Have we lost all economic sense of reality about cancer treatment in America?

There may be a very small number of regular readers of this column that would consider it perfectly OK to spend $200,000 to have exclusive personal use of a high performance car like a Maserati GranTurismo MC Stradale for a single year. Good luck to them; they clearly have the annual income to afford it. For most of us, it ain’t gonna happen, and we know it. It’s more than a lot of us of us may have paid for a home that we started to pay for 15, 20, or 30+ years ago.

However, we appear to have an utterly different set of expectations when it comes to health care (and cancer care specifically) — and so do at least some of our doctors!

Two articles published this week, both based on recent data reported in the journal Health Affairs, looked at what physicians and patients thought were reasonable costs to pay for each additional year of life for a person with late stage cancer.

On the Pharmalot web site, Ed Silverman discusses “the real value patients place on cancer meds“. According to Mr. Silverman’s interpretation of one of the studies in Health Affairs:

  • 4,800 patients placed valuations on treatments for metastatic cancer that were 24 times the actual cost (on average).
    • The actual average annual cost of treatment for colorectal cancer, female breast cancer, cancer of the head and neck, or lung cancer was $7,321;  the average value placed on such treatment by patients was $180,284 (a benefit-cost ratio of 24.6).
    • The actual average annual cost of treatment for metastatic colorectal cancer was $10,775; the estimated annual willingness to pay given by patients was $251,567 (a benefit-cost ratio of 23.3).
  • Standard methods used to estimate the value of these treatments for late stage cancers (e.g., quality-adjusted life years [QALYs]) massively undervalued these treatments from a patient perspective.

Where are these patients expecting to be able to find $250,000 if they suddenly found they needed this to pay for their treatment?

In an article on Medscape, Nick Mulcahy looks at data published by Ubel et al. in the same issue of Health Affairs. This study asked oncologists in the USA (n = 788) and Canada (n = 158) how much benefit a new cancer treatment needed to provide to justify its cost. In this case,

  • About half the oncologists thought, in the abstract, that $50,000 to $100,000 was a reasonable cost per life-year saved. However, …
  • Faced with a hypothetical case of an individual patient with metastatic cancer, the American and the Canadian oncologists endorsed “much higher cost-effectiveness ratios, often several hundred thousand dollars per life-year gained.”

In the case of this second study, the first reported figure of $50,000 to $100,000 per QALY is one commonly used by health economists as a reasonable estimate of the value of a year of life for a person with metastatic disease. Clearly, however, the oncologists were unable to correlate their abstract estimates of reasonableness from the very personal estimates of reasonableness when faced with an individual patient.

Where do these doctors think that their patients are going to find “several hundred thousand dollars” at the drop of a hat?

The problem, of course, is that very few of the readers of this column — or indeed of all the cancer patients in most of the developed world, or their oncologists — ever have to actually pay the full costs for such therapies. They are (largely) paid for by insurance companies and governments and self-insured companies. Our expectations have been divorced from reality. If we really had to pay for these treatments ourselves at the costs suggested, we would simply understand we couldn’t do it. And I am not just talking about the poor. Families with incomes of $250,000 a year would be hard-pressed to consider the idea of paying $200,000 to keep Grandma alive for an extra year — even if that extra year of life could be guaranteed!

But for some reason we also seem to think that it is reasonable that our insurance companies or our governments or our employers should be able to pay these sums — even though we know we can’t. So let’s try to give this some real context:

  • Let’s say that it really did cost $250,000 a year to keep a single person with metastatic, castration-resistant prostate cancer (mCRPC) alive with good quality of life for a single year.
  • There are some 30,000 men who are going to die of prostate cancer in America each year, and almost all of those men are going to die with mCRPC.
  • So … the cost of keeping these 30,000 men alive for a single additional year would be 30,000 x $250,000 = $7.5 billion.

$7.5 billion is a number that insurance companies and governments (let alone self-insured companies) look at and, just like you and I as individuals, say “We just can’t afford to pay that!” And that’s just for the 30,000 men who will die with mCRPC. It ignores the healthcare needs of the other 311.97 million Americans. It also ignores the costs of the doctors and the nurses needed to treat these 30,000 men with mCRPC and a whole other bunch of things too — like hospice care for the last 3 months of their lives.

