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The expanding pharmaceutical arsenal in the war on cancer


  • Frank R. Lichtenberg


The five-year relative survival rate from all malignant cancers increased from 50.0% in 1975-1979 to 62.7% in 1995. This increase is not due to a favorable shift in the distribution of cancers. A variety of factors, including technological advances in diagnostic procedures that led to earlier detection and diagnosis, have contributed to this increase. This paper?s main objective is to assess the contribution of pharmaceutical innovation to the increase in cancer survival rates. Only about one third of the approximately 80 drugs currently used to treat cancer had been approved when the war on cancer was declared in 1971. The percentage increase in the survival rate varied considerably across cancer sites. We hypothesize that these differential rates of progress were partly attributable to different rates of pharmaceutical innovation for different types of cancer, and test this hypothesis within a ?differences in differences? framework, by estimating models of cancer mortality rates using longitudinal, annual, cancer-site-level data based on records of 2.1 million people diagnosed with cancer during the period 1975-1995. We control for fixed cancer site effects, fixed year effects, incidence, stage distribution of diagnosed patients, mean age at diagnosis, percent of patients having surgery, and percent of patients having radiation. Overall, the estimates indicate that cancers for which the stock of drugs increased more rapidly tended to have greater increases in survival rates. The estimates imply that, ceteris paribus, the 1975-1995 increase in the stock of drugs increased the 1-year crude cancer survival rate from 69.4% to 76.1%, the 5-year rate from 45.5% to 51.3%, and the 10-year rate from 34.2% to 38.1%. The increase in the stock of drugs accounted for about 50-60% of the increase in age-adjusted survival rates in the first 6 years after diagnosis. We also estimate that the 1975-1995 increase in the lagged stock of drugs made the life expectancy of people diagnosed with cancer in 1995 just over a year greater than the life expectancy of people diagnosed with cancer in 1975. This figure increased from about 9.6 to 10.6 years. This is very similar to the estimate of the contribution of pharmaceutical innovation to longevity increase I obtained in an earlier study, although that study was based on a very different sample and methodology. Since the lifetime risk of being diagnosed with cancer is about 40%, the estimates imply that the 1975-1995 increase in the lagged stock of cancer drugs increased the life expectancy of the entire U.S. population by 0.4 years, and that new cancer drugs accounted for 10.7% of the overall increase in U.S. life expectancy at birth. The estimated cost to achieve the additional year of life per person diagnosed with cancer?-below $3000-?is well below recent estimates of the value of a statistical life-year. We are unable to measure quality-adjusted life-years (QALYS), but if new cancer drugs increased the quality of life as well as delayed death, the increase in QALYS is not necessarily less than the increase in life expectancy. This paper is closely related to another recent paper of mine, "The impact of new drug launches on longevity: evidence from longitudinal disease-level data from 52 countries, 1982-2001" ( I could present that paper instead, or a combination of the two papers.

Suggested Citation

  • Frank R. Lichtenberg, 2004. "The expanding pharmaceutical arsenal in the war on cancer," 2004 Meeting Papers 204, Society for Economic Dynamics.
  • Handle: RePEc:red:sed004:204

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    References listed on IDEAS

    1. Frank Lichtenberg, 2005. "The Impact of New Drug Launches on Longevity: Evidence from Longitudinal, Disease-Level Data from 52 Countries, 1982–2001," International Journal of Health Economics and Management, Springer, vol. 5(1), pages 47-73, January.
    2. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
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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. Lakdawalla, Darius N. & Sun, Eric C. & Jena, Anupam B. & Reyes, Carolina M. & Goldman, Dana P. & Philipson, Tomas J., 2010. "An economic evaluation of the war on cancer," Journal of Health Economics, Elsevier, vol. 29(3), pages 333-346, May.
    3. Lichtenberg Frank R., 2008. "Pharmaceutical Innovation and U.S. Cancer Survival, 1992-2003: Evidence from Linked SEER-MEDSTAT Data," Forum for Health Economics & Policy, De Gruyter, vol. 10(1), pages 1-27, March.
    4. Dolan, Paul & Metcalfe, Robert, 2012. "The relationship between innovation and subjective wellbeing," Research Policy, Elsevier, vol. 41(8), pages 1489-1498.
    5. Lionel Perrier & Magali Morelle & Nathalie Havet & Anthony Montella & Bertrand Favier & David Perol & Frédéric Gomez & Marie-Odile Carrere & Paul Rebattu, 2009. "The effect of health care expenditures on survival in locally advanced and metastatic Non Small Cell Lung Cancer," Working Papers 0903, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    6. Dubois, Pierre & Kyle, Margaret, 2016. "The Effects of Pharmaceutical Innovation on Cancer Mortality Rates," TSE Working Papers 16-688, Toulouse School of Economics (TSE).
    7. Okunade, Albert A., 2004. "Concepts, measures, and models of technology and technical progress in medical care and health economics," The Quarterly Review of Economics and Finance, Elsevier, vol. 44(3), pages 363-368, July.
    8. Martin, Stephen & Rice, Nigel & Smith, Peter C., 2008. "Does health care spending improve health outcomes? Evidence from English programme budgeting data," Journal of Health Economics, Elsevier, vol. 27(4), pages 826-842, July.
    9. Shin-Yun Wang & Chih-Chiang Hwang, 2011. "Application of options to the pharmaceutical markets: The solutions of corruption and counterfeit drugs in emerging markets," International Journal of Accounting and Information Management, Emerald Group Publishing, vol. 19(2), pages 169-181, June.

    More about this item


    Longevity; innovation; mortality; cancer; pharmaceuticals;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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