Health care providers and financing organizations have become more
aware of the resource constraints on the provision of medical
services, thus increasing the importance of economic evaluations
within the health care industry.[1,2] This has carried over to the
evaluation of new, therapeutic strategies for cancer, which have
traditionally been evaluated exclusively for safety and clinical efficacy.
The National Cancer Institute (NCI) and the American Society for
Clinical Oncology (ASCO) have recognized the growing need for
economic information. To address this issue, they held a joint
economic workshop in 1996.
The outcome of the workshop was the development of a workbook
outlining procedures and guidelines for performing economic
evaluations alongside cancer clinical trials.
As a result of these efforts, guidelines and procedures are currently
being developed and applied to appropriately evaluate both the
economic and clinical impact of new cancer therapies in NCI-sponsored
Within a clinical trial, economic evaluations address the same issues
as clinical investigations, but approach them from a different
perspective. While the clinical protocol may be concerned with the
results of a magnetic resonance imaging (MRI) scan, for example, the
economic protocol will be concerned with the number of MRI scans
conducted during the study period.
Evaluation of resource utilization data often requires specific
assessments that account for the longitudinal nature of economic data.
Costs that can be included in an economic evaluation of cancer care
consist of direct medical, direct nonmedical, indirect, and
Direct medical costs represent costs incurred in providing care, such
as payment for a chemotherapy agent or for seeing an oncologist.
Direct nonmedical costs represent costs incurred because of
illness or the need to seek medical care, and are generally paid
out-of-pocket by patients and their families (eg, transportation or
hotel stays required for medical treatment, or purchase of cosmetic
apparel after disfiguring cancer treatment).
Indirect costs represent costs not associated with transactions
for goods or services, such as morbidity (eg, time lost from work) or
mortality (eg, premature death leading to removal from the work force).
Intangible costs represent the costs of pain, grief, and suffering.
There are four types of analyses performed in clinical economics:
cost-identification, cost-effectiveness, cost-utility, and cost-benefit.
A cost-identification analysis simply assesses the costs involved in
medical care without regard to clinical outcome. Typically, this type
of analysis is conducted for procedures or therapies with equivalent
A cost-effectiveness analysis compares both the costs and
outcomes of an intervention, with effectiveness measured in any
meaningful clinical unit, such as years of life saved or number of
toxic side effects prevented.
When a medical intervention can result in several outcomes, the
outcomes can be assessed in terms of patient utility. Utility is a
measure of the patients preferences for a particular health
state or for the outcome of an intervention. A cost-utility analysis
compares the costs and benefits of care with the benefits measured as
A cost-benefit analysis compares the cost of a medical intervention
with its benefit by measuring costs and benefits in the same units
(usually dollars), allowing for calculation of the ratio of dollars
spent to dollars saved, or the net cost or net savings.
The necessity of associating monetary values with medical outcomes,
such as the cost of a year of life lost or gained, makes a
cost-benefit analysis a difficult measure to use for health care evaluation.
Economic analyses may incorporate the concept of perspective in
assessment of costs. Costs can be considered from the perspective of
the patient (eg, lost work time, travel costs, and copayments); the
employer (eg, lost employee productivity, increased insurance
premiums); the insurance company (eg, payments for physician visits,
hospital stays, clinical procedures, and pharmaceuticals); or society.
The societal perspective takes into account the overall costs of a
treatment to society as a whole. By focusing on all costs stemming
from the treatment choice, the societal perspective has the advantage
of being able to determine true cost savings that accrue to one
member of society as a result of employing a specific treatment.
For example, employing a treatment that shortens hospital stays may
significantly reduce the costs faced by an insurer, while shifting
the financial burden to patients and their caregivers. Use of the
societal perspective allows health care decision-makers to explicitly
consider these tradeoffs.
Kevin A. Schulman, MD, MBA, and William L. Boyko, Jr., PharmD
In prospective analyses of the costs of care in clinical trials, the
development of economic data as endpoints in the trial begins at the
same time the clinical trial is being designed. The initial step
is to construct a study design to establish economic endpoints and
data collection methods. This involves collaboration with the
clinical study investigators and protocol approval from trial
sponsors and individual Institutional Review Boards.
Economic case report forms need to be merged with the clinical case
report forms. Special consideration must be given to the amount of
data requested within the protocol for clinical and economic data, as
the workload of the data collection staff is always a concern in
Final steps involve the generation of a database appropriate for the
study, analysis of the data, and dissemination of the study results.
