Substantial Return On Investment From Cancer Research Went To Patients And Not Medical Providers: Will Health Care Reform Limit R&D?

From a patient's point of view, the rate of return to R&D investments against cancer is substantial and most of the gain went to the patients and not to health care providers or pharmaceutical companies.

Between 1988 and 2000, life expectancy for cancer patients increased by roughly four years, and the average willingness-to-pay for these survival gains was roughly $322,000. Improvements in cancer survival during this period created 23 million additional life-years and roughly $1.9 trillion of additional social value, implying that the average life-year was worth approximately $82,000 to its recipient. Health care providers and pharmaceutical companies appropriated 5-19% of this total, with the rest accruing to patients. The share of value flowing to patients has been rising over time. These calculations suggest that from the patient's point of view, the rate of return to R&D investments against cancer has been substantial.

From "An Economic Evaluation of the War on Cancer" by Eric C. Sun, Anupam B. Jena, Darius N. Lakdawalla, Carolina M. Reyes, Tomas J. Philipson, and Dana P. Goldman, NBER Working Paper No. 15574, Issued December 2009 (unfortunately gated).

Will health care reform limit future r&d investment and the positive results that come out of research? Or will the r&d aspect of health care remain unchanged or improved?

Milton Recht