The Economic Value and Pricing of Personalized Medicine
Chapter in NBER book Economic Dimensions of Personalized and Precision Medicine (2019), Ernst R. Berndt, Dana P. Goldman, and John W. Rowe, editor (p. 9 - 19)
We discuss the economic value of personalized medicine and the optimal pricing of the combination products involved. We build on previous work of Egan and Philipson (2015) who stress a link between rational adherence in health care and the value of personalized medicine. Personalized medicine converts experience goods to search goods by speeding up the learning process relative to trial and error. This explains the emergence of personalized medicine in cancer care as well as the timing of this emergence. It also predicts greater innovation- and merger incentives from Disneyland style two-part pricing of the combination products.This chapter is no longer available for free download, since the book has been published. To obtain a copy, you must buy the book.
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