New Insights Into the Cost-Effectiveness of Lung Cancer Treatment

September 1, 1999
William K. Evans, MD, FRCPC

Oncology, ONCOLOGY Vol 13 No 9, Volume 13, Issue 9

Despite growing evidence that patients with advanced non–small-cell lung cancer have improved survival and better symptom control with modern systemic therapy, there is still resistance to the use of chemotherapy because

ABSTRACT: Despite growing evidence that patients with advanced non–small-cell lung cancer have improved survival and better symptom control with modern systemic therapy, there is still resistance to the use of chemotherapy because of the perceived modest magnitude of benefit and concern about its cost. An analysis of the economic burden of care for non–small-cell lung cancer in Canada has revealed that the average cost to provide this care over 5 years is approximately $30,400 (1993 Canadian dollars). A large component of this cost, however, is related to initial diagnosis and in-hospital care, and to terminal care costs. Estimates of most of the commonly used chemotherapy regimens demonstrate that they are cost-effective and amount to less than the $20,000 per quality-adjusted life-year gained that is thought to be acceptable for the early adoption of a health-care intervention in Canada. Some chemotherapy regimens actually have the potential to decrease total health-care costs by reducing the use of acute care hospital beds for terminal care. Combined modality therapy for locally advanced non–small-cell lung cancer has also been shown to be cost-effective. The available evidence is that the cost of treating advanced non–small-cell lung cancer is not excessive, and estimates of cost-effectiveness are well within the commonly accepted range for the adoption of a new health-care technology. [ONCOLOGY 13(Suppl 4):16-21, 1999]


Even in a universal access health- care system as exists in Canada, there are barriers to care for patients with lung cancer. The reasons are undoubtedly multiple; one important issue is the attitude of those physicians who must decide whether to refer a patient with advanced lung cancer for consideration of chemotherapy. Most care providers believe that the prognosis of patients with advanced non–small-cell lung cancer is poor, and many would not accept treatment themselves if they had this disease.[1] The survival of lung cancer patients is related to stage at diagnosis, and at least one-third of Canadian patients present with stage IV disease and another 25% to 30% have locally advanced disease.[2] The median survival for stage III non–small-cell lung cancer is 9 to 14 months and for stage IV, 17 to 33 weeks.[3] In reality, even when the stage at presentation is advanced, current therapies offer potential benefits by relieving cancer-related symptoms and increasing survival.[4-10]

Multiple studies have shown symptomatic improvement in advanced disease.[6-10] In addition, one randomized, controlled clinical trial, incorporating a quality-of-life assessment, demonstrated a significant improvement in quality of life for those patients who received chemotherapy relative to those managed by best supportive care alone.[10,11] These observations all suggest that patients should at least be referred for consideration of treatment. Sometimes a patient won’t be referred because there is concern from physicians, health-care administrators, and insurers about the cost of treatment for advanced and incurable disease. The following information summarizes the evidence for the benefit of systemic therapy in metastatic (stage IV) non–small-cell lung cancer, and then focuses on the cost and cost-effectiveness of chemotherapy for stages III and IV disease. The data demonstrate that chemotherapy for stage IV non–small-cell lung cancer and combined modality therapy for stage III disease are cost-effective treatments that are competitive with commonly used health care interventions.

Evidence for Use of Chemotherapy

There are now eight randomized controlled clinical trials of cisplatin (Platinol)-based chemotherapy in comparison to best supportive care.[10,12-18] Best supportive care has, in general, consisted of the judicious use of radiotherapy in patients with localized cancer-related symptoms, as well as the use of antibiotics and steroids to control infections, cerebral metastases, and hypercalcemia. Almost all of the trials have been small, with approximately 20 to 50 patients per arm. Although the response rate to chemotherapy in metastatic disease has generally been low (range 20% to 25%), there has been a small but consistent increase in median survival time. Those patients receiving best supportive care generally have had a median survival of only 17 weeks, whereas the median survival of those who received chemotherapy has been approximately 24 weeks. Several of the trials[10,12, 15,18] have shown a statistically significant survival advantage. Four meta-analyses have shown a reduction in the hazard ratio for death in chemotherapy-treated patients [19-22]. As demonstrated in the Non–Small-Cell Lung Cancer Collaborative Study, the overall survival advantage at 1 year is 10% in absolute terms.[20]

