In Case You Missed It, This New Cancer Care Cost Study Is Extremely Disappointing

By Markets Fool.com


Source: Flickr user Erik Soderstrom.

Continue Reading Below

Cancer is a scary diagnosis in any form, and it can also be a swift killer (depending on the type), making it a truly terrifying and difficult-to-fight disease.

According to the latest statistics from the Centers for Disease Control and Prevention, cancer ranked as the second-leading cause of death in the United States as of 2013, claiming the lives of nearly 585,000 people. Put another way, cancer was the primary cause of one in every five deaths in the U.S. in 2013. If the World Health Organization's forecasts are correct, global cancer incidence is set to rise from 14 million annual cases currently to 22 million cases two decades from now. In short, cancer is poised to potentially become the leading killer in the U.S. and possibly around the globe.

Source: Flickr user Ano Lobb.

Cancer care costs soar
Cancer is also an incredibly costly disease to fight. The time it takes to develop cancer drugs, as well as their specialization toward a specific cancer type -- or potentially even a gene or protein related to a targeted cancer -- can make these products quite expensive. Based on a March 2014 report issued by the American Society of Clinical Oncology, the cost to treat cancer in the United States is expected to soar 40% between 2010 and 2020 to $175 billion. Keep in mind, these are direct cancer care treatment costs and don't include the indirect economic costs of premature death and lost productivity.

Continue Reading Below

But, we'd like to think that all of the money being thrown into cancer research and new medications is serving a purpose by improving cancer patients' quality of life and possibly prolonging their survival. Unfortunately, a fresh cancer care value study out of the Geisel School of Medicine at Dartmouth would appear to indicate that the vast amount of money being thrown at cancer care in the U.S. is only having a marginally positive effect on survival and quality of life.

Unfortunate news
According to the two researchers, Samir Soneji and JaeWon Yang, who published their findings in Health Affairs, comparing the amount of money spent on cancer care in the U.S. relative to cancer care in Western Europe led the researchers to the observation that the extra spending in the U.S. did not always avert cancer-related death.

Additionally, since 1970, researchers note that cancer death rates have only decreased by 12%, compared to heart disease mortality rates, which have declined by 62%.

After studying the 12 most common cancers in the U.S. and Western Europe between 1982 and 2010, researchers concluded that within the U.S., 67,000 breast cancer deaths, 265,000 colorectal cancer deaths, and 60,000 prostate cancer deaths were averted by increased cancer care spending. However, the incremental cost to quality-adjusted-life-years saved worked out to $402,000 for breast cancer, $110,000 for colorectal cancer, and a whopping $1,979,000 for prostate cancer. In other words, this was extremely expensive advancement.


Source: StockMonkeys.com via Flickr.

What's more, within the U.S., there were 1.12 million more lung cancer related deaths between 1982 and 2010 than in Western Europe. In this instance, researchers discovered that the U.S. lost quality-adjusted-life-years despite additional spending on lung cancer care, resulting in a cost of negative $19,000 per quality-adjusted-life-year saved.

Lastly, the researchers note that the greatest drop in mortality rates were in cancer types where screening and successful prevention were more likely to lead to a drop in death rates instead of more effective medicines.

It's worth noting, though, that Soneji wasn't able to replicate the results of previous findings, meaning the negative nature of this cancer care cost study is contrary to a number of previous findings. It could mean this study is an anomaly, but it'll almost certainly mean more research on the value of cancer care spending will need to be undertaken.

Cost versus benefit in the real world
In a perfect world, we need more effective medicines, and we need them to be reasonably priced so that patients of all socioeconomic background have access to those treatments. Right now, this certainly isn't the case, but drug developers are working toward a point where this may one day be a reality.

As I examined last July, there are 10 primary reasonsprescription drug costs are so high in the United States. These include the high costs for research and development, strong demand for pharmaceutical products, a willingness of insurers to accept high drug prices, a lack of a truly universal health plan, and the aforementioned specialization of cancer treatments, to name a few. Together, these factors can price the average patient out of the market, and they could make the cost-versus-benefit analysis for a healthcare-benefits provider difficult.

Source: Merck & Co.

For example, Dendreon declared bankruptcy in November of last year, after its prostate cancer vaccine Provenge failed to gain sales traction. It did provide a four-month survival benefit in clinical studies, but being priced at $93,000, far higher than its peers, caused physicians to shy away from the treatment for fear of not being reimbursed. This was an instance of the benefit not equaling the cost in physicians' eyes.

Yet, there are plenty of other instances where high-priced drugs do pass the muster with physicians, but they still cost a veritable arm and a leg. Newly approved anti-PD-1 immunotherapy vaccines Keytruda from Merck and Opdivo from Bristol-Myers Squibb cost the equivalent of $150,000 and $143,000 per year for their current indication as a late line of defense against certain types of metastatic melanoma. Initial indications are that neither drug is having any issue gaining insurance coverage or being prescribed by physicians.

The path to more cost-effective and treatment-effective cancer treatments
The way I perceive it, there are two ways -- short of implementing Congressional pricing controls on the pharmaceutical sector -- to lower drug costs, but only one of those methods will also potentially improve cancer drug efficiency.

First, the Affordable Care Act, which you know best as Obamacare, should help spread the rising cost of medical expenses (all expenses, including cancer treatment) across a wider number of adults. The more healthy young adults that are paying into the healthcare system, the more profitable insurers will be. Additionally, the more profitable they are, the easier the decision becomes to more willingly approve costly treatment options. While this could temper drug price inflation, or perhaps even lower it, the ACA doesn't do anything for improving cancer drug efficiency.

Instead, the second method to potentially lowering cancer drug costs and boosting drug effectiveness is in studying new treatments that lend to being combined with existing therapies, or that could treat a broad spectrum of cancer types.

Source: Bristol-Myers Squibb.

Take the anti-PD-1 drugs, for instance. Merck and Bristol-Myers Squibb are asking a fortune for Keytruda and Opdivo at the moment. These are revolutionary new vaccines designed to heighten the body's immune response after metastatic melanoma patients have often had their disease progress following multiple other therapies. While high, their price points are somewhat justifiable by these drugs being the first-in-class anti-PD-1 inhibitors.

However, Keytruda and Opdivo could also treat dozens of different types of solid tumors. Merck plans to study Keytruda in 30 (yes, thirty!) different cancer types, including lung cancer. Opdivo's path is very similar. But, what's unique about these drugs is they could also be combined with existing and developing therapies. Altogether, the more labels Keytruda and Opdivo can gather under their belt, the lower the cost of the product could go. In turn, both products offer significant opportunity for response rate and survival improvements for plenty of solid tumor sufferers.

Clearly, there's work to be done in lowering cancer drug costs and improving their effectiveness, but the tools are in place where we could begin to see steps taken in the right direction to improve the value of cancer care in the U.S. and provide a meaningfully positive impact to cancer patients' lives.

The article In Case You Missed It, This New Cancer Care Cost Study Is Extremely Disappointing originally appeared on Fool.com.

Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.