The Economics of Personalized Medicine

The Wall Street Journal's Hester Plumridge writes that personalized medicine offers advantages, but also poses challenges for pharmaceutical companies. Giving patients a drug that is known to be effective for their genetic profile not only will lower health care costs and limit adverse reactions, but also, Plumridge says, minimize the number of liability claims filed against pharma companies. The problem, though, is that personalizing medicine will narrow each drug's market, leading to lower sales, but he notes that in a limited market, pharma companies could then charge a higher price.