I want to be able to extend the life (and the quality of life) of men with mCRPC just as much and probably more than the average man in the street … but if we don’t get a grip on the economic realities of what it really costs to develop and deliver effective medicines to the people who need them, we will soon have no new medicines at all that most of us can afford.

It may even become challenging for those who can currently afford the Maserati, because as demand for for rare products declines, their cost goes up. Will they be able to afford $2 million for an additional year of life? Maybe they’ll just have to settle for the Maserati for 6 months.

In my case, I already know I can’t afford the Maserati  … but, in the spirit of full disclosure, I was able to scrape up the money for a “previously owned” (that means “second hand”) Jaguar a few years ago at the bottom of the market. I drive this sparingly. Most of the time I use a Subaru with > 100,000 miles on the clock!

8 Responses

  1. Does the author of this article have mCRPC?

  2. No. But that doesn’t invalidate his opinion. The comments are equally applicable to the costs of treatment of any late stage, terminal disease. The author has spent 20 years acting as a cancer advocate in general and a prostate cancer advocate in particular. His comments have nothing to do with prostate cancer specifically and everything to do with whether we have a sustainable healthcare system. We are all going to die of something. It is a fact of life.

  3. I haven’t read the particular study in question, because it is behind a pay wall.

    However, this blog post may reflect some confusion over what economists mean when they talk about willingness to pay with respect to uncertain events. I work as an economist, and have taught courses in benefit-cost analysis, although I am not a health economist.

    For example, consider the “value of life”. What do economists typically mean when they say the “value of life” is, for example, $6 million?

    The value of something in economic benefit-cost analysis is either what someone is “willing to pay” to obtain that something, or alternatively, waht someone is “willing to accept” to give that something up.

    In the case of life, the question of what “life” is worth doesn’t make much sense when we are referring to a CERTAIN event. Presumably, we are “willing to pay” the discounted present value of our future income, minus some minimum consumption level, in order to be certainly alive rather than certainly dead. So WTP in that case is simply equal to the PV of income minus PV of consumption.

    On the other hand, in order to give up one’s life, most people would say that no dollar amount would suffice. So the value of life from a WTA standpoint is infinite.

    However, the question makes more sense if we’re referring to what it is worth to you to change your probability of dying by x%. If you’re willing to pay $y to reduce your probabilty of dying by x%, then the implict value of life to you from a WTP perspective for that change in risk is $y/x%. If you would be willing to accept $z to increase your probability of dying by x%, then the implicit value of life to you from a WTA perspective for that change in risk is $z/x%. These two values of life are likely to be much closer than in the certainty example given before. And this is more relevant to real world decisions, which typically involve changes in risks to life.

    These probabilisitc values of life can also be inferred from real world behavior, such as observing how wages or housing prices vary with various risks to life, or observing how occupational or housing choices respond to risks to life. Sometimes people are surveyed on these issues. There are many issues with these two approaches (e.g., looking at market behavior versus surveying).

    I don’t know how the value of metastatic cancer treatment is inferred in this study. However, it is possible that the value could be greater than one’s future income or what someone would be willing to pay who was actually a patient for at least the following two reasons: (1) we could be asking about someone’s “willing to accept” forgoing a treatment; (2) we could be asking a large group of potential patients how much extra they were willing to pay for insurance coverage that includes these treatments. In either of these cases, the value of the treatment might seem quite large if one is comparing it with what it would be reasonable for someone who already knows they need the treatment to be willing and able to pay.

  4. Tim:

    In the studies referred to, the authors are commenting exclusively on the costs associated with adding 1 year of life compared to the current standard expectation.

    In other words, to use abiraterone acetate as an example, in clinical trials it added a median 3.9 months of life for men with mCRPC who had already progressed on docetaxel-based chemotherapy compared to standard therapy. The published cost of abiraterone acetate is $5,000 a month (although the actual costs may vary). Thus the median cost of abiraterone acetate to add that median 3.9 months of survival is 3.9 x $5,000 = $19,500. [A later update analysis indicated that the median survival benefit was 4.6 months, which would imply a median cost for those median 4.6 months of $23,000.]

    For a man whose life was extended by 1 year on abiraterone acetate, the cost would be $60,000 (plus the cost of the prednisone, but that’s peanuts by comparison, perhaps $60.00 in co-pays for the year). Most men would not get that degree of benefit.

