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An Economic Evaluation of the War on Cancer

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

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. These calculations suggest that from the patient's point of view, the rate of return to R&D investments against cancer has been substantial.

Suggested Citation

  • Eric C. Sun & Anupam B. Jena & Darius N. Lakdawalla & Carolina M. Reyes & Tomas J. Philipson & Dana P. Goldman, 2009. "An Economic Evaluation of the War on Cancer," NBER Working Papers 15574, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:15574
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    Cited by:

    1. Dubois, Pierre & Kyle, Margaret K, 2016. "The Effects of Pharmaceutical Innovation on Cancer Mortality," CEPR Discussion Papers 11487, C.E.P.R. Discussion Papers.
    2. Tomas J. Philipson & Sachin Kamal-Bahl & Anupam B. Jena, 2017. "Defining Value: The Need for a Longer, Broader View," PharmacoEconomics, Springer, vol. 35(7), pages 669-672, July.
    3. Rheinberger, Christoph M. & Herrera-Araujo, Daniel & Hammitt, James K., 2016. "The value of disease prevention vs treatment," Journal of Health Economics, Elsevier, vol. 50(C), pages 247-255.
    4. Rodrigo Camejo & Clare McGrath & Marisa Miraldo & Frans Rutten, 2014. "Distribution of health-related social surplus in pharmaceuticals: an estimation of consumer and producer surplus in the management of high blood lipids and COPD," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(4), pages 439-445, May.
    5. Rebecca M. Myerson & Reginald D. Tucker‐Seeley & Dana P. Goldman & Darius N. Lakdawalla, 2020. "Does Medicare Coverage Improve Cancer Detection and Mortality Outcomes?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(3), pages 577-604, June.
    6. Adam Leive & Thomas Stratmann, 2015. "Do national cancer screening guidelines reduce mortality?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(4), pages 1075-1095, October.
    7. Eric Budish & Benjamin Roin & Heidi Williams, 2013. "Do fixed patent terms distort innovation? Evidence from cancer clinical trials," Discussion Papers 13-001, Stanford Institute for Economic Policy Research.
    8. Hintermann, Beat & Minke, Matthias, 2018. "The value of extending life at its end: Health care allocation in the presence of learning spillovers," Working papers 2018/15, Faculty of Business and Economics - University of Basel.
    9. Bloom, David E. & Chen, Simiao & Kuhn, Michael & McGovern, Mark E. & Oxley, Les & Prettner, Klaus, 2020. "The economic burden of chronic diseases: Estimates and projections for China, Japan, and South Korea," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    10. Rejon-Parrilla, J.C & Hernandez-Villafuerte, K. & Shah, K. & Mestre-Ferrandiz, J. & Garrison, L. & Towse, A., 2014. "The Expanding Value Footprint of Oncology Treatments," Consulting Reports 000050, Office of Health Economics.
    11. Amitabh Chandra & Jonathan S. Skinner, 2011. "Technology Growth and Expenditure Growth in Health Care," NBER Working Papers 16953, National Bureau of Economic Research, Inc.
    12. Hammitt, James K. & Herrera-Araujo, Daniel & Rheinberger, Christoph, 2016. "The Value of Cancer Prevention vs Treatment," TSE Working Papers 16-628, Toulouse School of Economics (TSE).
    13. Shafrin, Jason & Skornicki, Michelle & Brauer, Michelle & Villeneuve, Julie & Lees, Michael & Hertel, Nadine & Penrod, John R. & Jansen, Jeroen, 2018. "An exploratory case study of the impact of expanding cost-effectiveness analysis for second-line nivolumab for patients with squamous non-small cell lung cancer in Canada: Does it make a difference?," Health Policy, Elsevier, vol. 122(6), pages 607-613.
    14. 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.
    15. Eric Budish & Benjamin N. Roin & Heidi Williams, 2015. "Do Firms Underinvest in Long-Term Research? Evidence from Cancer Clinical Trials," American Economic Review, American Economic Association, vol. 105(7), pages 2044-2085, July.
    16. Dubois, Pierre & Kyle, Margaret, 2016. "The Effects of Pharmaceutical Innovation on Cancer Mortality Rates," TSE Working Papers 16-688, Toulouse School of Economics (TSE).

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    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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