Economic challenges and possible policy actions to advance stratified medicine

Abstract

In this article, we present a simple economic model to illustrate the economic challenges facing an oncology stratified medicine developer when scientific discoveries lead to ever smaller, targeted patient populations.We provide preliminary empirical evidence suggesting that at least some developers and their investors are retreating. We then examine the armamentarium of policy actions beyond higher reimbursement that may be employed to enhance the economic incentives for developing stratified medicines. In the absence of significant pricing and total oncology outlay flexibility by payers, our analysis suggests that private sector investment in small oncology segments, and in stratified medicine generally, may not prove economically sustainable, thus endangering the translation of scientific advances into bedside medicines. Beyond increasing reimbursement, decreasing development cycle time and costs, or both, would most directly improve the economic incentives facing developers. By contrast, extending exclusivity periods, or initiating advance market commitments and awarding prizes would likely have less impact and involve greater implementation challenges.