Economics Of Personalized Medicine

These days, you will read various articles going round and round about how personalized medicine could possibly prove to be a boon for medical sciences in terms of diagnosis and treatment. While on the other hand you will find many expressing their disappointment about how it hasn’t lived up to its promise pop up.

But a more interesting question is why exactly is personalized medicine such a big challenge?

The reasons might seem obvious — genes are really very complex and it’s hard to get enough people to study any particular target. A disease in which personalized therapy has been touted, probably results from a combination of many genetic mutations and it very difficult to deduce which one to blame.

Once we get to know the mechanics of personalized medicine, various questions tend to arise in our minds, like – will it work for us? If yes, then how? But the most important of them all is whether it really is worth our time and money?

First, let us throw some light on some of the many reasons why personalized medicine seems so tricky;

  • It is very hard to know which mutations are actually causing the disease and which are passive abnormalities that just happen to be present with no connection to the disease at all. For example, most patients with advanced cancer have p53 mutations. Right now, there is no drug that targets p53, and there’s no saying that taking aim at p53 will be useful.
  • Responses to the targeted therapy are often short-lived and it’s not easy to move these into meaningful extensions for healthy survival.
  • When you target one abnormality or pathway, cells might develop another means of growth, a process also known as treatment resistance.
  • Gene sequencing costs about $1,000 per patient, but handling and storage could increase the cost up to $10,000.


Now having stated the above issues, one cannot simply ignore the need to find better ways for patients to take care of themselves and better ways for physicians to help them do this. Today, most of the doctors continue to practice traditional trial-and-error medicine. In contrast, personalized medicine uses much more refined diagnostic testing to identify the exact cause of disease. Then, to select the best treatment and determine the right dosage, doctors who use the personalized medicine approach take into account the patient’s unique physiology, if applicable, of the tumor, virus, or bacteria; and the patient’s ability to metabolize particular drugs.

What really is hindering the transition from trial-and-error medicine to personalized are the following issues-

  • The pharmaceutical industries follow their blockbuster model, which focuses on developing and marketing drugs for as broad a patient population as possible and it discourages the development of therapies that aim at smaller subpopulations and the diagnostic tests that can identify them.
  • A regulatory environment that causes too many resources to be dedicated to phase-three clinical trials and too few to monitoring and assessment after the U.S. Food and Drug Administration has approved a drug.
  • The dysfunctional payment system, which pays physicians for completing procedures and prescribing drugs rather than for early diagnosis and prevention.
  • Physician behavior that is deeply rooted in trial-and-error medicine.


We need to consider and implement some straight forward and some complex solutions to overcome the aforementioned barriers, in a prudent manner.

Transforming pharmaceutical giants:

Big pharmaceutical companies can take three steps to speed the introduction of personalized medicine,

  • Abandon the blockbuster business model,
  • Forge alliances with diagnostic companies, and
  • Step up efforts to communicate the safety and efficacy advantages of targeted therapies.

 In long terms, the targeted drug business model would increase sales and profits for several reasons:

  • Once a highly effective therapy for a disease is available, more of the affected patients visit their physicians, who will then be aware of and willing to provide the treatment.
  • If a pharmaceutical company can demonstrate that its drug lowers the overall cost of treating a subpopulation with a disease, private and government insurers will be willing to pay for the diagnostic test and to pay a higher price for the drug treatment.
  • Since clinical trials now consume more than half the money spent on drug development, focusing clinical trials on targeted subpopulations would decrease their size, duration, and cost.

Given the trends, large pharmaceutical companies have little choice but to change. Those that stick with the blockbuster model face a frustrating future of declining sales and profits.

Role of FDA:

  • The FDA should motivate pharmaceutical companies to develop diagnostics and targeted drugs together.
  • The agency needs to implement practical regulations that continue to encourage industry innovation but maintain high standards of quality. 

Paying for benefit:

The cost of diagnostic tests might be high initially, but that pales in comparison with the potential benefits that tag along with personalized medical care.

When you have an expensive drug, rather than giving it to everybody, the act of individualizing that therapy will actually reduce the overall cost. If we increase the cost but have better outcomes, people are more likely to accept the change.

Changing physicians’ habits:

To get physicians accustomed to personalized medicine, medical schools must focus on genomics, diagnostic testing, and targeted therapies. This change alone will play a critical role in moving personalized medicine into mainstream practice.

The slow progress of personalized medicine in the past years could be discouraging, but it’s not very surprising given how complex of the health care system actually is. Given the higher stakes involved in personalized medicine—people’s lives and the viability of health care systems—it would be unreasonable to expect the widespread adoption of personalized medicine to happen swiftly.


The Many Reasons Why Personalized Medicine Is So Tricky

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