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Adoption of Personalized Medicine May Yield Significant ROI; Time to Achieve Benefit Varies Among U.S. Health Care Stakeholders, According to Deloitte Report
Date:1/27/2009

Greatest ROI Opportunity for Consumers in Shortest Period of Time

WASHINGTON, Jan. 27 /PRNewswire/ -- As the new administration examines the potential investment in targeted therapies that utilize personalized medicine to improve patient care, a new report released today by the Deloitte Center for Health Solutions found significant opportunities for the adoption of personalized medicine to produce a positive return on investment across key stakeholders in the U.S. health care system. The report, released today at the Personalized Medicine Coalition conference, "Achieving ROI in Personalized Medicine: Barriers, Incentives and Pathways to Successful Commercialization," also found that consumers stand to gain the most significant ROI opportunity within the shortest time period.

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"Personalized medicine is not a promise of the future; it is fast emerging as the current state in diagnostics and therapeutics," said Terry Hisey, vice chairman and U.S. industry leader for Deloitte LLP's Life Sciences industry group. "The U.S. health care system will confront an array of challenges to expedite development to make personalized medicine a reality. Our report examines opportunities to overcome these obstacles, from access to capital to stimulate increased R&D to how to justify coverage by health plans often pressured for short-term savings."

Assessing the barriers and incentives for advancing the adoption of personalized medicine, the Deloitte report, "The ROI for Targeted Therapies: A Strategic Perspective," provides an analysis of personalized medicine's economic value proposition. It examines the importance of ROI for multiple stakeholders -- consumers, diagnostic companies, pharmaceutical and biotechnology companies and payors.

Deloitte developed a framework that factored in the ROI for personalized medicine by examining case studies categorized by two scenarios -- altering the course of therapy or introducing a companion therapy -- across a number of clinical conditions, ranging from HIV/AIDS to breast cancer. The results of the analysis found that the ROI and time to yield benefit varied by scenario across each stakeholder group.

According to the report:

  • The literature review of two clinical scenarios found that all stakeholder groups experienced a positive ROI under certain conditions.
  • Consumers consistently experienced a positive ROI across all scenarios.
  • Payors received only a marginal benefit, and that was after six years.

"Personalized medicine facilitates better care and lower costs, and has the potential to benefit every major stakeholder in the U.S. system -- most importantly, its patients," added Paul Keckley, Ph.D., executive director of the Deloitte Center for Health Solutions.

Highlights of key stakeholder implications found in the report include:

  • Consumers stand to gain the greatest ROI from personalized medicine, often within the first year. However, upfront costs will likely be required because these therapies may be more expensive than conventional treatments. Long-term benefits of personalized medicine create an incentive for adoption, although education will also be critical to help consumers make informed care decisions.

  • Providers will benefit from the new tools offered by personalized medicine to improve patient care; however, reimbursement issues will need to be worked out with payors. Additionally, as providers implement electronic health records, new decision-support tools will help facilitate the adoption of disease-specific standards of practice that can provide real-time data to help prioritize therapies based on potential drug interactions and patient clinical profiles.

  • Payors may want to factor in personalized medicine products into the equation as the employer-sponsored model evolves into a retail health insurance model, providing the opportunity to include customized products. Plans may also benefit as personalized medicine may help slow the advancement of conditions and diseases that, left untreated, result in more expensive acute care interventions and institutional care. Additionally, they may also desire government subsidies, premium tax reductions and abatements to make coverage of personalized medicine more profitable.

  • Policy makers will need to consider incentives for commercial health plans to adopt personalized medicine by leading by example (for example, reimbursing these technologies). They can also consider leveraging the connection between personalized medicine with the Orphan Drug Act, as well as supporting R&D tax credits (or other strategies) for the biotech/pharma industry to encourage its personalized medicine development efforts.

  • Biotech/Pharmaceutical and diagnostic companies may need to consider more virtual R&D to address smaller markets with more targeted therapies to reduce R&D expenditures, as well as collaborate with affiliates, such as academic medical centers and research organizations. The continued trend toward M&A and partnerships may also pick up as personalized diagnostic companies may become prime investments or acquisition targets. New strategies to integrate marketing, sales and distribution with companion diagnostics will need to be considered to improve the cost effectiveness of these activities.

Related Resources:

Profile: Paul Keckley, Ph.D. (www.deloitte.com/us/PaulKeckley)

Full Report: The ROI for Targeted Therapies: A Strategic Perspective (www.deloitte.com/us/TargetedTherapiesROI)

About Deloitte

As used in this document, "Deloitte" means Deloitte LLP and Deloitte Services LP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

About the Deloitte Center for Health Solutions

The Deloitte Center for Health Solutions is a part of Deloitte LLP. For more on the Center and its work, see www.deloitte.com/centerforhealthsolutions.


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