Working Paper: NBER ID: w15574
Authors: Eric C. Sun; Anupam B. Jena; Darius N. Lakdawalla; Carolina M. Reyes; Tomas J. Philipson; Dana P. Goldman
Abstract: For decades, the US public and private sectors have committed substantial resources towards cancer research, but the societal payoff has not been well-understood. We quantify the value of recent gains in cancer survival, and analyze the distribution of value among various stakeholders. Between 1988 and 2000, life expectancy for cancer patients increased by roughly four years, and the average willingness-to-pay for these survival gains was roughly $322,000. Improvements in cancer survival during this period created 23 million additional life-years and roughly $1.9 trillion of additional social value, implying that the average life-year was worth approximately $82,000 to its recipient. Health care providers and pharmaceutical companies appropriated 5-19% of this total, with the rest accruing to patients. The share of value flowing to patients has been rising over time. These calculations suggest that from the patient's point of view, the rate of return to R&D investments against cancer has been substantial.
Keywords: cancer; economic evaluation; survival gains; willingness to pay
JEL Codes: I1; I18; I28; I31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Improvements in cancer survival between 1988 and 2000 (C41) | Increase in life expectancy by approximately four years for cancer patients (J17) |
| Improvements in cancer survival (I14) | Creation of approximately 23 million additional life-years (J17) |
| Improvements in cancer survival (I14) | Generation of roughly $1.9 trillion in additional social value (O35) |
| Improvements in cancer survival (I14) | Average life-year valued at about $82,000 to its recipient (J17) |
| Cancer R&D (O32) | Improvements in cancer survival (I14) |
| Improvements in cancer survival (I14) | Appropriation of 51% of total value by healthcare providers and pharmaceutical companies (H51) |
| Improvements in cancer survival (I14) | Rising trend in the share of value flowing to patients over time (D46) |
| R&D investments against cancer (O32) | Rate of return on R&D investments has been substantial from the patients' perspective (O32) |
| R&D (O32) | Survival gains through prevention, early detection, and therapeutic advancements (I14) |
| Treatment improvements (C22) | Majority of survival gains (approximately 80%) (I14) |