Medical care is expensive-cancer care alone accounted for $35 billion in 1990 . In an era of health care reform, costs and cost-effectiveness estimates are taking on a larger role in the decision to use a new therapy. However, American efforts at quickly evaluating the cost effectiveness of new therapies lag behind the progress in Canada and Australia, where evidence of both clinical effectiveness and cost effectiveness is required before new drugs are allowed to be marketed [2,2a]. In the past 5 years, medical research journals have begun to publish articles on the costs of care of many therapies. However, few of these studies included early assessments of costs of care, especially during phase III trials. Because cost-effectiveness information is typically gathered after phase III trials and FDA approval, physicians have postponed asking the question, "Can we afford this new therapy?" Insurers, formulary committees, physicians, and health maintenance organizations (HMOs) must make policy decisions in the absence of objective data on cost effectiveness.
The cost effectiveness of a new therapy is only one of the concerns that need to be addressed when designing phase III trials. A therapy that is very effective and provides a higher quality of life or long-term survival requires more than a cost-effectiveness analysis. Alternative therapies, especially standard therapies, must also be studied. While studies on costs of care during clinical trials are appropriate to guide the development of more cost-effective therapeutic and supportive care interventions, such considerations should not diminish enthusiasm for investigation of new therapies that may prove very expensive and possibly not cost effective.
In the past year, the Cancer and Leukemia Group B (CALGB) and the Eastern Cooperative Oncology Group (ECOG) have formed task forces to study the economics of cancer therapies. These groups will provide oncologists with economic analyses as well as objective evidence of the clinical benefits and toxicities of new cancer agents. Current efforts are evaluating costs of care and cost-effectiveness of new technical procedures such as laparoscopic colectomy, supportive care such as hematopoietic growth factors, and alternative infusion schedules and chemotherapeutic agents (intermittent higher dose vs continuous infusion lower dose of 5-FU).
This article reviews the methodologic issues that should be considered during the planning phase of phase III clinical trials so that economic analyses can be incorporated. We do not intend to review the field of modeling of clinical trial results. The reader is referred to the review of Smith et al for information in this area , as well as to Drs. Smith and Hillner's article in this supplement.
We address our comments to the following basic questions: How are costs of care and cost effectiveness defined as they pertain to economic analysis? What sources of data should be used? Who should be involved in economic analysis? When should economic analysis be considered? How should the data be collected and for how long of a period of time? Where should these studies be conducted? What are the possible pitfalls in doing economic analyses of phase III clinical trials?
The costs of care can be defined as the economic burden therapy creates in monetary terms. Costs can be broken into two main categories: direct medical costs and indirect costs (see Table 1). Indirect costs include all of the supportive costs to therapy such as lost wages, traveling time, and lost income due to death. Direct medical costs account for resources spent on items such as laboratory tests, antibiotics, radiologic and other diagnostic procedures, and in-home care.
Although indirect costs may account for up to 60% of a family's income, they are rarely included in the economic analysis of phase III trials . Collecting data on indirect costs can be methodologically difficult or even impossible. In addition, many patients are elderly and do not work; hence, their indirect costs differ markedly from those of persons who miss work when receiving time-consuming therapies such as chemotherapy. However, in some cases it is important not to discount indirect costs when viewing the procedure as a whole. This may be especially important in clinical trials that involve patients or family members who lose time from work.
Other costs, including marginal costs, avoidable costs, variable costs, and fixed costs, are also important for economic analyses. The reader is referred to the review article by Bennett et al for in-depth definitions of these terms .
In evaluating costs of care in a clinical trial, results must be generalizable so that cost comparisons can be made among different types of hospitals, health care systems, and even countries. Broad evaluations based on reviews of medical charges have been reported in some studies but are likely to be inadequate for several reasons :
1. Many patients are covered by prepaid plans. Their portion of the medical charge is not representative of the costs. Also, each plan might negotiate a different charge rate for a particular service. Consequently, collecting data from providers on the charges that they bill will produce inaccurate figures. Charges for care may differ significantly even for patients who receive similar care at the same hospital.
2. Many patients accrue very high charges, but hospitals actually collect only a fraction of the bills.
3. Charges for separate departments of a hospital are often set by hospital administrators in such a way that profits from some cost centers subsidize losses from other cost centers.
4. Charges represent local factors such as rent, wages, and costs of ancillary supportive care efforts, which are likely to vary significantly in different geographic settings.
A more accurate method of computing costs of care might be to collect data on "cost drivers." For example, room and board, pharmacy, diagnostics, blood bank, and professional services account for 90% of the costs of autologous stem cell transplantation . To determine the differences between charges and costs, a standard such as the Medicare ratio of costs to charges (RCCs) can be used . To estimate the reasonable and necessary costs of providing care, Medicare uses diagnosis-related groups, as well as detailed annual reports from hospitals. Medicare fees are then determined by use of costs-to-charges ratios rather than the full hospital charge (see Table 1).
The selection of a definition of costs is important for several reasons. In the context of a clinical trial, it may determine the source of data collection. If resources are to be measured, then careful inventories of all resources must be carried out. However, if charges are to be evaluated via the costs derived from ratios of costs to charges, then all bills for each patient must be collected.
After determining the costs of a therapy, its cost effectiveness (or "money for value") can be determined. Many definitions of cost effectiveness are used in analyses of clinical trials. A standard cost-effectiveness analysis takes into account the added years of life a person lives due to the treatment, and is expressed in terms such as dollars per life-years gained (see Table 1).
A cost-utility analysis incorporates factors associated with quality of life during treatment. A utility value can be determined by using patient or provider surveys that incorporate time trade- off questions (ie, how many years of perfect health would you be willing to trade off in order to live a bit longer but in your current state of health?). This value expresses the period of time living with the disease that is equivalent to living a shorter period of time with perfect health. Cost-utility estimates are expressed in dollars per quality-adjusted life years (QALYs) saved, and highlight the importance of improving both the quality of life and the quantity of life with new advances in therapy or supportive care (see Table 1).
Cost-benefit analysis is controversial and not used much in the United States but is worth mentioning. Cost-benefit analysis converts benefits into dollars. For instance, if a lawyer makes $150,000 per year and the cost of a therapy is $100,000 per life-year gained, the cost benefit is $50,000 per life-year. Cost benefit can be markedly different for varying socioeconomic groups. Although placing a dollar value on a year of life is controversial, physicians can use cost-benefit analyses to help determine the benefit of a therapy (see Table 1).
To determine cost effectiveness, cost utility, or cost benefit, two therapies are compared. In a clinical trial, one therapy might be a placebo and the other a new medication, or two existing therapies might be compared-for example, chemotherapy vs allogeneic bone marrow transplantation for acute nonlymphocytic leukemia . Although many phase III clinical trials are based on studies of a new therapy vs a placebo, the relevant economic analysis needs to be based on a comparison of the new therapy vs the market leader (which is never a placebo).