Tuesday, July 04, 2006

Prize fund and size of client population

by James Packard Love
A system of incentives for drug development that depends upon marketing monopolies rewards greater utilization in a linear way. The costs of drug development are pretty (but not necessarily unlrelated, due to the possibility of larger trials to address issues of adverse effects) to the size of the potential market. HR 417 now has a set-aside for "orphan" diseases, to ensure that they receive more money per measure of benefit, than would diseases that have larger client populations. I have assumed, however, that it might sense to think about the payoff's having a non-linear relationship to the client population, with products with very large client populations receiving less for the marginal patients than products serving small client populations. We now implicitly accept much high reimbursements for products with small client populations (such as gleevec, as opposed to HAART treatment for AIDS), reflecting I think both the notion that we value orphan products and that costs of drug development are largely insentive to patient populations. Jamie


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