Economic and developmental considerations for pharmacogenomic technology

    Authors

    J. A. Vernon; S. J. Johnson; W. K. Hughen;A. Trujillo

    Comments

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    Abbreviated Journal Title

    Pharmacoeconomics

    Keywords

    Economics; Health Care Sciences & Services; Health Policy & Services; Pharmacology & Pharmacy

    Abstract

    The pharmaceutical industry's core business is the innovation, development and marketing of new drugs. Pharmacogenetic (PG) testing and technology has the potential to increase a drug's value in many ways. A critical issue for the industry is whether products in development should be teamed with genetic tests that could segment the total population into responders and non-responders. In this paper we use a cost-effectiveness framework to model the strategic decision-making considerations by pharmaceutical manufacturers as they relate to drug development and the new technology of PG (the science of using genetic markers to predict drug response). In a simple, static, one-period model we consider three drug development strategies: a drug is exclusively developed and marketed to patients with a particular genetic marker; no distinguishing among patients based on the expression of a genetic marker is made (traditional approach); and a strategy whereby a drug is marketed to patients both with and without the genetic marker but there is price discrimination between the two subpopulations. We developed three main principles: revenues under a strategy targeting only the responder subpopulation will never generate more revenue than that which could have been obtained under a traditional approach; total revenues under a targeted PG strategy will be less than that under a traditional approach but higher than a naive view would believe them to be; and a targeted approach will earn the same total revenues as a price discrimination strategy, assuming no intermarket arbitrage. While these principles relate to the singular (and quite narrow) consideration of drug revenues, they may nevertheless partially explain why PG is not being used as widely as was predicted several years ago when the technology first became available, especially in terms of pharmaceutical manufacturer-developed tests.

    Journal Title

    Pharmacoeconomics

    Volume

    24

    Issue/Number

    4

    Publication Date

    1-1-2006

    Document Type

    Article

    Language

    English

    First Page

    335

    Last Page

    343

    WOS Identifier

    WOS:000237233000004

    ISSN

    1170-7690

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