Cancer Econometrics

Interesting paper measuring the option value

One key benefit new cancer treatments is not only that they improve survival, but also–in areas with a lot of treatment innovation–they that they allow some patients to live to receive the next treatment advance.  Although this concept may make sense intuitively, it is not clear how one could quantify this value.

This is the problem that a paper by Thornton Snider et al. (2017) attempts to address.  Using data from SEER and clinical trials, they examine a novel immuno-oncology treatments for renal cell carcinoma (RCC) and both squamous and nonsquamous non-small cell lung cancer (NSCLC).

To estimate the conventional value of nivolumab, survival with the pre-nivolumab standard of care was compared with survival with nivolumab assuming no future innovation. To estimate the option value of nivolumab, long-term survival trends in RCC and squamous and nonsquamous NSCLC were measured in SEER to forecast mortality improvements that nivolumab patients may live to see.

Using this approach, they find:

Compared with the previous standard of care, nivolumab extended life expectancy by 6.3 months in RCC, 7.5 months in squamous NSCLC, and 4.5 months in nonsquamous NSCLC, according to conventional methods. Accounting for expected future mortality trends, nivolumab patients are likely to gain an additional 1.2 months in RCC, 0.4 months in squamous NSCLC, and 0.5 months in nonsquamous NSCLC. These option values correspond to 18%, 5%, and 10% of the conventional value of nivolumab, respectively.


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