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Competing with precision: incentives for developing predictive biomarker tests

Kurt Brekke (), Dag Morten Dalen () and Odd Rune Straume ()
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Dag Morten Dalen: BI Norwegian Business School, Postal: BI Norwegian Business School, NO-0442 Oslo, Norway

No 6/2022, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: We study the incentives of drug producers to develop predictive biomarkers, taking into account strategic interaction between drug producers and health plans. For this purpose we develop a two-dimensional spatial framework that allows us to capture the informational role of biomarkers and their effects on price competition and treatment choices. Although biomarkers increase the information available to prescribers, we identify an anticompetitive effect on the prices set by producers of therapeutically substitutable drugs. We also nd that better information about each patient s most therapeutically appropriate drug does not necessarily lead to more efficient treatment outcomes.

Keywords: Pharmaceutical markets; Precision medicine; Therapeutic competition; Predictive biomarkers (search for similar items in EconPapers)
JEL-codes: I11 I18 L13 L65 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2022-03-31
New Economics Papers: this item is included in nep-com, nep-gth and nep-ind
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