Expensive Pharmaceuticals for Targeted Diseases

My latest paper, The Price of a Cure: Luxturna and the Economic Dilemmas of Precision Medicine, is in the Journal of Law, Medicine and Ethics. I discuss the economics of the pharmaceutical industry and the special issues that arise with targeted drugs that cure. We are going to get many more of these drugs in the future–more value but smaller patient group–so this paper is timely.

The $850,000 price for the gene therapy Luxturna is often framed as a story of private profiteering from publicly funded science. This paper challenges that narrative. Pharmaceuticals are a hit-driven industry: most projects fail, so the few successes must earn revenues well in excess of their own direct costs if the portfolio as a whole is to attract investment. Precision medicine intensifies this logic through two core economic challenges: (1) the “sticker shock” of one-time cures, which compress decades of value into a single payment, creating a financing problem more than a value problem; and (2) the “targeting dilemma,” in which precisely targeting drugs to smaller patient groups shrinks the market, requiring higher rewards per treated patient to maintain incentives to innovate. Rather than simply controlling prices, the paper proposes a policy toolkit that includes amortizing payments over time, bundling diagnostics with drugs and insurance, and streamlining regulation to lower development costs. The aim is to preserve innovation while expanding patient access.

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