NEW YORK – With the World Health Organization estimating the number of cancer diagnoses to rise by about 70 percent over the next two decades, biopharmaceutical companies around the globe are increasing investment in and production of innovative cancer drug treatments. By analyzing both their impact on prolonging life and their cost-effectiveness, groundbreaking research from Columbia Business School looks at the overall impact of recently developed cancer-fighting drugs.
“Cancer has become a huge focus of pharmaceutical innovation in recent years,” said Frank Lichtenberg, author of the study and Courtney C. Brown Professor of Business at Columbia Business School. “While we hear a lot about the cost of drugs, their actual value is less often discussed.”
Indeed, over the past four decades, nearly 200 new cancer treatments have been launched worldwide. In 2010, for example, the cost of oncology therapeutics and supportive care was $84 billion, compared to a staggering $107 billion globally in 2015. This upward trend comes at a time when the number of new drugs launched for other diseases has decreased.
Lichtenberg added: “What this study and my larger body of research on pharmaceutical innovation does is measure the significance of new cancer drugs over time and, particularly, how they have actually affected cancer mortality rates.”
New Drugs Have Cumulatively Added Millions of Years of Life to Patients
Lichtenberg’s study tracks the impact of new drug launches on potential years of life lost (the average number of years a person would have lived if he or she had not died prematurely) from 19 types of cancer in 36 countries. His findings indicate that cancer drugs produce the most value in terms of the largest declines in premature mortality 5-10 years after their launch. This is due, at least in part, to the fact that newly-minted drugs typically have lower rates of utilization in their first several years on the market because of a number of factors including price, marketing by pharmaceutical companies and habit formation of doctors.
For example, according to the research, cancer-fighting drugs launched during 2006-2010 reduced the number of life-years lost to cancer by about 8.7 percent in 2015. Had these new drugs not been on the market, Lichtenberg concludes that there would have been millions of additional years of life lost for cancer patients, specifically: 4.51 million additional years of life lost before age 75 and 2.52 million additional years of life lost before age 65 in 2015 alone.
“These findings show that drugs launched at least 5 years earlier, and especially drugs launched 5-10 years earlier, significantly prolonged the lives of millions,” said Lichtenberg.
Since more new cancer drugs were launched during 2011-2015 than were launched during 2006-2010, Lichtenberg predicts an even larger—9.9 percent—reduction in mortality in 2020 from cancer drugs launched 5-10 years earlier.
The research goes one step further, measuring the cost-effectiveness of new cancer drugs as they correlate with life-years gained as a result of the investment in the new drugs. For example, estimated expenditure in 2015 on drugs launched during 2006-2010 per life-year gained in 2015 ranged between $1635 to $2820 - figures that the vast majority of health economists would define as highly cost-effective.
Implications for Pharmaceutical Companies and Policymakers
Lichtenberg’s findings have important implications for pharmaceutical companies and policymakers because they indicate a very real and measurable value to continuing to expand cancer drug expenditure. By demonstrating the relationship between financial investment and years of life gained due to new treatments, the discourse on cancer drugs can move beyond cost to include an assessment of treatment value.
Given the proven reduction of the overall years of life lost from cancer due to new drug launches over time, Lichtenberg also stresses that policymakers need to seriously consider whether their citizens have adequate access to these new therapies and, if not, what barriers stand in the way.
“Access to these new and effective drugs is much more limited in some countries than it is in others,” said Lichtenberg. “As the research shows, in such cases, cancer mortality is much higher in countries with inadequate access.”
Lichtenberg cautions, however, that while it is an international study, the findings do not simply say that, for example, because the United States has more drugs than Peru, there are better treatment outcomes in America. His conclusions are based on an analysis of relative mortality from different types of cancer in different countries, not on the average cancer mortality rates of those countries.
Contributions to Pharmaceutical Research
This study builds on a larger body of Lichtenberg’s research on the impact of pharmaceutical innovation on longevity. With 684 observations, 19 cancer sites and 36 countries, the sample size is considerably larger than those used in previous studies. It also includes a larger set of measures of the burden of cancer.
Lichtenberg has received numerous honors for his research including the 2003 Milken Institute Award for Distinguished Economic Research for the paper, Pharmaceutical Knowledge-Capital Accumulation and Longevity, and Research!America’s 2010 Garfield Economic Impact Award for the paper, The effect of new cancer drug approvals on the life expectancy of American cancer patients, 1978-2004.
To learn more about the cutting-edge research being conducted at Columbia Business School, please visit www.gsb.columbia.edu.
About the researcher
Frank R. Lichtenberg is Courtney C. Brown Professor of Business at the Columbia University Graduate School of Business; a Research Associate of the National...Read more.