Data for the economic arm of the study should be collected during
initial inpatient hospitalizations as well as during the follow-up
period. In addition to chart review as a data collection means,
regular telephone interviews can be conducted to obtain data
associated with specific categories of postdischarge resource consumption.
For the hospitalization phase of an economic analysis, costs can be
estimated from patient charges on hospital bills. A hospitalwide
cost-to-charge ratio can be obtained from the Medicare cost report
data, and this information can be used to estimate costs based on
patient charges. Data regarding physician visits can be collected and
assigned CPT-4 codes, which are then assigned costs using the
Medicare fee schedule.[5,6]
For the posthospitalization phase of an economic analysis, costs can
be estimated using a variety of methods. Rehospitalization costs can
be estimated with the same methods used for initial hospitalization.
Costs for chemotherapy should consider both the cost of the drug as
well as physician time. Drug cost can be estimated using
pharmaceutical wholesale prices, while physician time can be valued
using the Medicare physician fee schedule for chemotherapy administration.[5,7]
Costs of radiation therapy can be estimated based on standard
regimens using the Medicare fee schedule and should include both
initial cost components and costs associated with weekly radiation
therapy team visits.
Costs of transfusions (packed red blood cells, white cells, platelet
standard units, platelet apheresed units, fresh frozen plasma, and
whole blood) can be estimated based on proprietary cost data from
Provider costs can be separated into three categories: physicians,
nurses, and home health. Physician visit costs can be estimated using
the Medicare physician fee schedule. Costs associated with both
nurses and home care visits can be estimated by multiplying the
length of the visit by the hourly cost for each nurse or service, respectively.[8,9]
Outpatient surgeries and procedures can be estimated by assigning
each procedure a CPT-4 code and assigning a relevant cost based upon
the Medicare fee schedule.
1. Schulman KA, Yabroff KR: Measuring the cost-effectiveness of
cancer care. Oncology 9:523-533, 1995.
2. Gold MR, Siegel JE, Russell LB, et al: Cost-effectiveness in
Health and Medicine. New York, Oxford University Press, 1996.
3. Eisenberg JM, Schulman KA, Glick HA, et al: Pharmacoeconomics:
Economic evaluation of pharmaceuticals, in Strom BL (ed):
Pharmacoepidemiology, 2nd ed, pp 469-494. Chincester, John Wiley &
4. Mauskopf J, Schulman K, Bell L, et al: A strategy for collecting
pharmacoeconomic data during phase II/III clinical trials.
Pharmacoeconomics 9:264-277, 1996.
5. American Medical Association: Physicians Current Procedural
Terminology, CPT-4 94. Chicago, American Medical Association, 1993.
6. Health Care Financing Administration: Revisions to payment
policies and adjustments to the relative value units under the
physician fee schedule calendar year 1995; final rule. Federal
Register. December 2, 1995.
7. Medical Economics Company, Inc.: The RED BOOK. Montvale, Medical
Economics Data, 1995.
8. American Nurses Association: 1994 average salaries. Hospital and
Health Care Report. Rochelle Park, Wyatt Data Services, April, 1994.
9. National Association for Home Care: Basic Statistics About Home
10. Bennett CL, Smith TJ, George SL, et al: Free-riding and the
prisoners dilemma: Problems in funding economic analyses of
phase III cancer clinical trials. J Clin Oncol 13:2457-2463, 1995.
11. Bennett CL, Waters TM: Economic analyses in clinical trials for
cooperative groups: Operational considerations. Cancer Invest
12. Bennett CL, Golub R, Waters TM, et al: Economic analyses of phase
III cooperative cancer group clinical trials: Are they feasible?
Cancer Invest 15:227-236, 1997.
13. Pajeau MS, Lane D, Bennett CL, et al: Economic analysis of G-CSF
use with intensive treatment for pediatric lymphoma and T-cell
leukemia (abstract). Blood 90(suppl 1):316-I-73a, 1997.
Dr. Schulman is director, Clinical Economics Research Unit,
Georgetown University Medical Center, Washington. Dr. Boyko is a
fellow of the Clinical Economics Research Unit, Georgetown University
Medical Center. Dr. Laver is director, Division of
Hematology/Oncology, Department of Pediatrics, Medical University of
South Carolina. Ms. Pajeau is a research analyst, Chicago VA Health
Care System, Lakeside Division. Dr. Bennett is senior research
associate, Chicago VA Health Care System, Lakeside Division, and
associate professor of medicine, Lurie Comprehensive Cancer Center of
Northwestern University Medical School, Chicago. Mr. Weinberg is a
research analyst at Northwestern University.