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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 1-22, April.
  • Handle: RePEc:bpj:fhecpo:v:16:y:2013:i:1:p:22:n:10
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    References listed on IDEAS

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    1. Joseph Cook & Graeme Hunter & John Vernon, 2009. "The Future Costs, Risks and Rewards of Drug Development," PharmacoEconomics, Springer, vol. 27(5), pages 355-363, May.
    2. Elisabeth Fenwick & Bernie J. O'Brien & Andrew Briggs, 2004. "Cost-effectiveness acceptability curves - facts, fallacies and frequently asked questions," Health Economics, John Wiley & Sons, Ltd., vol. 13(5), pages 405-415.
    3. Gafni, Amiram & Charles, Cathy & Whelan, Tim, 1998. "The physician-patient encounter: The physician as a perfect agent for the patient versus the informed treatment decision-making model," Social Science & Medicine, Elsevier, vol. 47(3), pages 347-354, August.
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