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The economics of cancer care

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To mark Breast Cancer Awareness Month this October, here is an extract from Cancer: A Very Short Introduction by Nick James.

Around 40% of [cancer] patients develop advanced cancer at some stage, most of whom will ultimately die from the disease. New drugs are generally tested initially in this group of ultimately incurable patients with limited options. In breast cancer, for example, only a minority of patients die from the disease and hence expenditure on a newly licensed, end-stage drug will be relatively limited. However, if a drug works well in this group, it will often work better in earlier patients with potentially curable disease at high risk of relapse after their initial therapy. This group makes up around half of the patients who end up with advanced disease. Trials of successful end-stage drugs will thus take place in these patients and if successful the drug will ‘migrate’ into the earlier disease group.

This process is well illustrated by the Herceptin (trastuzumab) story. The drug was shown to prolong survival in advanced breast cancer in 2002. From the beginning, Herceptin has attracted huge publicity. The novel nature of the treatment rapidly became known amongst breast cancer patients leading to a clamour to enter the trials. So great was the demand that a lottery for trial entry had to be set up for interested eligible patients. After the drug obtained a licence, its high price (around £30,000 per year) led to restricted access in the UK and a different sort of lottery – the post-code lottery of UK cancer funding – began for a different group of women. The subsequent highly vocal campaign by women successfully overturned the restrictions but also set a precedent for other groups seeking access to expensive therapies that still bedevils purchasing authorities in the UK in particular.

Subsequent trials in earlier disease showed in 2006 that if given to women with early high-risk disease after surgery, Herceptin reduced the chances of a disease recurrence by about half compared to previous therapies. The licence for Herceptin was thus extended to this earlier disease group the same year. Unfortunately, we cannot currently identify those who will relapse after surgery and radiotherapy. As most women in the early, high-risk group were already cured by standard therapy, the numbers eligible to receive the drug increased hugely (about four-fold in the UK) – all patients at risk have to be treated, not just those destined to relapse. Following a vocal campaign by women with the disease, the drug was made available on the NHS to all eligible patients.

How, therefore, do healthcare systems make decisions about new treatments? Suppose a new treatment costs £30,000 and improves survival by 6 months, from 12 to 18 months. What is the real cost of providing this treatment?

  • £30,000?
  • £30,000 minus the treatment it replaces?
  • £30,000 minus the treatment it replaces and minus any consequent savings in other supportive care?


There is no correct answer — it depends on who is paying for what. Answer 1 is the cost to the patient if the treatment is not reimbursed by the healthcare system. This is sometimes the case in the UK where the NHS sets limits on which drugs it will buy. The old standard of care will be covered but not the new drug. Increasingly, it is also a problem for patients in insurance-based systems where the extra drug falls outside the reimbursement package covered by the insurance. Answer 2 is the price to a hospital providing specialist care where the hospital budget per patient is fixed (as happens in hospitals in the NHS and some managed-care systems in the USA). Answer 3 is the price to the organization funding the totality of the patient’s care: this may be the state via structures like the NHS or an insurance company. This then raises the further question of what exactly is included in the associated costs. For example, terminal care costs will probably be similar whenever a patient dies. However, if the survival time is longer, as in the example, they may then fall in a different financial year to the drug costs – how long must costs be deferred to count as savings? This is particularly the case with treatments which increase the cure rate, for which such costs may be postponed for many years. Again, there is no single simple answer to such questions – different healthcare systems tend to resolve these dilemmas in different ways. It is worth examining the sort of methodologies used by public health specialists and insurance companies in making these decisions on whether to fund a particular treatment.

Nick James is the co-founder of the CancerHelp UK website, author of Cancer: A Very Short Introduction, and Professor of Clinical Oncology at the University of Birmingham.

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