Five studies of chemotherapy in advanced non–small-cell lung cancer have evaluated symptom improvement in patients undergoing treatment.[6-10] The first of these, reported by Osoba et al in 1985, used a regimen of bleomycin (Blenoxane), etoposide, and cisplatin and yielded a 44% response rate, but a higher rate of symptom improvement.[8] Cough improved in 68% of patients, hemoptysis was relieved in 78%, pain in 68%, dyspnea in 31%, and anorexia in 44%. Subsequent studies by Ellis,[6] Fernandez,[7] Kris,[9] Hardy,[10] and Thatcher[24] have confirmed that chemotherapy yields symptomatic improvement in 60% to 70% of patients.

Billingham has recently reported the results of a quality-of-life study undertaken during a randomized comparison of MIC (mitomycin [Mutamycin], ifosfamide [Ifex], cisplatin), compared to best supportive care.[12] Patients with metastatic disease completed quality of life questionnaires using the European Organization for Research and Treatment of Cancer (EORTC) quality-of- life core questionnaire, as well as the lung module. There was a statistically significant benefit in terms of quality-of-life in the chemotherapy-treated patients over the first 6 weeks of the study.

Estimating the Treatment Cost of NSCLC

With the evidence that chemotherapy produces a survival advantage as well as symptomatic improvement and even benefit in the quality of life of patients with advanced non–small-cell lung cancer, resistance to the idea of offering systemic therapy to medically appropriate patients has diminished. Nonetheless, there remain those who believe that we cannot afford such treatment in a fiscally constrained environment. The fiscal barrier appears to be the last remaining barrier that needs to be dealt with to enable patients with lung cancer to access the current best available care. An understanding of what the costs of care are for patients receiving lung cancer treatment is needed. In Canada, the Health Analysis Modeling Group at Statistics Canada has undertaken a cost analysis of the burden of care for common malignancies, including lung cancer. These cost models are integrated into a microsimulation model of Canadian health called the Population Health Model (POHEM).[25]

The lung cancer component of the Population Health Model incorporates information on histologic cell type (small-cell vs non–small-cell), age, gender, and stage, coupled with clinical algorithms of care and the survival appropriate for stage of disease. It assigns costs according to tumor cell type and treatment options. Multiple databases were accessed to develop the model including the Canadian Cancer Registry at Statistics Canada’s Health Statistics Division. This database provided data on lung cancer incidence, tumor cell type, and patient demographics.

Because staging information was not available from the Canadian Cancer Registry, a retrospective staging study was undertaken by the Alberta Cancer Board and the Ontario Cancer Registry. The stage distribution of cases diagnosed between 1984 and 1985 was entered into all Canadian non–small-cell lung cancer cases. The treatment approaches incorporated into the model of care were those identified from cancer registry data supplemented by responses from a questionnaire sent to all Canadian thoracic surgeons and radiation oncologists. From this information, estimates were made of the proportion of patients who would be treated by a particular treatment approach.

The questionnaire was also used to estimate the average number of treatment fractions and the total dose of radiation used on radiotherapy patients, according to stage of disease. It was assumed that patients with stage IV disease were managed by best supportive care, as this has been the usual care provided to most patients in Canada presenting with metastatic disease. At the time the model was developed, it was estimated that only about 10% of patients with stage IV non–small-cell lung cancer received chemotherapy in Canada.[1]

Comparison of Hospitalization

Statistics Canada’s 1992-1994 Person Oriented Hospital Morbidity Information Database provided the duration of hospitalization for diagnostic work-up and initial treatment for non–small-cell lung cancer. Costs for hospital and outpatient chemotherapy treatment were extracted from an economic analysis of a National Cancer Institute of Canada Clinical Trial (BR.5), which compared chemotherapy vs best supportive care in advanced non–small-cell lung cancer.[25]

A record linkage study was performed in the province of Manitoba for all patients diagnosed with lung cancer in 1990 (approximately 600) to determine if the hospital utilization data from the BR.5 study were still relevant. The study confirmed that patients with advanced non–small-cell lung cancer who received chemotherapy used fewer hospital bed days than those managed by best supportive care and that the difference in the length of hospital stay was similar to that observed in the BR.5 study.[26]

