Why Curing Cancer Will Boost Productivity

By / 5.7.2014

An article in Forbes trumpets a new approach to actually curing cancer using the immune system.  The article itself, entitled “Is This How We’ll Cure Cancer?” is worth reading, though a healthy dose of skepticism is important.

However, from my perspective, what’s important are the  quotes about cost towards the bottom of the story

“You’re going to see these companies that are going to get crushed by this new environment, despite the fact that health care spending is going to almost double,” Jimenez says. He has a team actively exploring new ways of pricing cancer drugs, in which several medicines are sold for the price of one, or health systems or insurers pay based on how many patients are cured.

The real question is not cost, but productivity. And I don’t mean the productivity of cancer patients, but the productivity of the whole economy.

Right now we have a healthcare system where millions of person-hours, many of them highly skilled,  are thrown into treating and providing palliative care for cancer patients. These skilled person-hours are not available for production or research in other parts of the economy.

A drug that cures a major form of cancer will almost certainly boost what we call “gross medical productivity,” defined as the size of the population divided by the number of healthcare workers.  And rising gross medical productivity will free up skilled labor for other forms of non-healthcare production, which will in turn boost non-health GDP.

So even if a cure for a particular type of cancer seems expensive measured in dollars,  it may seem imminently reasonable when measured in terms of its impact on the nation’s productivity and total output.