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Why Is Cancer Treatment So Expensive?

Cancer represents a big financial burden in the U.S., but an ounce of prevention might well be worth a pound of cure.

By Elaine K. Howley<>, Contributor
June 20, 2018, at 10:14 a.m.

FOUNDING FATHER Benjamin Franklin knew a thing or two about how the world worked. In 1736, long before the advent of modern medicine, he astutely observed that "an ounce of prevention is worth a pound of cure." Though he was speaking in relation to preventing devastating fires, his words have wider implications and seem even truer now in the age of expensive health care and high-tech treatments that can cost thousands of dollars for a single dose. Treating chronic illnesses, especially cancer, is an expensive affair.

A 2017 report from the Cancer Action Network<>, the advocacy arm of the American Cancer Society, found that "in 2014, cancer patients paid nearly $4 billion out-of-pocket for cancer treatments," and that "roughly $87.8 billion was spent in 2014 in the U.S. on cancer-related health care<>. These costs were paid by employers, insurance companies and taxpayer-funded public programs like Medicare and Medicaid, as well as by cancer patients and their families."

So what's driving the cost? In a nutshell, "it's personnel and medicines and physical structures or buildings," says Dr. Peter Shields, a medical oncologist<> and researcher focusing on lung cancer at The Ohio State University James Cancer Hospital<>. Personnel, such as doctors and nurses, "have to be appropriately trained and they take lots of responsibility." This means they need to be compensated appropriately for their many years of training and the sometimes life-or-death responsibility they shoulder for their patients. "In the United States, no one wants a cheap doctor, so labor is expensive," Shields says.

These health care providers also need appropriate facilities in which to treat patients. "Everyone wants a state-of-the-art building," Shields says. Even the most basic treatment facility can cost millions of dollars to build and maintain.

Beyond those two often overlooked but expensive aspects of cancer care are the drugs. Much attention is paid to the exorbitant sticker prices<> of certain cancer drugs, especially newer, high-tech and cutting-edge treatments. Some of these treatments can cost thousands of dollars per dose. Health insurance usually picks up some of the cost, but as the American Cancer Society reports, "there will be unexpected charges, and even the best health insurance won't cover all your costs."

Shields says he's "appalled every day" by the staggering cost of drugs to treat cancer, "and I'm not going to defend the pharmaceutical companies." But they do have a lot of costs that go into developing an effective cancer treatment, such as the expense of discovering the drug and then testing it for safety and efficacy. This process can take years and millions of dollars to complete. "To bring a drug to market, especially a cancer drug, is so expensive. Pharmaceutical companies do have many more failures than successes," and these research and development costs are factored into the cost of the drug. These companies, like any other, need to make a profit to stay in business, after all, and they exist as much to make money as they do to provide drugs for the diseases their products treat.

Shields says currently, cancer research is largely funded by pharmaceutical companies and the federal government, and recent leaps forward in this research have translated into much more effective treatments. For example, newer lung cancer drugs<> may be costly, but "many of my lung cancer patients are now living two to three times longer than they were just three years ago. It's huge," he says. And these advances have changed the conversation that Shields has with many of his patients. Whereas they often would discuss end-of-life concerns, "now it's more like, 'you could be the unlucky one where nothing responds, but we have enough choices that you might be alive in two-plus years.' That's a very different conversation." So while the treatments are expensive, they're extending life for many patients in meaningful ways. "We're having incredible advances in virtually every cancer," Shields says. "I'm not an economist, but I know from my patient's perspective, they value this."

The good news regarding the high cost of drug treatments for cancer is that "over time, these companies are figuring out how to make them cheaper," Shields says. Drug patents last for 20 years, during which time the company needs to earn back its R&D costs and make money to fund the next discovery. After that, other companies can manufacture the same chemical compound, and that competition typically drives the cost of the treatment down.

But what Benjamin Franklin knew was that if you could avoid needing the "cure" in the first place, you'd save yourself a lot of heartache and money. That's the approach being championed by the Partnership to Fight Chronic Disease, a nonprofit consortium of about 100 stakeholders including patient advocacy groups, health care providers, community organizations and business groups that raise awareness of chronic disease. Although diseases like diabetes<> might come to mind first in the discussion of chronic diseases, for many patients, cancer is also a chronic disease that results from a lifetime of exposure to environmental or lifestyle factors that elevated risk.

"Up to 50 percent of cancers are potentially preventable, so we focus a lot on prevention," says Ken Thorpe, executive director of the Partnership to Fight Chronic Disease and chair of the department of health policy and management in the Rollins School of Public Health at Emory University in Atlanta. "It's a three-part strategy that we've been focusing on," Thorpe says, to try to drive down health care costs.

The first part is prevention. "Our point is that to the extent that we can prevent 40 to 50 percent of these cancers, obviously, cancer spending goes down," Thorpe says. Preventing cancer revolves around making lifestyle choices such as avoiding or quitting smoking, protecting your skin from the sun, maintaining a healthy weight, staying physically active and eating right. All of these actions can reduce your risk of developing cancer, which could save you a lot of money - not to mention your life - in the long run.

The second part of the PFCD's cost control strategy is early detection. "Part of the problem with cancer is that we're detecting this in stage 3 and stage 4. We have very aggressive efforts, and just by the nature of the diagnosis, it's going to be expensive" to treat later-stage cancers, he says. If there were a way to detect those cancers earlier, the treatment could be less expensive and offer better outcomes, because a smaller tumor caught at an earlier stage is generally easier to treat with fewer medical interventions. This is where preventive screenings like routine mammograms<>, Pap smears<>, colonoscopies<> and lung CT scans<> in high-risk individuals can help reduce the cost of treating cancer.

The third strategy is "managing patients and working with patients who have multiple chronic conditions<>. How do we keep them healthy and out of the hospital?" Thorpe says. If these individuals can remain healthier and out of the hospital, that could cut health care spending significantly, he says. "Half of Medicare beneficiaries - about 52 percent - are being treated for five or more conditions," Thorpe says, and this "accounts for 75 percent of what Medicare spends."

In April 2018, Medicare approved reimbursement for "a very intensive lifestyle intervention program called the Diabetes Prevention Program<>," that the PFCD has advocated for, Thorpe says. "It's kind of mislabeled - it's a 16-week, chronic disease prevention curriculum that focuses on behavior change, including diet, exercise and nutrition and portion control counseling. It's an educational module that's combined with making sure people get at least 150 minutes of physical activity per week and it targets prediabetic, hypertensive adults with a goal of having an average weight loss of 5 to 7 percent." Thorpe says that the program has been effective. "On average it reduced the number of new cases of diabetes<> in a year by 58 percent. We haven't done the cancer studies on it, but certainly, there's going to be reduction in the incidence of cancer as well," among patients who follow the program.

Thorpe says the fact that Medicare has approved benefits for the program "is a real innovation because Medicare usually focuses on paying for things after people are sick rather than trying to find ways of keeping them healthy and keeping them from getting sick in the first place." As a covered benefit, the program may be able to benefit more people and hopefully cut their risk of cancer as well as their health care costs across the board.

But given that more than 1.7 million people are expected to be diagnosed with cancer in 2018, according to figures from the National Cancer Institute, there's still a lot that can be done to both lower that incidence rate<> and to reduce costs associated with the disease. "We're broadening the focus of our policy interventions to also focus on preventing cancers rather than just treatments. Obviously, we have to treat when somebody's sick, but I think there are big opportunities on the prevention side." Benjamin Franklin would no doubt endorse this approach.