Comparing Costs

Costs were determined in 1993 Canadian dollars and the economic analysis was performed from the perspective of the government as payer in a universal access health-care system. Fees for physician assessments and laboratory and surgical procedures were based on the fees paid in Ontario under its Health Insurance Plan (OHIP). The cost of hospitalization was provided by Statistics Canada (personal communication, Jean-Marie Berthelot, Health Analysis Modeling Group, Statistics Canada, 1997).[27]

The per diem rate for a Canadian teaching hospital in 1992-1993 was $818. Hospital costs for the nonsurgical care of lung cancer cases, including terminal care, were extracted from the economic analysis of the National Cancer Institute of Canada clinical trial of best supportive care vs chemotherapy.

We adjusted these costs from 1984 to 1993 dollars based on the average increase in cost (112.8%) of a tertiary care hospital bed in Canada during that time period.

The economic analysis of BR.5 used the hotel-approximation method, as described by Hull et al.[28] This methodology assumes that certain costs, called hotel costs, are evenly distributed over all inpatient days regardless of the reason for admission. These cost items include overhead, administration, security, housekeeping, maintenance, purchase of general equipment, central supply, portering, dietary and social services, and inpatient records management. The total cost of these items attributable to inpatient facilities on a per annum basis was averaged over all inpatient days to generate a per diem hotel cost.

Inpatient medical care costs were determined from a review of 275 inpatient days for patients treated on a medical ward at Princess Margaret Hospital during a trial of chemotherapy for lung cancer.[29] Medical care costs included the costs of nursing care, ward supplies for a typical ward treating lung cancer patients, pharmacy (excluding chemotherapy costs), laboratory, diagnostic radiology, and physician services. Medical care costs were added to the hotel costs to arrive at an average cost of $307 per day (1984 Canadian dollars) for nonsurgical inpatient care of lung cancer patients. We adjusted these costs to 1993 dollars, which resulted in an inpatient cost of $653.71 per day.

Similarly, the cost of clinic visits for chemotherapy and radiotherapy assessment was determined using the hotel-approximation method. Chemotherapy costs included the acquisition cost of chemotherapy and antiemetic drugs, the cost of drug preparation by pharmacy and administration by nursing staff, and the laboratory investigations necessary to monitor patients during chemotherapy. Staff at the Ottawa Regional Cancer Centre measured the length of time (in hours) to prepare and administer the chemotherapy drugs. This time was multiplied by the hourly rate, including benefits. The number and types of physician assessment were determined and costs were assigned based on the Ontario Health Insurance Plan schedule of benefits.

An estimate of the cost of radiotherapy in Canada was made by Wodinsky and Jenkin in 1984.[30] At that time, the cost of a fraction of radiation was estimated to be $125. This cost was inflated by 41.1%, based on the increase in the Consumer Price Index between 1984 and 1993, to provide an estimate in 1993 dollars of $176 per fraction. This assessment included the salaries and benefits of all staff involved in a radiation oncology treatment program, as well as the capital depreciation of equipment and facilities, and administrative costs.

The Cost of Treatment

The average cost for the treatment of non–small-cell lung cancer by stage is summarized in Table 1. On average, the cost to manage a patient with lung cancer over a 5-year period was roughly $30,400 in 1993 Canadian dollars. The cost of managing an individual with stage IV disease from diagnosis through terminal care amounted to almost $28,000, even without the administration of palliative chemotherapy. If the costs of common chemotherapy regimens such as vinorelbine (Navelbine)/cisplatin, etoposide/cisplatin, and vinblastine/cisplatin are evaluated in the model, it can be seen that there would be a small incremental increase in total expenditure in the Canadian health care system for vinorelbine/cisplatin, and a decrease in health system costs for etoposide/cisplatin and vinblastine/cisplatin (Table 2). This decrease in costs results from the fact that chemotherapy administration results in lower hospitalization costs during terminal care, as previously described.

The reasons for this lower number of hospital days are unknown, but may be due to the symptomatic improvement induced by chemotherapy or from the positive patient motivation that can accompany chemotherapy administration. Alternatively, chemotherapy administration may adversely alter the biology of non–small-cell lung cancer, resulting in accelerated disease progression in the terminal phase. Whatever the reasons, there would be a net decrease in health system costs if one of several chemotherapy regimens was used in the management of patients with advanced non–small-cell lung cancer, despite the incremental cost of the chemotherapy drugs and their administration.

