The Future of Drug Development: The Economics of Pharmacogenomics

John A. Vernon and W. Keener Hughen

No 11875, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper models how the evolving field of pharmacogenomics (PG), which is the science of using genomic markers to predict drug response, may impact drug development times, attrition rates, costs, and the future returns to research and development (R&D). While there still remains an abundance of uncertainty around how PG will impact the future landscape of pharmaceutical and biological R&D, we identify several likely outcomes. We conclude PG has the potential to significantly reduce both expected drug development costs (via higher probabilities of technical success, shorter clinical development times, and smaller clinical trials) and returns. The impact PG has on expected returns is partially mitigated by higher equilibrium prices, expedited product launches, and longer effective patent lives. Our conclusions are, of course, accompanied by numerous caveats.

JEL-codes: I10 I11 I12 (search for similar items in EconPapers)
Date: 2005-12
New Economics Papers: this item is included in nep-hea and nep-ino
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Published as Vernon, J., Hughen K., Trujillo, A. The Future of Drug Development: The Economics of Pharmacogenomics. January 2008, Vol. 1, No. 1, Pages 49-59 Expert Review of Clinical Pharmacology

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