more people who are eligible for cancer screening programs are now participating. Simultaneously, cancer screening identifies more people with cancer who are at earlier stages of the disease, which also increases the number of cancer survivors (with their required ongoing care and surveillance costs).[13]

Large variation exists in the expenditures on healthcare, in general and in cancer in particular, between countries. In several countries, cost of illness studies have been performed. Comparisons of those cost of illness studies can show how cost patterns differ between countries and are therefore a way of exploring the determinants of healthcare spending. In 2008, a study was published that compared the cost of illness in five countries: Australia, Canada, France, Germany and The Netherlands.[15] The System of Health Accounts (SHA) was used to categorize the supply side – the OECD introduced this standard in order to make international comparisons of health expenditures – and the SHA assigns costs to goals and purposes of healthcare, including disease prevention, health promotion, treatment, rehabilitation and long-term care.

The costs of cancer in the five countries are shown in Figure 6 as a percentage of their total healthcare costs. Costs vary from 4.5% of the total costs in Canada to 8.1% of the total costs in Germany. Expenditures related to hospitals, physicians, prescribed medicines and dentists were included to analyze cross-country differences.[15]

Figure 6.

Costs of neoplasms for five countries, as a percentage of total healthcare costs related to four provider groups.
Reproduced from [15].

The study of international comparisons of costs of illness suggests several explanations for the cost differences. First, it was stated that epidemiological data provide no explanation for differences in expenditure. Second, the role of demography was studied. In Germany, a higher percentage of the population was aged 65 years and over compared with the other countries and this age structure could possibly cause higher expenditure on cancer care, since cancer tends to affect older individuals. Thus, an effect of demography on the differences in expenditure appears to be present, but not exhaustive. A third explanation for the differences in costs could be found in treatment variation, which was indicated by significant differences in the average length of stay in a hospital, the number of inpatient cases and the number of day cases in hospitals. Whether treatment variation indeed explains the variation in expenditures remains debatable.[15]

There are many limitations in comparing cost-of-illness studies, which makes an international comparison of health expenditures very difficult. Heijink et al. had to limit the supply side to providers of curative care.[15] In Canada, 45% of the total costs could not be allocated to diseases, since information regarding the use of healthcare within these provider groups was lacking. Moreover, the reference year varied although this would probably not seriously influence the distribution of costs over diseases.[15] Other limitations were related to variation in the definitions of provider groups.

Figure 6 illustrates that neoplasms use, on average, approximately 6% of total healthcare expenditure. A study by Wilking et al. concluded that the cancer share of total health expenditures was estimated to be 6.3% in Europe in 2007.[102] It was calculated that the costs of cancer treatment were €148 per capita in Europe, varying from €22 in Romania to €342 in Luxembourg (€170 in The Netherlands). In this analysis, data of 28 countries were used – 25 of the 27 EU member states (excluding Cyprus and Malta) and the three non-EU member states: Iceland, Norway and Switzerland.[102]

Table 1 lists the costs of cancer in The Netherlands for 1994,[16] 1999,[17] 2003 and 2005.[106] The data from 2003 and 2005 are based on the SHA. The table shows that the costs of cancer have almost doubled since 1994. In 1994 and 1999, the costs associated with breast cancer were the highest compared with the other types of cancer. In 2003 and 2005, colorectal cancer was the most expensive type of cancer in The Netherlands. A possible explanation for this could be the lack of a population-based screening program for colorectal cancer in The Netherlands. Consequently, most cases will be more advanced and will therefore be more expensive to treat.[12]

According to the Dutch National Institute for Public Health and the Environment, €2.7 billion were spent on all types of cancer in The Netherlands in 2005, based on the health accounts of the Dutch Central Bureau of Statistics.[106] This amount was equal to 3.9% of the total health costs. Of this total amount, costs of hospital care and medical specialist care accounted for €1.8 billion and €310 million were attributed to the elderly care sector. Finally, the costs of drugs, resources and body materials amounted to €242 million.[106]

Indirect costs of cancer patients are not covered by the figures in Table 1. Nevertheless, indirect costs also have a significant impact on the total costs of cancer. Those costs mainly relate to productivity losses. Wilking et al. state that indirect costs become lower in relation to direct costs as a consequence of the quicker recovery of patients and patients having increased chances of survival due to improvements in cancer treatment.[102]

Oncolytics & Other Drugs used in Cancer Treatment

The share for drug spending of the total health expenditures is increasing. This is partly due to the fact that new drugs are, in general, more expensive than older drugs, and new indications for earlier approved drugs also increase the share of drug spending. As a result of the increasing share of drug spending on the total health expenditures, drugs are currently getting more attention in comparison to other types of medical services.[14]

In The Netherlands, 20% of the costs of expensive drugs are covered by hospital budgets. Hospitals are partially compensated (80% of the net purchase costs) to cover the high costs of these drugs. The Dutch Health Authority determines whether or not expensive drugs are considered for extra hospital income after receiving advice about the therapeutic value and the costs prognosis. A total of 33 drugs with registered indications were receiving extra expenses at the end of 2008 and the net purchase costs of expensive drugs amounted to €379.6 million during that year. Many drugs on the policy rule are used in the treatment of cancer. The net purchase cost of trastuzumab was €58.8 million. Other cancer drugs on the policy rule with high net purchase costs include rituximab (€51.2 million), bevacizumab (€44.6 million) and docetaxel (€31.9 million).[18]

In January 2002, trastuzumab was placed on the policy rule for patients with metastatic breast cancer. In January 2006, the indication for nonmetastatic breast cancer was added to the policy rule. During that year, the costs of trastuzumab increased from €18 million to €51.1 million. Rituximab also belongs to the expensive drugs on the policy rule. It was placed on the policy rule in 2002 for the indications of B-cell non-Hodgkin lymphoma and B-cell leukemia. Since January 2006, the indication for rheumatoid arthritis was added.[18]

Table 2 shows the top ten drugs with the highest costs on the Dutch policy rule. The drugs labeled with the dagger symbol are used in the treatment of cancer. Infliximab, trastuzumab and rituximab are responsible for more than half of the costs of expensive drugs and these drugs are all immune modulation therapies.[18]

Table 3 is based on data from the Dutch Health Care Insurance Board (CVZ; College voor Zorgverzekeringen).[107] The figures originate from the total population that has health insurance under the Health Insurance Act. The table includes the top three drugs that are used in an outpatient setting, based on total costs in 2008. The table also includes drugs that are used in the treatment of cancer and appeared in the top 100 drugs based on total costs.

Pegfilgrastim is the first drug on the list that is used in the treatment of cancer. It is used in patients undergoing chemotherapy in order to stimulate the bone marrow to produce more neutrophils to fight infection. Imatinib appears next on the list and costs amounted to more than €36 million. This drug was provided approximately 7400 times in 2008, partly as a result of newly registered indications. The oncolytic capecitabine was provided mostly by public pharmacies in The Netherlands in 2008 – it was provided 58,000 times.[108]

In conclusion, the costs of drugs represent a significant cost in both the inpatient and outpatient setting. However, these costs could reduce expenditures elsewhere. For example, this was seen in Sweden where the number of bed days for cancer patients per year decreased by almost 15% from 1998 to 2006 due to improvements in treatment methods.[102] Only the major drugs used in cancer treatment are discussed in this paragraph; however, costs related to concomitant drugs, such as antiemetics, antifungals and analgesics, should not be forgotten.