Estimating Cost-Effectiveness

When the survival curves associated with chemotherapy are compared to best supportive care, it is possible to estimate the survival gain as the difference between the survival curves. The potential life-years gained are summarized in Table 2 for each of the commonly used chemotherapy regimens. As well, the total cost of chemotherapy administration for these regimens and the cost per life-year gained are shown.

Systemic chemotherapy, even in advanced disease, is remarkably cost-effective. In Canada, an intervention costing $20,000 or less per quality-adjusted life-year is thought to be cost-effective and appropriate for early adoption.[31] Because the results observed in clinical trials may not be generalizable to the population at large, we undertook sensitivity analyses reducing the survival gain by 25% to 50% of that reported in the clinical trials. The cost-effectiveness ratios still remain within the range that would be considered cost-effective in Canada.

The data for gemcitabine (Gemzar) suggest that this agent is also cost-effective as a single agent. There would be a small incremental cost per case if patients were treated with this agent rather than with best supportive care. However, assuming that this agent also reduces the length of terminal hospital care, then the cost-effectiveness of gemcitabine relative to best supportive care would be approximately $632 to $2,796 per life-year gained, depending on the dose used (1,000 to 1,250 mg/m²).

Similarly, paclitaxel (Taxol) would be relatively cost-effective at $4,696 per life-year gained relative to best supportive care. Using generic pricing as has recently become available in Canada, the cost-effectiveness relative to best supportive care is $1,814 per life-year gained. This generic price of $434/100 mg has been used to estimate the cost-effectiveness of paclitaxel/cisplatin relative to etoposide/cisplatin as reported by Bonomi et al for the Eastern Cooperative Oncology Group.[32] Assuming that 3-hour and 12-hour infusions are equivalent and that 3-hour infusions are the least costly approach, the cost per life-year gained was determined to be $30,633.

We have recently undertaken similar studies in patients with locoregional disease to determine the cost-effectiveness of combined-modality therapy in stage IIIB disease based on the Cancer and Leukemia Group B trial reported by Dillman et al.[33] This cost-effectiveness analysis was recently reported.[34] Based on Canadian health-care system costs, combined-modality interventions for locally advanced non–small-cell lung cancer are highly cost-effective. Similarly, the cost-effectiveness of neoadjuvant chemotherapy approaches for stage IIIA disease as reported by Kris[35] and Burkes[36] has been determined and also reported to be cost-effective in the Canadian system.[34]

Cost Components of Lung Cancer Management

Undertaking cost analyses leads to an understanding of the components of costs associated with managing a disease. As shown in the pie chart of the total care costs for all cases of non–small-cell lung cancer over a 5-year period (Figure 1), the major expenditures in the management of lung cancer are initial hospitalization for diagnosis and surgical management (35% of total costs), and terminal care management (46%). The costs of diagnostic tests, staging, surgery, radiotherapy, and follow-up each make up a relatively small proportion of the total care costs. If costs are to be reduced and the health-care system is to be made more cost-effective, the main focus of efforts must be on reducing the use of hospital beds and finding qualitatively better, but less costly, means of undertaking diagnostic assessment and providing terminal care.

Diagnostic workup could be coordinated through ambulatory multidisciplinary assessment units, and post- operative bed stays could be shortened by greater use of in-home nursing care. Terminal care costs in Canada would be reduced if there were a greater spectrum of resources available for patients in the terminal phase of their illness, including home palliative care, hospice care, and palliative care units. All of these alternatives are likely to be substantially less costly, but they are also more likely to meet the real needs of patients.


Although many have made the assumption that the cost of managing non–small-cell lung cancer is too large for a fiscally constrained health-care environment, actual data reveal otherwise. The cost of best supportive care of patients with this disease is at least as great as the cost of administering a number of combination chemotherapy regimens. All chemotherapy regimens examined to date in advanced disease have been shown to be cost-effective in the Canadian health care system, and the analysis is robust, even under the most adverse assumptions of less survival gain and longer hospitalization than was observed in clinical trials.

