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An economic evaluation of the war on cancer

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  • Lakdawalla, Darius N.
  • Sun, Eric C.
  • Jena, Anupam B.
  • Reyes, Carolina M.
  • Goldman, Dana P.
  • Philipson, Tomas J.

Abstract

For decades, the US public and private sectors have committed substantial resources towards cancer research, but the societal payoff has not been well-understood. We quantify the value of recent gains in cancer survival, and analyze the distribution of value among various stakeholders. Between 1988 and 2000, life expectancy for cancer patients increased by roughly four years, and the average willingness-to-pay for these survival gains was roughly $322,000. Improvements in cancer survival during this period created 23 million additional life-years and roughly $1.9 trillion of additional social value, implying that the average life-year was worth approximately $82,000 to its recipient. Health care providers and pharmaceutical companies appropriated 5-19% of this total, with the rest accruing to patients. The share of value flowing to patients has been rising over time. In terms of economic rates of return, R&D investments against cancer have been a success, particularly from the patient's point of view.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 29 (2010)
Issue (Month): 3 (May)
Pages: 333-346

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Handle: RePEc:eee:jhecon:v:29:y:2010:i:3:p:333-346

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Web page: http://www.elsevier.com/locate/inca/505560

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Keywords: Cancer Economic gains Life expectancy;

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  1. Robert E Hall & Charles I Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 39-72, 02.
  2. Gary S. Becker & Tomas J. Philipson & Rodrigo R. Soares, 2005. "The Quantity and Quality of Life and the Evolution of World Inequality," American Economic Review, American Economic Association, vol. 95(1), pages 277-291, March.
  3. Frank R. Lichtenberg, 2004. "The Expanding Pharmaceutical Arsenal in the War on Cancer," NBER Working Papers 10328, National Bureau of Economic Research, Inc.
  4. Tomas J. Philipson & Anupam B. Jena, 2005. "Who Benefits from New Medical Technologies? Estimates of Consumer and Producer Surpluses for HIV/AIDS Drugs," NBER Working Papers 11810, National Bureau of Economic Research, Inc.
  5. Aldy, Joseph E. & Viscusi, W. Kip, 2007. "Age Differences in the Value of Statistical Life: Revealed Preference Evidence," Discussion Papers dp-07-05, Resources For the Future.
  6. Nancy Devlin & David Parkin, 2004. "Does NICE have a cost-effectiveness threshold and what other factors influence its decisions? A binary choice analysis," Health Economics, John Wiley & Sons, Ltd., vol. 13(5), pages 437-452.
  7. Bo E. Honoré & Adriana Lleras-Muney, 2006. "Bounds in Competing Risks Models and the War on Cancer," Econometrica, Econometric Society, vol. 74(6), pages 1675-1698, November.
  8. Gary Becker & Kevin Murphy & Tomas Philipson, 2007. "The Value of Life Near its End and Terminal Care," NBER Working Papers 13333, National Bureau of Economic Research, Inc.
  9. Martin Gaynor & William B Vogt, 2003. "Competition among Hospitals," The Centre for Market and Public Organisation 03/087, Department of Economics, University of Bristol, UK.
  10. Kevin M. Murphy & Robert H. Topel, 2005. "The Value of Health and Longevity," NBER Working Papers 11405, National Bureau of Economic Research, Inc.
  11. David M. Cutler & Elizabeth Richardson, 1997. "Measuring the Health of the U.S. Population," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1997 Micr), pages 217-282.
  12. Grabowski, Henry G & Vernon, John M, 1992. "Brand Loyalty, Entry, and Price Competition in Pharmaceuticals after the 1984 Drug Act," Journal of Law and Economics, University of Chicago Press, vol. 35(2), pages 331-50, October.
  13. DiMasi, Joseph A. & Hansen, Ronald W. & Grabowski, Henry G., 2003. "The price of innovation: new estimates of drug development costs," Journal of Health Economics, Elsevier, vol. 22(2), pages 151-185, March.
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Cited by:
  1. Amitabh Chandra & Jonathan Skinner, 2012. "Technology Growth and Expenditure Growth in Health Care," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 645-80, September.
  2. Amitabh Chandra, 2011. "Comment on "The Value of Progress Against Cancer in the Elderly"," NBER Chapters, in: Investigations in the Economics of Aging, pages 233-236 National Bureau of Economic Research, Inc.

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