Lichtenberg, Frank R (2009) The effect of new cancer drug approvals on the life expectancy of American cancer patients, 1978–2004. Economics of Innovation and New Technology, 18 (5). pp. 407-428. ISSN 1043-8599 (print), 1476-8364 (online)

Abstract

This study attempts to determine the extent to which new cancer drugs introduced during the last 40 years have prolonged the lives of Americans diagnosed with cancer. We use a difference-in-differences approach: we analyze the correlation across cancer sites (breast, prostate, lung, etc.) between changes in the hazard rate of people previously diagnosed with that cancer and changes in the number of drugs that have been introduced to treat that cancer, controlling for variables likely to reflect changes in diagnostic techniques: cancer stage distribution, age at diagnosis, number of people diagnosed (incidence), and use of surgery and radiation. The rate of introduction of new cancer drugs varied considerably across cancer sites and over time. Data on cancer-site-specific drug introductions are constructed using the National Cancer Institute (NCI) Thesaurus and the Drugs@FDA database. Data on all other variables were obtained from the NCI's surveillance, epidemiology, and end results 9 Registries Database, an authoritative source of information on cancer incidence and survival in the USA. We find that the effect of the lagged stock of drugs on the hazard rate of cancer patients is negative and highly significant. This signifies that cancer sites with larger increases in the lagged stock of approved drugs had larger reductions in the hazard rate, ceteris paribus. The impact of the stock of Food and Drug Administration (FDA) approvals on the hazard rate tends to increase steadily for a number of years, peak about 8–12 years after launch, and then decline. This finding is consistent with evidence about the product life cycle of cancer drugs: utilization tends to increase steadily after FDA approval, peak about 6–10 years after launch, and then decline. The cancer stage, the age at diagnosis, and incidence variables have the expected effects on the hazard rate. New cancer drugs introduced during the period 1968–1994 are estimated to have increased the life expectancy of cancer patients by almost 1 year (0.94 years). Although the health of cancer patients is less than perfect, the increase in quality-adjusted life-years is not necessarily less than the increase in life expectancy. Since the lifetime risk of being diagnosed with cancer is about 40%, the 1978–2004 increase in the lagged stock of cancer drugs is estimated to have increased the life expectancy of the entire US population by 0.38 years. This represents about 8.8% of the overall increase in US life expectancy at birth. Estimated cost per life-year gained does not exceed $6908, which is far below recent estimates of the value of a statistical life-year.

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