Review Economic cost analysis in cancer

Article
management and its relevance today
Sharma K, Das S1, Mukhopadhyay A1, Rath GK, Mohanti BK
Departments of Radiotherapy, Dr. B. R. Ambedkar Institute Rotary Cancer Hospital (IRCH), All India
Institute of Medical Sciences, New Delhi and 1Planning Unit, Indian Statistical Institute, New Delhi, India

Correspondence to: Dr. Kuldeep Sharma, E-mail: dr._kuldeepsharma@yahoo.co.in

Abstract
The global cancer burden has shown a distinct shift in the last two decades and its Þnancial impact can be large, even
among patients living in high resource countries, with comprehensive health insurance policies. It is hard to imagine its
impact on patients of developing countries where insurance policies exist infrequently and often cost becomes the greatest
barrier in availing cancer treatment. It is recognized that these costs include the direct cost of disease treatment and
care, indirect costs accrued by the patient and the family, and economic losses to the society as a whole. Economic cost
analysis or cost-effectiveness analysis has emerged as a basic tool in the evaluation of health-care practices. To date,
these cost data have been collected only sporadically, even in the most developed countries, and there is a great need for
incorporating economic cost assessment practices in developing countries, so that patients and their families can access
the care adequately. The current review has been done using pubmed and medline search with keywords like cancer,
cost-analysis, cost-effectiveness, economic burden, medical cost, etc.

Key words: Cancer, cost-analysis, developing countries

DOI: 10.4103/0019-509X.51360 PMID: ****

Introduction of novel diagnostic modalities and multimodality

The incidence of cancer is increasing worldwide
and hence the economic costs associated with its
management. It is estimated that in 2000, about 11
million cases of cancer were diagnosed worldwide,
7 million people died of cancer and 25 million were
living with it. By 2030, it could be expected that
there will be 27 million incident cases, 17 million
cancer deaths annually and 75 million persons alive
with cancer.[1] The greatest effect of this increase will
fall on low-resource and medium-resource countries
like India. A major challenge for these countries is
to find strategies in which their limited resources
can be properly utilized in managing this disease;
else cancer could become a major impediment to the
socioeconomic development of these economically
emerging nations.
In recent years, market forces and political processes
have generated growing interest with regard to the
economic costs of diseases to the individual, family,
institution, and society. [2] With the increasing use
treatment approaches the overall treatment cost for
cancer is increasing day by day. Apart from these
factors, the increasing influence of market forces
in day-to-day practice, lack of proper treatment
guidelines among physicians, awareness among
patients regarding themselves as consumers, and
lack of political willpower among the governing
agencies, adds to these cost inflations. Hence, there
is a growing need in health sector to live within
budgets, more so in a country like India. In time to
come, cost analyses will be an important component
in policy making, for effective health care delivery.
Cancer interventions have outcomes that affect several
parties: patients and their families who pay out-of-
pocket costs and time, people without cancer (not yet
"
patients") who are falsely screened positive and thus
must devote time and money for follow-up testing,
providers of care, third party payers who cover costs
of health care, the employer, the government, and
the society as a whole.[3] The current topic has been
chosen keeping in mind the general oncology practice

