While innovation is central for the quality of healthcare and improving health outcomes, it is also a source of increasing costs for governments. Confronted by fiscal pressures, governments have made efforts to restrict access to innovative treatments. While such policies are understandable, they are not necessarily supportive of the ambition to control the cost burden of a disease. This paper reviews economic analyses of the cost burden of cancer, and blood cancers in particular, and the effects that innovative treatments have on other sources of costs in the healthcare system or the economy as a whole.
While there is a need for more research on the relations between costs in healthcare systems, and significant variations between countries, several studies have found that access to innovative treatments have reduced inpatient care costs because, among other things, better treatments reduce the need for long hospital stay. Furthermore, research also shows that a significant part of the total cost burden of cancer and blood cancer is the productivity loss to the economy when patients are out of work. Reducing the productivity loss is central for improving the economic rationality of healthcare systems. This Policy Brief charts some areas for work – at national and the EU level.
Few sectors testify to the benefits of innovation as much as healthcare. Today, people in developed economies live long and have a high quality of life. “Life is better now than at almost any time in history”, suggests Nobel laureate Angus Deaton. In the 1960s and 1970s these societies had left the age of child mortality and infectious diseases. In the following decades, there has been great improvements to attack what he called “the monsters” of “chronic diseases that killed people in middle age: heart disease, stroke and cancer”.
In the past 100 years, new medical innovation and access to healthcare have helped people survive what previously were deadly diseases. Rising global prosperity in the past decades has converged billions of people in previously poor countries to the medieval frontier. And among rich countries, that frontier is yet again on the verge of a great expansion as the medical science is rapidly improving its capacity to treat malign conditions.
The question facing healthcare systems, however, is not just one of awe for the impressive achievements in pushing the medical frontier. There is also a far more pedestrian issue that they are wrestling with, and it is about the payment or financing of all these new opportunities to cure and treat people. For many healthcare administrators in Europe and elsewhere, the combination of increased longevity and medical innovation is not just a testimony of human ingenuity but also a potential blow to fiscal sustainability and efforts to maintain healthcare budgets in good balance. Most countries in Europe already manage healthcare policies in a way that aim to contain costs and restrict access to healthcare. A long period of low or negative economic growth has given greater urgency to the need for governments to economize with resources. Faced with new medical innovation, governments increasingly fear that the supply of innovative drugs and medical technologies ultimately may “break the bank” unless they restrict access to them and avoid giving patients the expectation that governments can afford them. Consequently, patients in many European countries are today offered treatments that are increasingly distant from the medical frontier, and the gap between the frontier and current treatments is gradually getting larger. On current track, the policy of rationing access to innovative healthcare will only increase in strength and consequence.
This reaction by governments is understandable. However, it is not necessarily economically rational or the best way to use resources in a way that promotes efficiency and equity. In some areas, preventing access to better treatment will not just prolong or increase human suffering, it will also drive up government expenditures on healthcare and keep people away from the labour market, which in turn lower tax receipts and, in most countries, raise spending on social security. A general economic rule of thumb for healthcare is that the most expensive way to address illnesses is to not treat them, or to treat the symptoms rather than the source. While there is variety between diseases and areas of medical practice, this particularly holds true for diseases where it is difficult or outright impossible to shift the cost burden to the patient, or for the patient to manage his or her disease in a way that allows them to remain in work or education and not put other demands on the public purse.
Cancer treatment is one such area. It is expensive and the cost cannot be shifted to the patient. Delaying access to treatment has serious consequences for the ability to treat and cure patients. Non-treatment or non-efficient treatments are often associated with greater need for other healthcare or social assistance. Even the most cynical approach to cancer treatment, therefore, would be associated with significant effects on public expenditure. In reality, the choice facing governments is not one of accepting or escaping the cost burden: it is rather the choice of how resources should be allocated between different parts of the healthcare system – or the welfare state generally.
In this Policy Brief, we will take a closer look at this allocation of resources and how different choices affect the economics of healthcare systems. We will particularly consider the case of blood cancer and what economic and medical research have concluded in terms of the best way of economizing with scarce resources for treating patients with blood cancer. Blood cancer is an interesting area of medical practice to study, because the growth in cancer incidence has increased and there has been a period of acceleration in healthcare innovation for various blood cancers over the past two decades. It is not one of the most common forms of cancers, but blood cancer represents about 7 percent of all cancers today.
The basic question in this Policy Brief is: can governments improve on their expenditures by moving treatments closer to the medical frontier and allow a greater degree of innovation in medical devices and drugs? That is a difficult issue to respond to because there is an obvious lack of comparative data and research on the comparative costs of specific cancers and treatments in Europe. Nor is there necessarily a universal answer, applicable to all countries in Europe, to the question either as the design of healthcare systems vary considerably. Hence, there are clear limitations both in research and in the established knowledge about how healthcare systems work.
However, new research has put greater light on the economic effects of different choices in resource allocation, and this research is of great value for healthcare administrators making decisions about costs and access. This Policy Brief will present an overview of this research and discuss the findings in light of healthcare policy design in Europe. It will set out a new platform for policymakers and stakeholders with the interest and desire to improve on the current system.
 Deaton, 2015, p. 1.
 Deaton, 2015, p. 130.
 Hostenkamp & Lichtenberg, 2015