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Quantifying the Value of Personalized Medicines: Evidence from COX-2 Inhibitors

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  • Sood Neeraj

    (The University of Southern California, 3335 South Figueroa Street, University Park Campus, UGW-Unit A, Los Angeles, CA 90089, USA)

  • Philipson Tomas J.

    (Harris School of Public Policy, The University of Chicago, 1155 E, 60th Street, Chicago, IL 60637, USA)

  • Huckfeldt Peter

    (The RAND Corporation, 1776 Main Street, Santa Monica, CA 90401, USA)

Abstract

We develop a conceptual framework for estimating the value of personalized medicines. We show that personalizing medicines generates value from two sources. The first is a market-expansion effect by persons who initiate treatment due to reduced pre-treatment uncertainty about the effectiveness or side effects of treatment. The second is a market-contraction effect due to discontinuation of treatment by persons unresponsive to treatment. We apply the conceptual framework to evaluate the value of a predictive test to assess whether patients are at elevated risk for cardiac complications from COX-2 inhibitors. We find that this predictive test would yield an overall value to patients of about $16 billion per year or $1284 per likely patient.

Suggested Citation

  • Sood Neeraj & Philipson Tomas J. & Huckfeldt Peter, 2013. "Quantifying the Value of Personalized Medicines: Evidence from COX-2 Inhibitors," Forum for Health Economics & Policy, De Gruyter, vol. 16(1), pages 101-122, April.
    • Handle: RePEc:bpj:fhecpo:v:16:y:2013:i:1:p:22:n:10
    DOI: 10.1515/fhep-2013-0005
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    References listed on IDEAS

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    Cited by:

    1. Tomas J. Philipson, 2018. "The Economic Value and Pricing of Personalized Medicine," NBER Chapters, in: Economic Dimensions of Personalized and Precision Medicine, pages 9-19, National Bureau of Economic Research, Inc.
    2. Mark Egan & Tomas Philipson, 2016. "Health Care Adherence and Personalized Medicine," Working Papers 2016-H01, Becker Friedman Institute for Research In Economics.

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