40-Year Review: Events Impacting Cancer Care Costs
TL/DR –
In 1985, the direct health service costs of cancer care were $18.1 billion and by 2015, this figure rose to approximately $183 billion and is predicted to reach $246 billion by 2030. Major advancements in cancer treatment, policy changes, and the introduction of new treatments into the market have contributed to this increase. Meanwhile, several financial controls and limits have been put in place over the years to help patients with the increased costs, such as Medicare’s Prospective Payment System introduced in the 1980s and the Inflation Reduction Act in the 2020s.
Financial Trajectory of Cancer Treatment Over the Past 40 Years
The landscape of cancer care has seen a considerable transformation over the past four decades. Treatment advancements, policy changes, and cost fluctuations have shaped the journey of oncology treatment. However, one fact remains consistent – the cost of cancer treatment has continuously risen over time.
According to financial records, the direct health services cost for cancer care stood at $18.1 billion in 1985. This cost escalated to $183 billion by 2015 and is expected to reach $246 by 2030. Factoring in figures from the past 40 years and assuming an annual expense of at least $28 billion, the total amount spent on cancer treatment could easily reach trillions of dollars.
Key Policy Changes and Their Impact
Several key policy changes and initiatives have influenced the financial landscape of cancer care. For instance, the Federal Tax Equity and Fiscal Responsibility Act of 1982 introduced the Prospective Payment System. This system changed the methodology of hospital reimbursements from the US government, leading to a reshuffling of patient care from inpatient hospitals to outpatient clinics or doctor’s offices.
Similarly, the Orphan Drug Act (ODA) enacted in 1983 incentivized pharmaceutical companies to develop treatments for rare cancers. The act resulted in 1122 approvals of orphan-designated products from 1983 to 2022. Interestingly, 38% of all these designations fell under oncology.
The 340B Drug Pricing Program, enacted in 1992, aimed to protect safety-net hospitals and low-income communities from rising drug prices. However, this Program led to the consolidation of cancer care, with 546 hospitals adding satellite cancer care clinics from 2012 to 2022.
Medication Costs and Financial Toxicity
The cost of cancer medication also underwent significant changes. The introduction of imatinib (Gleevec) in 2001 for the treatment of chronic myeloid leukemia (CML) marked the commencement of targeted therapy. Unfortunately, the price of this life-saving medication rose from $26,000 per year in 2001 to $120,000 per year in 2016.
The financial burden created by the cost of cancer treatment led to the coinage of the term “financial toxicity,” referring to the stress and financial challenge cancer patients face. With the average out-of-pocket expenses for cancer care exceeding $5000 per year, financial toxicity became a significant concern in modern oncology care.
Policies for Cost Reduction and Better Care
Several policies and models have been introduced throughout the years to reduce the financial burden of cancer treatment and ensure high-quality care. The Affordable Care Act (ACA), passed in 2010, expanded health insurance coverage and reformed health care payment and delivery systems. It also set up the Center for Medicare and Medicaid Innovation and the Patient-Centered Outcomes Research Institute to test innovative models and fund cancer-related projects.
The Oncology Care Model (OCM), established in 2016, aimed to reduce costs of chemotherapy while maintaining high-quality care. However, the model eventually led to a $600-million loss for Medicare, as health care expenses for both OCM and comparison episodes rose by around 25%.
The emergence of Chimeric Antigen Receptor (CAR) T-cell therapies in 2017 revolutionized the treatment of certain types of cancer. However, these therapies were expensive, with average sales prices exceeding $450,000. The Inflation Reduction Act was later implemented to cap Medicare Part D out-of-pocket costs at $2000 annually and to mandate federal price negotiations for high-expenditure oncology drugs.
No doubt, great strides have been made in the field of oncology over the past 40 years, but these advancements have come at a significant financial cost. Despite the efforts of researchers, clinicians, and policy makers to make cancer treatment more effective and affordable, the increasing costs associated with cancer care remain a significant challenge.
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