Economic Considerations in Medical
Biotechnology
INTRODUCTION
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.
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