Health Care Savings from Personalizing Medicine Using Genetic Testing: The Case of Warfarin

Progress towards realizing a vision of personalized medicine - drugs and drug doses that are safer and more effective because they are chosen based on an individual's genetic makeup - has been slower than once forecast. The Food and Drug Administration has a key role to play in facilitating the use of genetic information in drug therapies because it approves labels, and labels influence how doctors use drugs. Here we evaluate one example of how using genetic information in drug therapy may improve public health and lower health care costs. Warfarin, an anticoagulant commonly used to prevent and control blood clots, is complicated to use because the optimal dose varies greatly among patients. If the dose is too strong the risk of serious bleeding increases and if the dose is too weak, the risk of stroke increases. We estimate the health benefits and the resulting savings in health care costs by using personalized warfarin dosing decisions based on appropriate genetic testing. We estimate that formally integrating genetic testing into routine warfarin therapy could allow American warfarin users to avoid 85,000 serious bleeding events and 17,000 strokes annually. We estimate the reduced health care spending from integrating genetic testing into warfarin therapy to be $1.1 billion annually, with a range of about$100 million to $2 billion.

FDA New Drug Approval Times, Prescription Drug User Fees, and R & D Spending

FDA-approval times have declined significantly since the enactment of the Prescription Drug User Fee Act (PDUFA) in 1992. As a result, present value expected returns to pharmaceutical R&D have likely increased. In the current paper we employ a unique survey dataset, which includes for the first time data on firm-level pharmaceutical R&D. We estimate the effects that FDA-approval times have on R&D investments. Controlling for other factors such as pharmaceutical profitability and cash flows, we find that a 10 percent decrease (increase) in FDA-approval times results in a 1.7 percent in increase (decrease) in R&D spending.Combining this estimate with previous research and publicly available data on industry-level pharmaceutical spending between 1992 and 2001, we conclude PDUFA, and its subsequent renewals, stimulated an additional 13.5 billion in pharmaceutical R&D (2005 U.S.), and has presumably continued to do so since 2001. Recent economic research has shown the social rate of return on pharmaceutical R&D is remarkably high; thus, the social benefits of PDUFA (over and above the benefits of more rapid consumer access) are likely to be substantial.

Productivity, Wages, and Marriage: The Case of Major League Baseball

The effect of marriage on productivity and, consequently, wages has been long debated in economics. A primary explanation for the impact of marriage on wages has been through its impact on productivity, however, there has been no direct evidence for this. In this paper, we aim to fill this gap by directly measuring the impact of marriage on productivity using a sample of professional baseball players from 1871 - 2007. Our results show that only lower ability men see an increase in productivity, though this result is sensitive to the empirical specification and weakly significant. In addition, despite the lack of any effect on productivity, high ability married players earn roughly 16 - 20 percent more than their single counterparts. We discuss possible reasons why employers may favor married men

From Duty to Right: The Role of Public Education in the Transition to Aging Societies

This paper argues that the introduction of compulsory schooling in early industrialization promoted the growth process that eventually led to a vicious cycle of population aging and negative pressure on education policy. In the early phases of industrialization, public education was undesirable for the young poor who relied on child labor. Compulsory schooling therefore discouraged childbirth, while the accompanying industrialization stimulated their demand for education. The subsequent rise in the share of the old population, however, limited government resources for education, placing heavier financial burdens on the young. This induced further fertility decline and population aging, and the resulting cycle may have delayed the growth of advanced economies in the last few decades

Customer Racial Discrimination in the Market for Memorabilia: The Case of Baseball.

Because consumer discrimination can reduce productivity, it is often impossible to tell whether differential productivity is the effect of discrimination or of differential ability. Detailed data for the sports labor market make it possible to separate consumer discrimination from ability. The authors use a unique approach to determine whether the entertainment value of baseball players is related to their race: they examine whether race directly affects the value of a player in the market for baseball cards. In contrast to studies that use salaries, there is no room for owner or coworker discrimination. Their evidence supports the hypothesis of consumer discrimination. Copyright 1990, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.