Economic Considerations in Medical Biotechnology
The biotechnology revolution has coincided with another revolution in health care: the emergence of finance and economics as major issues in the use and success of new medical technologies. Health care finance has become a major social issue in nearly every nation, and the evaluation and scrutiny of the pricing and value of new treatments has become an industry unto itself. The most tangible effect of this change is the establishment of the so-called “third hurdle” for new agents in many nations. Beyond the traditional requirements for demonstrating the effi-cacy and safety of new agents, some nations, and many private health care systems, now demand data on the economic costs and benefits of new medicines. Although currently required only in Canada (Blaker et al., 1994) and Australia (Drummond, 1992), meth-ods to extend similar prerequisites are being exam-ined by the governments of most developed nations. Many managed care organizations in the United States now prefer that an economic dossier be submitted along with the clinical dossier to make coverage decisions.
The licensing of new agents in most non-US nations has traditionally been accompanied by a parallel process of price and reimbursement approval, and the development of an economic dossier has emerged as a means of securing the highest possible rates of reimbursement. In recent years, sets of economic guidelines have been developed and adopted by the regulatory authorities of several nations to assist them in their decisions to reimburse new products. As many of the products of biotechnol-ogy are used to treat costly disorders and the products themselves are often costly to discover and produce, these new agents have presented new problems to those charged with the financing of medical care delivery. The movement to require an economic rationale for the pricing of new agents brings new challenges to those developing such agents. These requirements also provide firms with new tools to help determine which new technologies will provide the most value to society, as well as contribute the greatest financial returns to those developing and marketing the products.