The discipline of ‘health economics’ has significantly progressed to become more inclusive, beginning with only cost-benefit analyses of public health programs, such as vaccinations, to evolving into a large area of health technology assessments (HTA). Cost-effectiveness analyses are a routine practice in HTA and are performed virtually for every new health technology. Healthcare industry as well as payers are hugely dependent on the cost-effectiveness analyses to determine the value of new technologies as well as to define their pricing and coverage decision making. (1)

However, ‘affordability’ criterion by the payers has made the costlier options available, thus creating an overall depressed outlook towards healthcare delivery. Moreover, medical innovation happens incrementally, putting additional costs on healthcare systems. These concerns surrounding affordability and financial stability have fuelled the need for new concepts to go beyond ‘price-per-pill’ and incremental cost-effectiveness ratio (ICER). This debate about rising costs of care also opens the discussion about rewarding innovation and sustaining R&D investments while balancing affordability and equitable access to innovation. Moreover, the potential value these new treatments would bring to patient as well as to the society also need to be assessed. (1) It’s time for decision makers to recognize efficient medical strategies in order to choose the right interventions for maximizing the achievable benefits for the patient within the available budgets. It is especially important when the healthcare industry is riddled with arguments regarding risk-sharing and alternative pricing models or the potential impact of radical new approaches like personalized medicine. (1)

The approach of personalised medicine is expected to enhance the patients’ quality of life while also increasing the quality of clinical practice and targeted care pathways. Moreover, it is slated to reduce overall healthcare costs through strategies, such as early-detection, prevention, accurate risk assessments and efficiencies in care delivery. (2) However, there is lack of consensus about the definition of personalized medicine. The Personalized Medicine Special Interest Group of the ISPOR defines it as, “the use of genetic or other biomarker information to improve the safety, effectiveness, and health outcomes of patients via more efficiently targeted risk stratification, prevention, and tailored medication and treatment-management approaches”. (3) Whereas, other definitions emphasize on the aspects of “stratified medicine” among sub-populations defined in different ways, not simply by genomic information, and whose orientation is somewhat less “personalized” but more “population-based”. (4,5)

Findings from many economic evaluations have shown personalized medicine to promise greater efficiency and effectiveness in health care. Many researchers, at both the “macro” and “micro” economic policy levels, have even shown how personalized medicine can help target appropriate patients, and also how this can yield positive net benefit to manufacturers, payers, as well as governments as a whole. These new/revamped economic evaluation methods will help the ecosystem to explore competent approaches that appropriately and successfully value new technologies. (5)

Despite many benefits, the personalized approach faces a wide range of challenges. Consequently, significant evidence on the benefits of this approach have been recently outlined in a joint report by the European Biopharmaceutical Enterprises (EBE) and European Federation of Pharmaceutical Industries and Associations (EFPIA). It provides substantial examples of enhanced efficacy of medicinal treatments, better prevention and prediction of diseases, reduced hospitalisation, thereby decreasing the costs; and more effective and ethical clinical trials. Implementing the policy recommendations from this report will certainly enable an equitable access for patients to such innovative medicines. (6) Furthermore, the manifesto of the EBE-EFPIA Personalised Medicine Working Group aims to emphasize on policy elements for ensuring that personalised medicines and the respective diagnostic tests, also called companion diagnostics, successfully reach patients. (7)

Existing health economic research shows that the approach of personalized medicine can significantly improve effectiveness, eventually reducing costs. Furthermore, biomarker testing may lead to more successful R&D projects. However, the value of so-called bespoke therapies relies largely on the quality of the manufacturer; i.e. adapting to both regulatory and market structures is necessary to encourage the development of personalised medicine. (8)

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  1. Ethgen O, Staginnus U. The future of health economics. Taylor and Francis Group: Routledge. 2017.
  2. Mollette A. Health economics of future therapeutic concepts. DIA Europe 2018.
  3. Faulkner E, Annemans L, Garrison L, et al. Challenges in the development and reimbursement of personalized medicine- payer and manufacturer perspectives and implications for health economics and outcomes research: a report of the ISPOR Personalized Medicine Special Interest Group. Value Health 2012; 15:1162-71.
  4. Kuhn TS. The Structure of Scientific Revolutions. Chicago: University Of Chicago Press, 1962.
  5. O’Donnell JC. Personalized medicine and the role of health economics and outcomes research: issues, applications, emerging trends, and future research. Value Health. 2013; 16(6 Suppl):S1-3.
  6. EFPIA. New EBE-EFPIA study demonstrates benefits of personalised medicine for patients, society and healthcare systems and makes recommendations for equitable access for patients in Europe. July, 2018. 
  7. EBE-EFPIA Set Out Policy Positions in Their Personalised Medicines Manifesto. September, 2017. 
  8. Roediger A. Personalised medicine: Health Economic Aspects. April, 2013. 

Blog written by: Ms. Tanvi Laghate

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