Appendix Y โ ๐ Economic Value: Medical Progress
Estimating the Economic Value of Accelerating Medical Progress Through New Therapies
Introduction
Understanding the economic value of new therapies is essential for evaluating the impact of accelerating medical progress. This article explores:
- The average economic value of a new therapy.
- The total annual value based on the average number of new therapies approved each year.
- An estimation of the potential value created by accelerating medical progress by 80X.
Average Economic Value of a New Therapy
The value of a new therapy can be assessed through market performance and societal benefits:
- Market Valuation: Research estimates the average value of a successful new drug at $1.62 billion.
- Development Costs: Drug development costs range from $314 million to $4.46 billion depending on therapeutic area and clinical complexity.
Annual Value Based on Average Approvals
- FDA Approvals: The FDA approves around 50 new drugs annually.
- Total Annual Value: Multiplying 50 approvals by $1.62 billion yields an estimated $81 billion in economic value per year.
Impact of Accelerating Medical Progress by 80X
What would happen if medical progress accelerated by 80-fold?
- Hypothetical Annual Approvals: 50 new therapies ร 80 = 4,000 new therapies annually.
- Projected Economic Value: 4,000 therapies ร $1.62 billion = $6.48 trillion per year.
Considerations and Context
- Market Saturation: Rapid introduction of therapies could lead to price competition and reduced per-drug economic value.
- Healthcare System Capacity: The healthcare infrastructure would need substantial scaling to manage increased development and distribution.
- Societal Benefits: Beyond direct economic value, accelerated medical progress could lead to improved health outcomes, increased productivity, and reduced long-term healthcare costs.
Conclusion
Accelerating medical progress by 80X could generate $6.48 trillion annually, a dramatic increase from the current $81 billion. While market dynamics and system capacities are important considerations, the potential economic and societal impacts underscore the transformative value of advancing medical innovation.