Oral Chemotherapy for Colorectal Cancer: Some Economic Considerations

January 2, 2001

In the formal medical curriculum, little has been provided to prepare the clinician for an understanding of the economics of health care. The questions are often far more complicated than they initially appear to be, and the

ABSTRACT: In the formal medical curriculum, little has been provided toprepare the clinician for an understanding of the economics of health care. Thequestions are often far more complicated than they initially appear to be, andthe techniques and terminology used in evaluation of these questions are oftenforeign to many health-care providers. This brief essay, written by an authorwho confesses to being an economic layman, will attempt to discuss and clarifysome terms and techniques used in the economic analysis of health care. In thatcontext, and recognizing the limitations of the techniques available, an attemptwill be made to address the question of the economic impact of oral fluorinatedpyrimidines on the management of colorectal cancer. [ONCOLOGY 15(Suppl 2):29-32, 2001]


One recent trend in the development of cancer chemotherapyis a move toward oral administration. Many factors are driving this. Some ofthese are realistic and practical, while others appear to be less so. Economicconsiderations are often cited as a reason to pursue development of oralanticancer agents. This implies that overall financial costs of treatment willbe lower if parenteral administration can be avoided. Few if any studies,however, have systematically evaluated the financial impact of oralchemotherapy. As such, there are very few data to evaluate, and this discussionof economic considerations is necessarily general and exploratory in nature.

So What Does It Cost?

The economic impact of a particular chemotherapy will varydepending upon whether it is viewed from the perspective of the patient, thedoctor, the insurer, or the pharmaceutical manufacturer. In attempting tounderstand these costs, it may be useful to step back and define some terms.When we look at costs, we have to consider the direct medical costs, the directnonmedical costs, and the indirect costs of an individual therapy (Table1).

Direct Costs: Direct costs refer to money spent directly onmedical care. When we talk about the direct cost of chemotherapy, we are talkingabout far more than just the cost of the actual drug. There are costs involvedin the facilities and equipment used to administer the drugs. We need tubing, weneed needles, and we need infusion bags. We need a chair for the patient to sitin and we need a place to put that chair. There are real estate costs for thesquare footage that is needed for chemotherapy storage, preparation, andadministration, whether it is in a doctor’s office or hospital or clinic.Then, there are labor costs (physicians, nurses, technicians, secretaries,support staff, facility maintenance, etc.). There are also nursing costsinvolved in the follow-up of the patients, and so on. These are the direct costsof chemotherapy. In our current environment, most of these direct costs forchemotherapy are largely borne by third-party payers.

 Indirect Costs: Indirect costs of chemotherapy are much moredifficult to identify. An example would be the costs incurred because thepatient does not have the same earning potential that he or she once did. Inaddition, their caregivers must expend considerable time and effort in bringingthem for chemotherapy treatments and other medical interventions, and so thefamily caregivers encounter lost wages as well. These costs are absorbed largelyby the patient and by society in terms of the lost productivity of the patient.These indirect costs, while potentially quite substantial, are rarely taken intoaccount from the physician or third-party payer’s point of view, yet they maybe of paramount importance to the patient.

Nonmedical Direct Costs: Nonmedical direct costs are thecosts that the patient directly incurs as a result of the treatment, but are notdirectly due to the treatment itself. These include the costs of transportation,parking, childcare, and meals while making these trips for treatment, etc. Suchcosts are directly related to the length and number of office or hospitalvisits. They are difficult to quantitate, and are largely absorbed by thepatient. They also do not figure into most economic analyses, yet from a patient’spoint of view, they may be an enormous burden.

Estimating the Cost of Chemotherapy for Colon Cancer

For the purposes of this discussion, the direct medical costs ofparenteral vs oral treatment will be considered. Drug prices used in thisestimation are the currently published average wholesale price (AWP). These maynot necessarily reflect actual prices paid, but serve as a useful approximationfor comparison purposes.

