Study: New Therapies Lower Cancer Care Costs

Under a new payment model, doctors leveraged cancer medications to reduce costs by 34 percent.

A new study has found that increased spending on prescription medications can help reduce overall cancer treatment costs while maintaining high-quality care for patients. While these results may seem surprising, they serve as a reminder that overall cost depends on much more than just prescriptions.

In the study, researchers used five oncology centers to test a new payment model designed to reduce the cost of cancer care. As a result, pharmaceutical spending increased by 179 percent, but overall cancer care costs decreased by 34 percent. Those savings were realized because of a reduction in hospital care and radiation therapy without affecting the quality of outcomes for patients.

“I think this is an important lesson to say that instead of just looking at medication costs, which a lot of stakeholders like to do, one really has to look at the total cost of care,” study author Dr. Bruce J. Gould, medical director of Northwest Georgia Oncology Centers and president of the Community Oncology Alliance (COA), said.

“We tend to ignore the role that innovation can play in bringing down and controlling health care spending”

The cost of cancer care is expected to reach $158 billion by the year 2020, an increase of 27 percent over 2010. In response, a number of health care organizations, including the American Society of Clinical Oncology, and some insurers are focused on the cost of new cancer treatments.

All medicines, however, represent less than 10 percent of U.S. health spending in 2011. In contrast, hospital care represented 32 percent, and physician services represented 20 percent of total U.S. health spending in 2012.


Cancer medications represent less than 1 percent of health care spending.


Health insurer UnitedHealth teamed up with five oncology centers to remove financial incentives that favored one course of treatment over another.

In the study, doctors were given a lump sum for treating a cancer patient instead of smaller payments for individual services such as office visits and drug administration. These changes, according to the authors, allowed physicians to focus on selecting the most effective treatment for their patients while keeping costs down. The results suggest that the doctors in the study relied on innovative therapies to achieve both goals.

“We tend to ignore the role that innovation can play in bringing down and controlling health care spending,” Dana Goldman, professor of public policy, pharmacy and economics at the University of Southern California, said. “It’s an area that people typically don’t look at.”



While these results might have surprised the study authors, cancer doctors and the media, health economists such as Goldman have been highlighting such offsets for years. In a 2007 analysis, Goldman found that for every $1 increase in prescription drug spending, Medicare spending was reduced by $2.06.



In the new study, overall costs were lowered by reductions in hospital care and radiation therapy. If this system were to be applied throughout oncology centers in the United States, the savings could be as high as $29 billion.

Even with the monetary savings, Goldman hopes people keep the ultimate goal in mind. “The true value of innovation is not really on the cost side, it’s on the health side,” said Goldman. “We may be forgetting that the ultimate goal here is to improve health, and even if something costs money, if it’s very useful for improving population health, it’s something we need to do.”