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 Sharma et al.: Cost analysis in cancer care
in India and other developing countries. A pubmed
and medline search was performed for identifying
articles published in English, till 2007, related to
the topic. Keywords that were used to identify such
articles were a combination of cancer, cost-analysis,
cost-effectiveness, economic burden, medical costs, etc.
Abstracts obtained from this search were evaluated.
The references of the articles found in the literature
search were also examined to find additional articles.
What is Economic Cost Analysis?
Traditionally, the burden of illness caused by a disease
is measured in terms of health outcomes like mortality
and morbidity. In addition, there are concomitant
economic outcomes or endpoints of diseases, defined
as the measure of resources consumed for prevention,
diagnosis, and treatment of the disease.[4]
Cost-effectiveness analysis (CEA) is a method for
evaluating the outcomes and costs of interventions
designed to improve health. Its results are summarized
as cost-effectiveness (C/E) ratio, that is, the cost of
achieving a unit of health effect (e.g., the cost per
year of life gained). In a cost effectiveness ratio,
changes in health due to an intervention, compared
with a specific alternative, are captured in the
denominator; and changes in resource use, compared
with the same alternative and valued in monetary
terms, are captured in the numerator. [5] A balance
must be struck between the cost of intervention and
its effectiveness for it to be adopted.
What is the Purpose of Economic Cost Analysis?
A major purpose of economic analysis is ‘to quantify
the magnitude of improvement in cancer health
outcome, relative to the magnitude of resources
expended to secure those improvements.’[4] Its central
function is to show the relative value of alternative
interventions of improving health. These analyses allow
us to compare the efficacy of alternative interventions
when making choices, subject to resource constraints.
For example, Pignone et al., reviewed seven modeling
studies for cost effectiveness of colorectal cancer
screening, for the US Preventive Services Task Force
to use, before developing public guidelines and
recommendations for such a screening.[6]
Economic measures are important for cancer outcome
research. Calculation of the total economic burden
of a particular cancer or cancer in general, provides
information to decision makers for mobilizing political
and financial support for cancer care and research.[7]
Since resources are not unlimited and costs do matter,
Indian Journal of Cancer | July–September 2009 | Volume 46 | Issue 3
CEA is required for making effective and efficient
cancer care decisions.
Conceptual Model for Economic Cost Analysis
Concept of cost: It includes the value of goods,
services, time, and other resources consumed in the
provision of an intervention or in dealing with its
side effects or other current and future consequences
linked to it. It is tempting to think that the cost of
a medical intervention is its price but it is not so
because it involves the use of a resource rather than
a mere monetary exchange. [8]
Direct cost: It encompasses all type of resource
use including the consumption of professional,
family, volunteer, or patients' time and money. It
also includes resources expended as downstream
consequences of an intervention. For example, the
cost of a screening intervention include not only
the cost of the test itself but also the cost of further
tests, follow-up services for both true and false-
positive results, and the "downstream" costs from
hospitalization and treatment ` . Direct costs also
include patients' out-of- pocket costs as patients
frequently make co-payments for some services
not covered by their insurance, employer or the
government, such as the cost for over-the-counter
drugs and certain procedures. Direct non health
care costs accrue as well which includes transport,
lodging and food.
Studies have demonstrated that out-of-pocket non-
medical cost were consuming upto 26% of the
weekly budget and overall, they were found to
be more than the medical cost of the treatment. [9]
Patient has to pay for transportation and child-care
especially in Indian scenario where patient has to
travel great distance to the tertiary care facilities.
Hospitalization may well require another adult to
accompany the patient and that person's time is a
direct cost. Family and friends provide informal
assistance to the patient including child-care. If these
were purchased services, this time would be apparent
as a direct cost of care. In one study, when family
labour was included in cost calculation, average
home-care cost for three months ($4563) was found
similar to nursing home care. The cost was found
to be unrelated to the diagnosis, treatment and
time since diagnosis and was seen to be driven by
functional status of the patient and family living
arrangements. [10]
Indirect cost or overhead cost: These costs share
