Scandinavian Working Papers in Economics
Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics
No 6/2022: Competing with precision: incentives for developing predictive biomarker tests
Kurt R. Brekke (), Dag Morten Dalen () and Odd Rune Straume ()
Additional contact information
Kurt R. Brekke: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Dag Morten Dalen: BI Norwegian Business School, Postal: BI Norwegian Business School, NO-0442 Oslo, Norway
Odd Rune Straume: University of Minho and University of Bergen, Postal: Department of Economics/NIPE, University of Minho, Campus de Gualtar, 4710-057 Braga, Portugal; and, Department of Economics, University of Bergen, Norway,
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
Language: English
47 pages, March 31, 2022
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