The delivery of health care to patients with advanced non–small-cell lung cancer could be made more cost-effective by initiatives aimed at minimizing hospitalization during initial diagnosis and treatment, and improving the provision of supportive care and palliative care services to the terminally ill in settings other than the acute care hospital. Such initiatives would make treatment interventions even more cost-effective. However, current practices are sufficiently cost-effective to argue strongly against cost being a barrier to access to chemotherapy for patients with advanced non–small-cell lung cancer.


1. Raby B, Pater J, Mackillop W: Does knowledge guide practice? Another look at the management of non-small-cell cancer. J Clin Oncol 13:1904-1911, 1995.

2. Evans WK, Will BP, Berthelot JM, et al: Estimating the cost of lung cancer diagnosis and treatment in Canada: The POHEM model. Can J Oncol 5:408-419, 1995.

3. Bunn PA: The treatment of non-small-cell lung cancer: Current perspectives and controversies, future directions. Semin Oncol 21(suppl 6):49-59, 1994.

4. Lopez PG, Stewart DJ, Newman TE, et al: Chemotherapy in stage IV (metastatic) non–small-cell lung cancer. Cancer Prevention Control 1(1):18-27, 1997.

5. Okawara G, Rusthoven J, Newman, et al: Unresected stage III non–small cell lung cancer. Cancer Prevention Control 1(2):249-267, 1997.

6. Ellis PA, Smith IE, Hardy JR, et al: Symptom relief with MVP (mitomycin C, vinblastine and cisplatin) chemotherapy in advanced non–small-cell lung cancer. Br J Cancer 71:366-377, 1995.

7. Fernandez C, Rosell R, Abad-Esteve A, et al: Quality of life during chemotherapy in non–small-cell lung cancer. Acta Oncol 28:129-133, 1989.

8. Osoba D, Rusthoven JJ, Turnbull KA, et al: Combination chemotherapy with bleomycin, etoposide, cisplatin in metastatic non–small-cell lung cancer. J Clin Oncol 3:1478-1485, 1985.

9. Kris MG, Gralla RJ, Potanovich LM, et al: Assessment of pretreatment symptoms and improvement after EDAM + mitomycin + vinblastine (EMV) in patients with inoperable non–small-cell lung cancer (NSCLC) (abstract 883). Proc Am Soc Clin Oncol 9:229, 1990.

10. Hardy JR, Nobel T, Smith RE: Symptom relief with moderate dose chemotherapy (mitomycin C, vinblastine, cisplatin) in advanced non–small-cell lung cancer. Eur J Cancer 60(5):764-766, 1989.

11. Cullen MH, Woodroffe CN, Billingham LJ, et al: Mitomycin, ifosfamide and cisplatin (MIC) in non–small-cell lung cancer (NSCLC):2. Results of a randomized trial in patients with extensive disease (abstract 11). Lung Cancer 18(suppl 1):5, 1997.

12. Billingham LJ, Cullen MH, Woods J, et al: Mitomycin, ifosphamide and cisplatin (MIC) in non–small-cell lung cancer (NSCLC):3. Results of a randomized trial evaluating palliation and quality of life (abstract 26). Lung Cancer 18(suppl 1):9, 1997.

13. Rapp E, Pater JL, Willan A, et al: Chemotherapy can prolong survival in patients with advanced non–small-cell lung cancer: Report of a Canadian multicentre randomized trial. J Clin Oncol 6:633-641, 1988.

14. Woods RL, Williams CJ, Levy J, et al: A randomized trial of cisplatin and vindesine versus supportive care only in advanced non–small-cell lung cancer. Brit J Cancer 61:608-611, 1990.

15. Ganz PA, Figlin RA, Haskell CM, et al: Supportive care versus supportive care and combination chemotherapy in metastatic non–small-cell lung cancer. Does chemotherapy make a difference? Cancer 63:1271-1278, 1989.

16. Quoix E, Dietemann A, Charbonneau J, et al: La chimioterapie comportant du cisplatine est-elle utile dans le cancer bronchique non microcellulaire au stade IV? Resultats d’une etude randomisée. Bull Cancer 78:341-346, 1991.

17. Kaasa S, Lund E, Thorud E, et al: Symptomatic treatment versus combination chemotherapy for patients with extensive non–small-cell lung cancer. Cancer 67:2443-2447, 1991.