the property that they are difficult to allocate on
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 Sharma et al.: Cost analysis in cancer care
a per-patient basis as these include the cost of
the resources shared across patients of many types
such as clerical salaries, sanitation and light in
hospital, libraries etc. This component of cost is
often handled in an aggregate ad hoc fashion, but
some investigators use more systematic accounting
methods. [4]
Pr o d u c t i v i t y r e l a t e d c o s t : D u e t o p re m a t u re
m o r t a l i t y a n d m o r b i d i t y, c a n c e r c a n l e a d t o
significant productivity related costs for the patient,
employer, and society as a whole. For the patient
it involves substantial loss of earnings, as well
as reduction in length and quality of productive
life. From the employer ’s perspective, these are
v i e w e d a s " f r i c t i o n c o s t s " a s s o c i a t e d with the
inefficiencies of temporary replacement workers
or cost associated with recruiting and training a
permanent replacement for a worker lost to illness.[4]
Total cost: It includes all medical costs attributed
to a patient diagnosed with cancer, regardless of
whether the particular procedure or service was
directly related to cancer treatment or not. It is
much easier to construct, but is not as useful as the
net cost estimates.
Net cost: If estimated appropriately net cost is
better reflections of the costs, as it also include
the costs avoided as a result of an intervention
that prevents the occurrence of cancer and its
consequences. Net cost is commonly used in the
CEA associated with screening procedures.
In a retrospective case control study involving lung
cancer patients and controls, it was seen that the
total costs (from diagnosis to death or a maximum
of two years) were US$ 45,897 for the patients and
US$ 2907 for the controls. The main cost drivers
were hospitalization (49%) and treatment-related
visits (35.2%). Monthly primary treatment phase
costs (US$ 11,496) were higher than secondary
treatment phase (US$ 3733) or terminal care phase
(US$ 9399) costs. [11]
What Should be Collected as Primary Data in Cost
Analysis and How?
Ideally the primary study should collect and
report "counts" of actual resources consumed as
a direct result or further consequence of a cancer
intervention. These counts should be collected and
reported in as much detail as is feasible within the
study constraints. [4]
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Studies in cancer-related cost analyses have counted
resources with varying degrees of refinements. One
method is the actual 'counts' of resources. This is
the most accurate and most transportable method,
b e c a u s e re s o u rc e s m a y b e a s s i g n e d m o n e t a r y
values, to reflect costs at different locales or in
different time frames from those in which they were
originally collected. [8] On account of the labour
intensity of this approach, researchers have sought
alternative ways like using data from administrative
sources such as hospital billing systems. However,
administrative data are usually in the form of
charges and, like prices, may not reflect the actual
cost. Recognizing this deficiency, some researchers
have attempted to use cost-to-charge ratios to adjust
charge data, to better reflect costs.
Less satisfactory is the collection of ‘aggregate costs
only’ for a service, set of services, or episode of care,
for instance, recording only the total charges for an
inpatient stay. These results are less transportable to
other settings or time frames. For any cost data,
methods for inflation adjustment, type of currency,
and year of cost should be indicated.
Cost Data may be in the Form of
Hospital based cost: (e.g., radiotherapy planning,
o p e r a t i n g ro o m c h a rg e s , s i m u l a t i o n ) c a n b e
estimated by first allocating the local or institutional
charges for these procedures or treatment courses and
multiplying it with the appropriate cost-to-charge
ratio.
Professional cost: (e.g., surgeon, anesthesiologist,
oncologist) is calculated by multiplying relative
value units (RVUs) of a relevant procedure by an
institution-specific cost per RVU.
Patient's time cost: can be estimated by using the
average hourly wage of the person based on his sex,
age, and skill, and multiplying it with the number
of hours expended for procuring an intervention or
treatment.
Travel cost: can be calculated by estimating the
average distance travelled by the patient, average
cost per unit of distance travelled, number of
accompanying persons, parking charges, etc.
There is a growing recognition that Quality of life
(QOL) is an important outcome to consider in
calculating cost effectiveness. This is especially true
in situations wherein the intervention in question
has no known impact on overall survival, but does
alter the QOL.
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 Sharma et al.: Cost analysis in cancer care
