Cancer drugs have become increasingly expensive in recent years. No one blinks anymore when a new lung cancer or colon cancer treatment comes to market priced at more than $100,000 per patient. In part, we don’t blink because we have simply gotten used to such prices – the shock has worn off. Moreover, many of these new treatments are targeted therapies that only work for patients whose cancers express specific mutations, targeting the specific genetics underlying their neoplasms. Because these treatments are targeted, we know that only a subset of patients will receive them, thereby limiting the overall cost of the therapies. We are willing to give pharmaceutical companies some leeway in pricing these drugs, because we recognize that such targeted therapies limit the pool of patients pharmaceutical companies can count on to recoup their investments. In fact, due to such precision targeting, we even hope that the new treatments will be so much more effective against cancers they will justify their high prices.
Unfortunately, a study by David H. Howard and colleagues shows that new cancer treatments, on average, are less cost-effective than older ones. The price of cancer drugs is rising faster than the effectiveness.
In the simplest terms, cost-effectiveness quantifies the ratio between how much an intervention raises healthcare costs and how much it improves health outcomes. For advanced cancers, one important outcome is whether the treatment increases patient survival. A $100,000 treatment that increases life expectancy by an average of, say, six months would have a cost-effectiveness of around $200,000 per life year. (The actual cost effectiveness could differ, depending on how the drug influences other healthcare costs.) That $200,000 per life year cost-effectiveness ratio is on the border of what health policy experts think is worth spending for a year of life. And if that extra year of life is of low quality, the intervention would be deemed even less cost-effective.