For parenteral 5-fluorouracil (5-FU), a 5,000-mg vial sells for$28.70. The AWP for leucovorin is $85.75 for 350 mg, which translates toapproximately $0.245 per mg. For the purposes of this analysis, let’s look ata hypothetical patient who has a body-surface area of 2 square meters (2.0 m2).Using the Roswell Park schedule of weekly 5-FU at 500 mg/m2 and leucovorin at500 mg/m2 for 6 weeks followed by a 2-week rest, the drug costs (rounded to thenearest dollar) over an 8-week cycle will be $34 for the fluorouracil and $1,470for the leuco-vorin (500 mg/m2 ´ 2.0m2 ´ $0.245/mg ´6 doses = $1,470).(This is assuming a large practice with bulk usage of leucovorin; otherwise, theactual leucovorin cost will be the cost of three vials, or $257 per week, or$1,542 per cycle). Thus, in this hypothetical case, the total chemotherapy costfor 5-FU plus leucovorin works out to $1,504 for the 8-week cycle.

If the leucovorin dose is reduced to 20 mg/m2/week, then theleucovorin dose works out to $10 per dose, or $60 per 8-week cycle. If we chooseinstead to skip the leucovorin and use a protracted infusion of 300 mg/m2 of5-FU daily, over the same 8-week period, the drug cost would be $193.

Recall, however, that, as we discussed, the direct costs includemore than drugs alone (not to mention that there are other drugs, such asantiemetics, to be considered). The costs of drug administration varyconsiderably, but the Medicare-allowable drug administration charges can serveas a useful barometer for comparisons.For example, if 5-FU is given by a brief (< 1 hour) infusion, as is typicalfor lower doses of leucovorin, then the allowable charge is $82.51 (CPT code96410, chemoinfusion, first hour). If the leucovorin is given over 2 hours, asis done in some centers with the500 mg/m2 dose, then the charge increases to $144.60 per week, or $867.60 overthe 8-week cycle.

Rental charges for ambulatory pumps or cost of disposable onesvary considerably, but usually bring the cost of protracted 5-FU chemotherapy tothe range between the high-dose and low-dose leucovorin regimens.

Costs of Oral Fluorinated Pyrimidine Therapy

At the time of this writing, capecitabine (Xeloda) is the onlyoral fluorinated pyrimidine on the market in the United States, so it is theonly one for which we have any actual cost data. The AWP of a 500-mg tablet ofcapecitabine is $6.40. Using our hypothetical 2.0 m2 patient, and therecommended dose of 2,500 mg/m2/day for 14 days followed by a 7-day rest, thecost of drug for a 3-week cycle would be $64 per day ´14 days of treatment =$896. Factoring this out over an 8-week period to permit comparisons with the5-FU regimens above, the drug cost of 8 weeks of capecitabine would average outto $2,389.

Professional Costs: Professional costs are a bit harder toanticipate, since so many variables are unknown. How often will doctors’visits be required and how often will nursing interventions be needed? It isclear that oral chemotherapy is complex enough that patients will requireconsiderable education and guidance. This takes professional time, and thatcosts money. Largely unresolved is the question of how much intervention doctorswill think is needed, and what portion of that will third-party payers bewilling to reimburse.

If oral agents turn out to require fewer medical office visitsand interventions than when parenteral agents are used, then these expenses willdrop, but it is far from clear that such a decrease in the need for medicalinterventions can be expected. More real-world experience with the use of oralfluorinated pyrimidines in clinical practice will be needed to better quantitatethe need for doctor and nurse interventions when these oral agents are employedinstead of parenteral administration.

 Oral vs Parenteral Drugs: Drug costs alone for capecitabine(the only oral fluorinated pyrimidine on the market in the United States at thetime of this writing) are higher than for 5-FU. However, some high-doseleucovorin regimens have drug costs that equal or exceed the costs ofcapecitabine. Administration costs and equipment associated with protractedvenous infusion also appear to bring the drug and supply costs to a rangecomparable to that of the oral agent. A full pharmacoeconomic analysis, however,would have to consider all the other direct medical costs discussed previously.In addition to these direct medical costs, the direct nonmedical costs and theindirect costs, which are very difficult to calculate, would need to beconsidered. Furthermore, the anticipated cost of follow-up care would need to beassessed, because the various toxicities and other disease-related events wouldneed to be taken into account.

