The Value of Diagnostic Testing in Personalized Medicine

Dana Goldman, Gupta Charu, Vasudeva Eshan, Trakas Kostas, Riley Ralph, Darius Lakdawalla, Agus David, Neeraj Sood, Jena Anupam B. and Tomas Philipson
Additional contact information
Gupta Charu: Precision Health Economics, Los Angeles, CA, USA
Vasudeva Eshan: Precision Health Economics, Los Angeles, CA, USA
Trakas Kostas: Janssen Diagnostics, Toronto, ON, Canada and Philadelphia, PA, USA
Riley Ralph: Janssen Diagnostics, Toronto, ON, Canada and Philadelphia, PA, USA
Agus David: Center for Applied Molecular Medicine, University of Southern California, Los Angeles, CA, USA
Jena Anupam B.: Harvard Medical School and Massachusetts General Hospital, Boston, MA, USA

Forum for Health Economics & Policy, 2013, vol. 16, issue 2, S87-S99

Abstract: Personalized medicine – the targeting of therapies to individuals on the basis of their biological, clinical, or genetic characteristics – is thought to have the potential to transform health care. While much emphasis has been placed on the value of personalized therapies, less attention has been paid to the value generated by the diagnostic tests that direct patients to those targeted treatments. This paper presents a framework derived from information economics for assessing the value of diagnostics. We demonstrate, via a case study, that the social value of such diagnostics can be very large, both by avoiding unnecessary treatment and by identifying patients who otherwise would not get treated. Despite the potential social benefits, diagnostic development has been discouraged by cost-based, rather than value-based, reimbursement.

Keywords: diagnostics; personalized medicine; social value; value-based reimbursement (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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DOI: 10.1515/fhep-2013-0023

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