The Economics of Personalized Medicine: A Model of Incentives for Value Creation and Capture
- PDF / 95,165 Bytes
- 9 Pages / 612 x 792 pts (letter) Page_size
- 75 Downloads / 226 Views
501
The Economics of Personalized Medicine: A Model of Incentives for Value Creation and Capture
Louis P. Garrison, Jr., PhD Professor, Pharmaceutical Outcomes Research and Policy Program, Department of Pharmacy, University of Washington, Seattle, Washington M. J. Finley Austin, PhD Director, Public Policy, Hoffmann-La Roche, Nutley, New Jersey
Key Words Personalized medicine; Value-based reimbursement; Economics of diagnostics; Linked diagnostictherapeutics Correspondence Address Lou Garrison, PhD, Professor, Pharmaceutical Outcomes Research and Policy Program, Department of Pharmacy, Box 357630, University of Washington, Seattle, WA 98195-7630 (e-mail: [email protected]). Presented at DIA Euromeeting, March 9, 2005, Lisbon, Portugal. This research was supported in part by Roche Pharmaceuticals. Dr. Garrison was formerly a Roche employee, and Dr. Austin is currently a Roche employee. The opinions expressed here are those of the authors.
Personalized medicine is a concept promoted as a new paradigm for health care delivery, with particular emphasis on more tightly linking genomics-based diagnostics and therapeutics. Previous analyses focused on the pharmaceutical market; this analysis also addresses the incentives to develop linked genomicsbased diagnostics and the broader public policy implications. Using a standard economic framework of an insurer-payer negotiating reimbursement with manufacturers of an innovative, targeted diagnostic and a companion patented therapeutic, several illustrative hypo-
INTRODUCTION Personalized medicine is a concept recently promoted as a new paradigm for health care delivery in general and for pharmaceuticals in particular. The underlying motivation is the belief that our new knowledge about genomics and genetics—as well as other biomarkers—will allow us to better target therapy for individuals based on their biological characteristics. This innovation could create additional economic value for society in several different ways, most notably by focusing treatment on those patients who are most likely to respond and by avoiding the costs and side effects associated with those who are unlikely to respond. Because such biomarker-based targeting would typically involve a combination of diagnostic (Dx) and therapeutic (Tx) technologies, it is important to understand the incentives to develop these technologies individually and in combination. The purpose of this article is to analyze these incentives and to assess their implications for public policy, particularly related to pricing and reimbursement. The existing relevant literature on pharmacogenetics/pharmacogenomics (PGx) targeting
thetical scenarios are developed. The relative importance of the key economic factors is examined, including whether the reimbursement system is value or cost based, whether the therapeutic is already marketed, the strength of diagnostic intellectual property, and a current year versus longer time frame. The results suggest that health systems reforms that promote value-based, flexible reimbu
Data Loading...
