The five-year relative survival rate from all malignant cancers increased from 50.0% in 1975-1979 to 62.7% in 1995. This increase is not due to a favorable shift in the distribution of cancers. A variety of factors, including technological advances in diagnostic procedures that led to earlier detection and diagnosis, have contributed to this increase. This paper?s main objective is to assess the contribution of pharmaceutical innovation to the increase in cancer survival rates. Only about one third of the approximately 80 drugs currently used to treat cancer had been approved when the war on cancer was declared in 1971. The percentage increase in the survival rate varied considerably across cancer sites. We hypothesize that these differential rates of progress were partly attributable to different rates of pharmaceutical innovation for different types of cancer, and test this hypothesis within a ?differences in differences? framework, by estimating models of cancer mortality rates using longitudinal, annual, cancer-site-level data based on records of 2.1 million people diagnosed with cancer during the period 1975-1995. We control for fixed cancer site effects, fixed year effects, incidence, stage distribution of diagnosed patients, mean age at diagnosis, percent of patients having surgery, and percent of patients having radiation. Overall, the estimates indicate that cancers for which the stock of drugs increased more rapidly tended to have greater increases in survival rates. The estimates imply that, ceteris paribus, the 1975-1995 increase in the stock of drugs increased the 1-year crude cancer survival rate from 69.4% to 76.1%, the 5-year rate from 45.5% to 51.3%, and the 10-year rate from 34.2% to 38.1%. The increase in the stock of drugs accounted for about 50-60% of the increase in age-adjusted survival rates in the first 6 years after diagnosis. We also estimate that the 1975-1995 increase in the lagged stock of drugs made the life expectancy of people diagnosed with cancer in 1995 just over a year greater than the life expectancy of people diagnosed with cancer in 1975. This figure increased from about 9.6 to 10.6 years. This is very similar to the estimate of the contribution of pharmaceutical innovation to longevity increase I obtained in an earlier study, although that study was based on a very different sample and methodology. Since the lifetime risk of being diagnosed with cancer is about 40%, the estimates imply that the 1975-1995 increase in the lagged stock of cancer drugs increased the life expectancy of the entire U.S. population by 0.4 years, and that new cancer drugs accounted for 10.7% of the overall increase in U.S. life expectancy at birth. The estimated cost to achieve the additional year of life per person diagnosed with cancer?-below $3000-?is well below recent estimates of the value of a statistical life-year. We are unable to measure quality-adjusted life-years (QALYS), but if new cancer drugs increased the quality of life as well as delayed death, the increase in QALYS is not necessarily less than the increase in life expectancy. This paper is closely related to another recent paper of mine, "The impact of new drug launches on longevity: evidence from longitudinal disease-level data from 52 countries, 1982-2001" (http://www.nber.org/papers/w9754) I could present that paper instead, or a combination of the two papers.