Quality of life weightings, called "utilities" are
used during analyses to account for these factors.
Utilities measure one's state of health on a scale
ranging from 0 to 1, where 0 is equivalent to death
and 1 to perfect health status. By multiplying the
length of time spent in each state by its utility
value and summing the product, it is possible to
calculate quality-adjusted life-years (QALY).[12] Thus,
improvement in overall survival is not a prerequisite
for cost-effectiveness.
Real Examples of Cost Analyses
In the last few decades, economic cost analyses have
been used in developed countries for formulating
guidelines and have the potential to be used in the
developing world, provided the data collection tools
and guidelines are formulated keeping in mind the
limitations and socio-cultural background of these
countries. Some real examples where these analyses
have been utilized in the past are:
1 . R i z z o et al., c o l l e c t e d e c o n o m i c d a t a i n a
nonrandomized prospective study of 132 cancer
patients undergoing bone marrow transplantation
(BMT) on inpatient versus outpatient basis. They
interviewed survivors at their one-year BMT
anniversary using self-administered questionnaires
and observed similar out-of-pocket costs in both
groups and concluded that outpatient BMT does
not necessarily shift costs to patients, as has been
previously hypothesized. [13]
2. Sculpher et al., in a prospective RCT collected
cost data in patients undergoing colorectal cancer
therapy with raltitrexed versus fluorouracil plus
folinic acid (5-FU + FA). They asked the patient
about travel time, mode of travel, number of
visits, etc., and computed the implied costs
of the time associated with treatment. Those
randomized to 5FU + FA incurred a median
of GBP 136 higher travel plus time costs per
patient, as compared to the raltitrexed group.
Thus, if costs are significantly different for one
treatment versus another, they can perhaps affect
compliance of the patient and hence effectiveness
of the treatment. [14]
3. S h i re m a n et al., re p o r t e d t i m e c o s t s f o r
women being screened for cervical cancer. A
questionnaire asking for travel time to the clinic,
waiting time, and time spent being screened was
used to collect information. Assigning monetary
costs by using a variety of wage rates to the
average 1.75 hours women spent during a single
screening resulted in finding that patients’ time
costs were up to 25% of the screening costs.[15]
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Shortcomings in Economic Analyses
Cost-Effectiveness Analysis has provoked criticism
at times and has continued to be the subject of
debate. The case of Oregon illustrates the problems
that arise when policy makers attempt to use CEA.
Faced with the problem of providing medical care
to its low-income population within the constraints
of its Medicaid budget, the Oregon Health Services
Commission tried to set priorities for covered
services. From 1990 to 1991, the commission
generated a list of “condition-treatment” pairs
ordered by their cost-effectiveness ratios. The list
was withdrawn after its public criticism at that time,
and has continued to be the subject of debate about
the role of CEA.
Some have observed that CEA ratios do not reflect
issues outside healthcare like distributive justice
or societal and cultural values. As an example,
individuals’ right to privacy has blocked compulsory
testing for HIV except in special situations like
military, although diagnosis and treatment can be
delayed. Thus, it is seldom appropriate to apply
CEA mechanically. Unlike other areas of cancer
outcome measures (e.g., overall survival time,
toxicities, failure pattern), standardized tools are
lacking, leading to a wide variation in computation
and interpretation of cost results across studies.
Thus, results can often impede rather than facilitate
the understanding of economic evaluation measures.
Hence, studies of the same intervention can produce
very different cost-effectiveness (C/E) ratios and it
may be suspected that CEA can be manipulated to
support almost any conclusion. Finally, although
the CEA literature has grown enormously in recent
years, many interventions have not been evaluated.
The best CEA available suggests that the current
healthcare resources fall short of providing the best
health care possible.
What we Need Now?
Standardization of methods is essential for valid
c o m p a r i s o n s o f C/E ratios as comparability is
essential if CEA is to help physicians and decision
makers evaluate economic impact and choose among
alternatives. Otherwise, it may complicate the users'
ability to find, interpret, and adapt information. [16]
Measuring tools are required to promote accuracy,
c o m p re h e n s i v e n e s s , a n d c o m p a r a b i l i t y i n c o s t
calculations.
Along with C/E ratios, the CEA should present
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t h e b a c k g ro u n d i n f o r m a t i o n of elements that
