Cancer costs are up—but there's more to the story than rising prices, report says

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Global spending on oncology treatments and supportive care drugs hit $113 billion in 2016, according to a QuintilesIMS report.

The cost of treating cancer has increased over the past few years—there’s no denying that. But there’s more to that increase than meets the eye. In other words? It's not just about prices.

Global spending on oncology treatments and supportive care drugs hit $113 billion in 2016, up from $107 billion in 2015. And over the past five years, the total global cost of cancer meds has swelled at a constant annual growth rate of 8.7%, according to a new report from the QuintilesIMS Institute.

That’s significantly higher than the 4.9% constant annual growth rate recorded over the previous five years, Quintiles notes.

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Perhaps unsurprisingly, it’s the U.S. that's accounting for the lion’s share of the costs, at 46%. But it’s not just high price tags on new meds driving the higher bill, Quintiles notes. Better drugs that help patients live longer mean patients stay on therapy longer, too—and that ups the cost of treatment.

“Two-thirds of growth in U.S. oncology costs is attributable to uptake of innovative medicines which have helped improve survival curves,” Evercore ISI analyst Umer Raffat pointed out in a note to clients.

While the U.S. may be eating up the bulk of costs, though, costs are growing at a comparable rate to its 11% in other parts of the world. Europe’s big five markets—France, Germany, Italy, Spain and the U.K.—posted a 2016 growth rate of 10.8% last year, and emerging markets checked in with a growth rate of 8.4%.

With spending rising around the globe, it’s no surprise that drugmakers are going hard in the cancer arena—and spending big money on buys to beef up in that department. Over the last couple of years, AbbVie has doled out $21 billion to buy Pharmacyclics and Pfizer has forked over $14 billion for Medivation, and as rumors swirl that Tesaro could be next up for sale, that trend could very well continue.