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Every extra £13000 (€17500; $25700) spent each year per patient in England on cancer treatment extends an individual life by one year. And for each patient with a circulatory disease an additional £8000 is enough to increase average life expectancy by 12 months.
These are among the findings of a new health economics study (Journal of Health Economics doi: 10.1016/j.jhealeco.2007.12.002).
“These results challenge the widely held view that healthcare spending has little marginal impact on health,” said Peter Smith, one of the authors, from the Centre for Health Economics at the University of York. “Our estimates suggest that, relative to received wisdom, the marginal cost of a life year saved is quite low.”
The economists say that one of the most important and unresolved issues in health policy is quantifying how much is produced by additional spending on health care in terms of improved outcomes for patients.
In the study the authors used primary care trusts’ programme budgets, recently developed in English trusts, which include the amounts spent on 23 broad areas of health care or “programmes.” The big advantage of the data is that they allow the relationship between local programme spending and associated disease specific outcomes to be examined.
The report says that, across England as a whole, annual NHS expenditure per person is £1183. One of the largest elements is expenditure on primary care, which accounts for £127 per person. Two other categories have an expenditure level of over £100 per person: mental health, at £145 per person, and circulation problems, at £122 per person.
In the study the economists used programme budgeting data prepared by primary care trusts to look at cancer and circulatory diseases. They produced an expenditure equation and a health outcomes equation, enabling them to establish the link between increased spending by primary care trusts and life expectancy in each trust’s population.
Applying the equations to the two programme areas showed that the cost of a life year saved is about £13100 for cancer and about £8000 for circulatory diseases.
“There is clear evidence that expenditure on circulatory disease yields greater benefits in terms of life years than expenditure on cancer,” says the report. “This is to be expected. Recent developments in circulatory drug therapies, especially statins, are acknowledged to be highly cost-effective. Furthermore, a substantial element of cancer expenditure is devoted to palliative care, the benefits of which are unlikely to be measured to any great extent in increased life expectancy.”
The authors add, “From a policy perspective, these results can help set priorities by informing resource allocation across programmes of care. They can also help health technology agencies decide whether their cost-effectiveness thresholds for accepting new technologies are set at the right level.”