The Promise of a Cure: Measuring the Welfare Gain to Hemophilia a Patients From Gene Therapy

Abstract

As pharmaceutical expenditures in the United States continue to rise, many policy-makers are calling for ways to curb healthcare spending. An often-overlooked possibility for better value from pharmaceuticals is the development and promotion of gene therapy. By correcting the genetic basis of disease, gene therapy can eliminate recurring prescription drug spending through a single, potentially curative, intervention. Hemophilia A, an inherited blood clotting disorder, has been a target disease for gene therapy proponents for decades due to its genetic cause, high cost of treatment ($500K+ per year) and long-term toll on patients. In this project, I fit a discrete choice demand system to hemophilia A drug consumption data and find demand to be sensitive to drug price, dosing frequency, and efficacy in reducing bleeds. I then use the fit model to simulate gene therapy’s market entry into the therapeutic space. I project that gene therapy will become the most popular treatment for hemophilia A, capturing 34% of the market and increasing total consumer surplus by $436M per annum or 25% of current spending. The substantial size of these welfare gains suggests a role for gene therapy in producing better treatment outcomes for patients and long-term cost savings for society.