1. In 2003, Medicaid spent $33.7 billion on drugs (19% of national spending for drugs and more than 10% of the Medicaid budget) Medicaid expenditures ($ billions) for outpatient prescription drugs US$ Spend doubled in 4 years 1998-2002 And cancer drugs are a key driver to rising costs

2. Confirmation in Europe: Cancer drugs budgets are doubling each 4 years Costs of anticancer drugs, France: – 2004 = 474 Million Euros – 2008 = 975 Million Euros Perrin S. Therapeutic decision making in oncology. Hospital Pharmacy Europe. 2010 (Sept/Oct);52:36-37 Spend doubled in 4 years 2004-2008

3. The world spends more each year for cancer treatment Data: IMS Global spend on oncology drugs: projected for 2010-12 Spend doubled in 4 years 2004-2008 It is a worldwide problem

4. Cancer drugs are associated with cancer cures! - Timeline of novel cancer drug approval Carin A Uyl-de Groot et al. The Economics of Improved Cancer Survival Rates: Better Outcomes, Higher Costs. Expert Rev Pharmacoeconomics Outcomes Res. 2010;10(3):283-292

5. Association of novel drugs and cancer mortality Carin A Uyl-de Groot et al. The Economics of Improved Cancer Survival Rates: Better Outcomes, Higher Costs. Expert Rev Pharmacoeconomics Outcomes Res. 2010;10(3):283-292

6. Cost of cancer drugs by year of approval Limits on Medicare's Ability to Control Rising Spending on Cancer Drugs Bach P. N Engl J Med 2009; 360:626-633 Cancer drug costs rise 5x faster than other classes of medicine Bach P. NEJM. 2009 Feb 7

7. Cost of treatment for metastatic colon cancer (Schrag D. NEJM. 2004;351:317- 319) Cost of standard therapy has risen from $63 / 8 weeks to £30,675 / 8 weeks: 500-fold rise in a decade Cost of standard therapy has risen from $63 / 8 weeks to £30,675 / 8 weeks: 500-fold rise in a decade

8. Planning for the future: what will happen to costs? USA Office of management and Budget. www.whitehouse.gov/omb medical treatment drives cost inflation far more than the aging population What is the driver for increased spending: ageing populations or medical treatment?

9. When will the health expenditure inflation bankrupt the US economy? 2% point gap: health care affordable only until 2020; – over 75 years, 118.5% of real increase in per capita income devoted to health care (e.g., implausible) 1% point gap: health care is affordable until 2083; – 54% of real increase in per capita income goes to health care – Michael E. Chernew, Richard A. Hirth, and David M. Cutler Increased Spending On Health Care: Long-Term Implications for The Nation. Health Affairs,September/October 2009, vol. 28, Number 5, pp. 1253- 1255. A small effort to control the growth of expenditures NOW can sustain health service development to 2083! Failure to control expenditure now risks collapse within a decade

10. What are policy-makers trying to do?

11. Protect and improve the health of the population Assure access to medical care Achieve efficient use of health care resources They are doing what doctors want to do!

12. The key to the need to understand economics - Money doesn’t always buy life Life expectancy at birth and health spend WHO. The World Health Report 2000 3 fold variation

13. The key to the need to understand economics - Money doesn’t always buy health Relationship between spend and health is not always clear – Disability-adjusted life expectancy relative to health expenditure per capita in USD in 191 WHO Member States, 1999 – WHO. The World Health Report 2000, p43 US Dollars >10 fold variation

14. Cost constraints in cancer treatment: What can nations do?

15. We must accept that ration will occur Rationing occurs either…. 1.by society’s willingness to pay 2.by personal ability to pay USA - one in five families used up all of their savings paying for cancer treatment Cavallo J. The ASCO Post, February 15, 2011, Volume 2, Issue 3

16. European countries - with formal cost-effectiveness approval Adapted and modified from Zentner et al, 2005 society’s willingness to pay is crucial to understand when setting priorities for a universal tax-funded or insurance based health service The UK is not alone in wanting to control costs through formal state mechanisms