A full outcomes analysis, therefore, would require considerationof all of these economic factors: the full cost of administration, management,value of benefits in terms of productivity, as well as the clinical outcomes andthe humanistic outcomes. To make it even more complicated, there is tremendousvariability in reimbursement, which makes identification of the final costs verydifficult.

The Costs Would Shift

One financial factor about oral chemotherapy is clear: Oralchemotherapy does shift the cost around. Whether it will truly make a differencein terms of the patient’s outcome remains to be established. For the patient,the out-of- pocket costs, that is, the indirect and nonmedical direct costs, area function of the frequency of the office visits and the hospitalization. Thisis an issue that is very much unresolved in terms of how these drugs are goingto be used on a large-scale basis. If oral chemotherapy truly decreases thenumber of required physician visits and contacts, then the indirect andnonmedical direct costs to the patient should be decreased.

For the physician, the loss of chemotherapy administration feeswould be expected to have a negative economic impact. For the third-party payer,the true costs are unknown, and, depending in large part on how much physicianintervention and supervision will be required, these may, in fact, be moresimilar to parenteral administration than might have been initially thought.

One last consideration that will affect the economic impact oforal chemotherapy agents is the changing standards for treatment of colorectalcancer. Combination regimens involving irinotecan (Camptosar), or possiblyoxaliplatin, are becoming widely used in the treatment of colorectal cancer.Combinations of oral plus parenteral chemotherapy are certainly likely toincrease overall treatment costs. Parenteral irinotecan or oxaliplatin, forexample, plus an oral fluorinated pyrimidine, would have the costs of theparenteral administration in terms of the physician, nursing, and technicalfees, etc., in addition to the increased costs of the newer oral compound.

To further cloud the issue, oral formulations of irinotecan andother agents are being developed. How these oral agents will affect the use oforal fluorinated pyrimidines is unknown at this time.


The cost and the potential value of the oral chemotherapies arebased on multiple considerations. It would appear that if the driving force foruse of these agents is a monetary one, that such a driving force might requirecloser analysis.

As outlined above, the financial waters are very murky, and thefinancial benefits or deficits may be somewhatin the eye of the beholder. The actual costs and actual benefits, and the degreeto which these agents are going to be used in general practice, remain to bedetermined.

Questions and Answers

John Marshall, MD: One of the things private practicingphysicians are concerned about with oral therapy is not just the lost revenue ofinfusions but the continuing costs to pay staff to educate and monitor patients.That is where the gap is. If you are giving a lot of oral agents, you still haveto employ someone to educate, train, and monitor the patients.

Leonard Saltz, MD: These are very major concerns—chemotherapyadministration, technical charges, nursing expertise, and the degree to whichnursing input has created a safety net in a lot of the clinical developmenttrials with oral chemotherapy. We certainly have a lot of oral agents underdevelopment in our institution, and the patients are very closely monitored.That costs time and money. How that will translate in the real world, we do notknow yet.

Daniel Haller, MD: I think that overall a lot of thepharmaceutical firms are interested in data on the impact of oral drugs on thetypical practice. We use these drugs either in standard treatment or one of theexperimental protocols. The nurse that works with me actually keeps a log ofevery phone call so she can justify her time spent. The patients on oraltherapies have a disproportionate number of phone contacts and adisproportionate number of sporadic office visits to evaluate things that aredifficult for them to articulate over the phone. Patients on clinical trials, onthe whole, tend to be a little bit better educated. I think that the ease oforal therapies has been overestimated. The initial thought was that these wouldbe easy and patient friendly therapies and everyone would love them.