18. Cellerino R, Tummarello D, Guidi F, et al: A randomized trial alternating chemotherapy versus best supportive care in advanced non–small-cell lung cancer. J Clin Oncol 9:1453-1462, 1991.

19. Cartei G, Cartei F, Cantone A, et al: Cisplatin-cyclophosphamide-mitomycin combination chemotherapy with supportive care versus supportive care alone for treatment of metastatic non–small-cell lung cancer. J Natl Cancer Inst 85:794-800, 1993.

20. Non-Small-Cell Lung Cancer Collaborative Group: Chemotherapy in non-small cell lung cancer: A metaanalysis using updated individual patient data from 52 randomized clinical trials. Br Med J 311:899-909, 1995.

21. Grilli R, Oxman AD, Julian JA: Chemotherapy for advanced non-small-cell lung cancer: How much benefit is enough? J Clin Oncol 11:1866-1872, 1983.

22. Souquet PJ, Chauvin F, Boissel JP, et al: Polychemotherapy in advanced non–small-cell lung cancer: A meta-analysis. Lancet 342:19-21, 1993.

23. Marino P, Pampallona S, Preatoni A, et al: Chemotherapy vs supportive care in advanced non–small-cell-lung cancer. Results of a meta-analyses of the literature. Chest 106(3):861-865, 1994.

24. Thatcher N, Hopwood P, Anderson H: Improving quality of life in patients with non–small-cell lung cancer: Research experience with gemcitabine. Eur J Cancer 33(suppl 1):8-11, 1997.

25. Wolfson MC: POHEM a framework for understanding and modeling the health of human populations. World Health Stat Q 47:157-176, 1994.

26. Jaakkimainen L, Goodwin PJ, Pater J: Counting the cost of cancer chemotherapy in the National Cancer Institute of Canada randomized trial of non–small-cell lung cancer. J Clin Oncol 8:1301-1309, 1990.

27. Statistics Canada: Hospital Statistics: Preliminary Annual Report, 83-241, 1992-1993, Ottawa, Canada: Government of Canada, Supply and Service, Ottawa, Canada.

28. Hull RD, Hirsch J, Sackett DL, et al: Cost-effectiveness of primary and secondary prevention of fatal pulmonary embolism in high-risk surgical patients. Can Med Assoc J 127:990-995, 1982.

29. Goodwin PJ, Feld R, Evans WK, et al: Cost-effectiveness of cancer chemotherapy: An economic evaluation of a randomized trial in small-cell lung cancer. J Clin Oncol 6:1537-1547, 1998.

30. Wodinsky H, Jenkin RDT: The cost of radiation treatment at an Ontario cancer centre. Can Med Assoc J 137:906-909, 1987.

31. Laupacis A, Feeny D, Detsky AS, et al: How attractive does a new technology have to be to warrant adoption of the utilization? Tentative guidelines for using clinical and economic evaluation. Can Med Assoc J 146:77-84, 1992.

32. Bonomi P, Kim K, Cheng A, et al: Phase III trial comparing etoposide (E) and cisplatin (C) versus Taxol (T) with cisplatin–G-CSF (G) versus Taxol-cisplatin in advanced non–small-cell lung cancer. An Eaastern Cooperative Oncology Group (ECOG) trial (abstract 1145). Proc ASCO 15:382, 1996.

33. Dillman RO, Seagren SI, Propert KJ, et al: A randomized trial of induction chemotherapy plus high-dose radiation versus radiation alone in stage III non–small-cell lung cancer. N Engl J Med 323:940-945, 1990.

34. Evans WK, Will BP, Berthelot JM, et al: The cost of combined modality interventions for stage III non–small-cell lung cancer. J Clin Oncol 15:3338-3348, 1997.

35. Kris MG, Martini N, Gralla RJ, et al: Primary chemotherapy in stage IIIA non–small-cell lung cancer patients with clinically apparent mediastinal lymph node metastases: Focus on 5-year survivors. Lung Cancer 9:369-376, 1993.

36. Burkes RL, Ginsberg RJ, Shepherd FA, et al: Induction chemotherapy with MVP (mitomycin C + vinblastine + cisplatin) for stage III (T1-3, N2, M0) unresectable non–small cell-lung cancer. The Toronto experience. Lung Cancer 9:377-382, 1993.