  5. Mike:

    I like your comments and hear some frustration. But I’m surprised you exampled a Italian Maserati instead of the British Aston Martin DB9. :-)

    Interestingly, in either of those countries these dollars would not have been spent per year on healthcare but it would had been spent on cars. Perhaps the other side of the coin here is that priorities that are in other countries don’t really vary. At what point should extending a life stop in the financial markets?

    I personally like the Bugatti Veyron! It’s worth over five Provenge treatments…

  6. Tony:

    If I was in the market for an Aston … which regrettably I am not … I would quite naturally want an Aston Martin One-77 — each of the 77 to be custom-built will cost between 25 and 34 years-worth of treatment with abiraterone acetate. Some people play fantasy football; others just have quiet fantasies!

    As a fall-back there is always the DBS V12 Volante Convertible (manual transmission, please) at a mere 4.9 years-worth of abiraterone.

    Re the value of extending a life (in the financial markets or anywhere else), doesn’t that depend on the potential net benefit? I’m not sure I am qualified to make such judgment calls. We have not been very good at making any decisions about the value of a single life on a societal level — for numerous reasons. If Bill Gates told you that you could have $1 billion to invest in research to find either a cure for prostate cancer (thereby saving the lives of about 275,000 men a year worldwide, most of whom would be well over 65 years of age) or a cure for malaria (thereby saving the lives of about 655,000 people a year worldwide, most under the age of 5 years), which would you invest in?

  7. Any approach to medical care which treats individuals like faceless cyphers calls forth a loud “No” from somewhere down deep inside.

    I find the whole NICE approach akin to something we might see under Lenin, Stalin or Mao. An approach that does not treat each individual as a valuable human life (valuable because it is in the image of God … not because of the value of the life to “society”) takes all of us down a sad, soul-degrading path.

    Let’s say a man is dying, even suffering, but with heroic and expensive efforts could live another 6 months. One man might not want to endure the treatment, and just accept the inevitable. Another man may have a grandchild on the way, and want to survive long enough to hold her and celebrate her birth. The choice should remain with the individual.

    If we lived in a subsistence society, where the effort to prolong this man’s life endangered the lives of others, the equation might be different. But we don’t. We live in the most wealthy society in the history of humanity. We can easily afford the most extreme measures for the few who need it.

    Simple insurance can make these resources available to all. Certainly our current system, distorted completely out of whack by 40 years of misguided government policies, could stand some major revamping. We don’t really have insurance. … We have unlimited pre-paid health care services.

    I find it especially disheartening that now, after 60 years of astounding progress in our understanding of human biology, just when we are about to start to reap amazing (but sometimes expensive) practical treatments and cures, there is this constant drumbeat about how important it is to contain the cost of healthcare. Should we kill the golden goose before the egg is laid?

    New treatments are initially expensive, but the costs come down over time (usually dramatically). Today, you can buy the most important life-saving medicines (blood pressure control, statins, metformin, etc.) for a few dollars a month. Patents don’t last forever.

    By the way, there’s an article today in the Wall Street Journal (subscription required) which discussed a recently published study in Health Affairs. Health Affairs says the US has been getting its money’s worth from our high-cost, cutting-edge oncology treatments. Here’s a quote from the Wall Street Journal article:

    “More remarkable still, the news arrives via the policy journal Health Affairs, in a symposium on the cost and quality of U.S. cancer care. This is like the Vatican saying, go ahead, worship the graven images and false idols.”

  8. Dear Doug:

    (1) I also find the NICE approach distasteful … but the UK has a nationalized health care system that operates on a very different basis to the American health care system. And those that live and work in Britain do have the potential ability to purchase subsidiary insurance to cover costs and services that fall outside those provided by the NHS.

    (2) I think anyone should be entitled to get any form of therapy they wish to pay for themselves … but I also think that insurance companies and Medicare need to be able to say, “We will not pay for that because there is no good evidence to justify its use in the proposed patient with the proposed condition.”

    (3) I entirely agree that we have been getting our “money’s worth from our high cost, cutting edge oncology treatments.” The question I am raising is whether we are going to be able to afford to go on doing it in the future if those costs continue to rise the way that they are, which is at a significantly higher rate than it has been in the past. I know of no new and really significant cancer therapy brought to market in the past 2 years that costs less than $100,000 for a year of treatment.

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