Consumer Surplus from Cancer Drugs
By David Henderson
Between 1988 and 2000, life expectancy for cancer patients increased by roughly four years, and the average willingness-to-pay for these survival gains was roughly $322,000. Improvements in cancer survival during this period created 23 million additional life-years and roughly $1.9 trillion of additional social value, implying that the average life-year was worth approximately $82,000 to its recipient. Health care providers and pharmaceutical companies appropriated 5-19% of this total, with the rest accruing to patients. The share of value flowing to patients has been rising over time.
This is from Eric C. Sun, Anupam B. Jena, Darius N. Lakdawalla, Carolina M. Reyes, Tomas J. Philipson, and Dana P. Goldman, “An Economic Evaluation of the War on Cancer,” NBER Working Paper No. 15574, December 2009.
I couldn’t find an ungated version.
H/T to Free Market Mojo.