Advances in Cancer Prevention
Open Access

High-risk research; Canadian data; Cancer treatment; Treatment options; Patient utilities; Total benefits

Introduction

The price of cancer drugs has risen, drawing criticism from leading academics. The annual cost of a new cancer medication now routinely exceeds $100 000, and medical bills have become the single largest cause of personal bankruptcy. Al-though some contend that the high cost of drugs is required support re-search and development efforts, the fact re-mains that when costs and revenues are balanced, the pharmaceutical industry generates high profit margins [1]. High profits may be justified if novel products offer significant benefits to patients or if they represent significant pharmacologic advances over their predecessors offering new mechanisms of actions and emblematic of high-risk research. We investigated whether novelty of medications or their relative benefits affected drug pricing. First, we provide the first evidence on how medical innovation in cancer treatment affects the labour market outcomes of breast and prostate cancer patients [2]. Second, we assess differences in labour market benefits of medical innovation by patients’ level of education to determine whether economic gains related to medical innovation differ by socio-economic status. To estimate the effect of medical innovation, we use unique Canadian administrative data from several sources [3]. Our findings imply substantial gains from medical innovation in terms of smaller declines in employment and earnings following a cancer diagnosis. These gains are observed almost exclusively among individuals with postsecondary education [4]. Existing evidence on the indirect benefits of cancer treatment innovation typically focuses on a single drug or combination of drugs and attempts to estimate patient utilities. Studies that account for productivity loss due to cancer are limited to a decline in employment due to patients’ death. In contrast, this is the first paper that explicitly estimates the effect of medical innovation on the labour market outcomes of surviving cancer patients, which is an important determinant of the total benefits of new treatment options.

Methodology

We focus on prostate and breast cancer for three reasons. First, they are the most common cancer diagnoses among men and women. Second, survival rates are high compared to other cancer types, so breast and prostate cancer patients are more likely to benefit from improved treatment options in terms of their labour market outcomes [5]. Third, although cancer usually occurs later in life, a substantial fraction of prostate and breast cancer diagnoses occur during working age. Hence, we expect meaningful changes in labour market outcomes in response to improved treatment. Bradley analyse the labour market outcomes of breast and prostate cancer patients, but to our knowledge no study has considered the role of treatment innovation in this context or in the context of any other cancer types. To study the labour market effects of innovation in cancer treatment, we use data linking the Canadian 1991 Census cohort with the Canadian Cancer Registry and individual income tax returns [6]. These data provide a representative sample of individuals diagnosed with breast and prostate cancer in Canada between 1992and 2010. We track the labour market outcomes of these cancer patients before and after their diagnosis and identify a control group consisting of individuals who were never diagnosed with cancer. We capture the cumulative level of medical innovation related to the treatment of breast and prostate cancer by counting the number of drugs that were approved for the treatment of these cancers and by constructing a quality-weighted patent index [7]. To our knowledge, no other study has used patent data to estimate the effect of medical innovation on labour market outcomes. Using data from the treatment group beforehand after the diagnosis and from the control group, we employ difference-in-differences regressions to estimate the impact of cancer diagnosis on labour market outcomes and the degree to which this effect is moderated by medical innovation [8]. To study how the impact of innovation varies by education, we estimate separate regressions for patients with different levels of highest educational attainment, primary, secondary, and postsecondary education. In all regressions, we use Coarsened Exact Matching weights to balance treatment and control group based on observed variables, including pre-treatment labour market outcomes. Our results confirm the existing evidence of negative labour market effects of breast and prostate cancer diagnoses. More important, we find that medical innovation, measured by the number of approved drugs and patents, reduces the negative employment effect of prostate cancer by about 64–70% over our study period [9]. For breast cancer, medical innovation mitigated the negative effect on employment by 63–68%, and this effect was concentrated among women aged 35–44 whose breast cancer diagnoses are typically more severe than the diagnoses of older women [10]. We also find effects of medical innovation on earnings that are only statistically significant in the case of prostate cancer. Our results imply that medical innovation between 1992 and 2010 could be associated with a reduction in the economic cost of a cancer diagnosis by about13,500 and 5,800 dollars per patient and year in the case of prostate and breast cancer, respectively.

Discussion

When estimating separate effects by education, we find that the economic gains of medical innovation arise almost exclusively among patients with postsecondary education. These results are robust to various alternative specifications. We present a comprehensive discussion of our empirical findings. This study contributes to several distinct literatures [11]. First, and most important, we contribute to the small but growing literature on the labour market effects of medical innovation, which focuses on pharmaceutical innovation such as the birth control pill, HIV treatment, antidepressants and hormone replacement therapy, as well as minimally invasive surgery. These studies use the introduction of a specific medical technology as a natural experiment. In contrast, we do not focus on one particular innovation but take a broader view on medical innovation and consider the labour market effects of cumulative medical innovation in cancer treatment over two decades as shown in (Figure 1). We also shed light on the value of medical innovation more generally [12]. Cutler show that increased medical spending is cost-effective in many cases. Murphy and Topel develop a general framework to evaluate the gains from medical innovations and find that the economic benefits of reducing mortality are very large. We contribute to this literature by considering the individual benefits that arise from medical innovation when cancer patients are able to stay economically more active after a diagnosis as shown in (Figure 2). Finally, we contribute to the literature on the nexus among health, education, and economic outcomes [13]. For example, Lundborget and Parro and Pohl show that the labour market effects of health shocks differ by education in Sweden and Chile. Heinesen and Kolodziejczyk find larger negative employment effects among less educated breast and colorectal cancer patients in Denmark. Glied and Lleras-Muney find that declines in mortality due to healthrelated technological progress are largest among highly educated individuals and Lleras-Muneyand Lichtenberg show that patients with more education are more likely to use recently launched drugs. We add to this literature by studying how the interaction between medical innovation and education affects cancer patients’ labour market outcomes. Treatment options for many types of cancer have vastly improved over the last few decades. The combination of surgery and chemotherapy or radiation therapy is one of the major innovations that have lowered cancer mortality rates. Medical innovation has made cancer treatments more effective and reduced their side effects [14]. Zurrida and Veronesi describe important treatment innovations that happened during our sample period, such as breast-conserving surgery in the 1990s. Chemotherapy has become more effective in targeting cancer cells while causing less harm to healthy cells. New drugs that lower the risk of side effects of chemotherapy have also been developed. The majority of new drugs, however, are approved for advanced-stage cancers and not for first-line therapy. Innovations in prostate cancer treatment include the use of hormonal therapy such as luteinizing hormone-releasing hormone analogues since the early 1980s; more recent drugs such as degarelix provide improved and cost-effective treatment options. Several innovations in surgical methods have also provided additional treatment options for prostate cancer. For example, laparoscopic radical prostatectomy is a minimally invasive surgical technique that leads to better postoperative functional outcomes [15]. These improvements in treatment of breast and prostate cancer are also reflected in the innovation measures that we use in our empirical analyses below.

Figure 1: Cumulative medical innovation in cancer treatment.

Figure 2: Developing from medical innovations to patients stay active after diagnosis.

Conclusion

Due to the significance of chemotherapy and hormone therapy in treating these cancers, drugs available for treatment of a specific type of cancer are an important measure of medical innovation. Lichtenberg provides a list of all drugs available for treatment by cancer type along with the year when they were approved in Canada.6 We use this information to calculate the cumulative number of drugs that were available for the treatment of breast and prostate cancer in the year of an individual’s diagnosis.

Acknowledgement

None

Conflict of Interest

None

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