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Competing with precision: incentives for developing predictive biomarker tests

Author

Listed:
  • Brekke, Kurt R.

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Dalen, Dag Morten

    (BI Norwegian Business School)

  • Straume, Odd Rune

    (University of Minho and University of Bergen)

Abstract

We study the incentives of drug producers to develop predictive biomarkers, taking into account strategic interaction between drug producers and health plans. For this purpose we develop a two-dimensional spatial framework that allows us to capture the informational role of biomarkers and their effects on price competition and treatment choices. Although biomarkers increase the information available to prescribers, we identify an anticompetitive effect on the prices set by producers of therapeutically substitutable drugs. We also nd that better information about each patient s most therapeutically appropriate drug does not necessarily lead to more efficient treatment outcomes.

Suggested Citation

  • Brekke, Kurt R. & Dalen, Dag Morten & Straume, Odd Rune, 2022. "Competing with precision: incentives for developing predictive biomarker tests," Discussion Paper Series in Economics 6/2022, Norwegian School of Economics, Department of Economics.
    • Handle: RePEc:hhs:nhheco:2022_006
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    References listed on IDEAS

    as
    1. Bardey, David & Jullien, Bruno & Lozachmeur, Jean-Marie, 2016. "Health insurance and diversity of treatment," Journal of Health Economics, Elsevier, vol. 47(C), pages 50-63.
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    4. Brekke, Kurt R. & Canta, Chiara & Straume, Odd Rune, 2016. "Reference pricing with endogenous generic entry," Journal of Health Economics, Elsevier, vol. 50(C), pages 312-329.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Pharmaceutical markets; Precision medicine; Therapeutic competition; Predictive biomarkers;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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