make up cost and effects; types and magnitude of
costs, who is helped or harmed, and up to what
extent. Analysis boundaries should be described,
explaining the extent to which the relevant benefits
and harms are included. Descriptors of target
population (patients and their families) including
demographic, socio-economic, behavioral, and
clinical characteristics are desirable inclusions. The
elements to include in a CEA report are discussed
below:
Checklist for Reporting Cost Effectiveness Analy-
ses
Framework
• Background of the problem
• General framing and design of the problem
• Target population for intervention
• Description of comparator programs
• Boundaries of the analysis
• Time horizon
• Statement of perspective of the analysis
Data and methods
• Description of event pathway
• Identification of outcomes
• Description of model used
• Modeling assumptions
• Diagram of event pathway
• Software used
• Complete description of estimates of effectiveness,
resource use, unit costs, health states, and QOL
weights and their sources
• Critique of data quality
• Statement of year of costs
• Statement of methods used to adjust costs for
inflation
• Statement of type of currency
• Source and methods for obtaining expert judgment
• Statement of discount rates
Results
• Results of model validation
• Reference case results: total costs and effectiveness,
incremental costs, and effectiveness
• Results of sensitivity analysis
• Other estimates of uncertainty
• Graphical representation of cost-effectiveness results
• Aggregate cost and effectiveness information
Discussion
• Summary of reference case results
• Discussion of analysis assumptions having important
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ethical implications
• Limitations of the study
• Relevance of study results for specific policy
questions and decisions
• Results of related cost-effectiveness analyses
• Distributive implications of an intervention
In the Indian context, a majority of the cancer treatment
costs fall upon the patient and family members. Hence,
it is imperative to carry out economic cost analyses, since
the financial impact is rarely addressed.
Conclusion
Economic measures are important for cancer outcome
research. The heightened awareness in recent years to
live within budgets in the health sector would seem
to create the perfect climate for CEA. Increasingly,
the costs of care will need to be balanced against
the effectiveness of care, and to do this balancing we
need to have accurate models of the cost of cancer
interventions. In practice, however, little consensus
exists regarding the best ways to define and collect
such information, and this has led to wide variation
in how costs are computed and interpreted across
studies. As a consequence, development of standardized
questionnaires and data collection forms should be
the top agenda of cancer economic research. Perhaps
one day cancer researchers will have validated and
standardized data collection tools to gather patient cost
data in the same way that standardized quality of life
instruments are becoming available today. Until then,
the cancer physicians should carry out cost analysis
even as a small component of the treatment regimen
response, toxicity, and survival data collection. Cancer
patients in India are being increasingly taxed by high
technology-based treatment and expensive drugs. The
reporting of the economic burden on the patients
and their families will make the cancer care process
qualitative and transparent.
References
1. Boyle P. The globalization of cancer. Lancet 2006;368:629-30.
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4. Fryback DG, Craig BM. Measuring economic outcomes of cancer.
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5. Russell LB ., Gold MR, Siegel JE, Daniels N, Weinstein M C . The
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6. Pignone M, Saha S, Hoerger T, Mandelblatt J. Cost-effectiveness
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7. Brown ML. The national economic burden of cancer: An update. J
Natl Cancer Inst 1990;82:1811-4.
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WH. The economic burden of lung cancer and the associated
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12. Hayman JA, Hillner BE, Harris JR, Weeks JC. Cost-effectiveness
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13. Rizzo JD, Vogelsang GB, Krumm S, Frink B, Mock V, Bass EB.
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logic malignancies: Cost saving or cost shifting? J Clin Oncol
1999;17:2811-8.
14. Sculpher M, Palmer MK, Heyes A. Costs incurred by patients
undergoing advanced colorectal cancer therapy. A comparison
of raltitrexed and fluorouraciI plus folinic acid. Pharmacoeco-
nomics 2000;17:361-70.
15. Shireman TI, Tsevat J, Goldie SJ. Time costs associated with
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Source of Support: Nil, Conßict of Interest: None declared.

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