a16z Podcast a16z Podcast: The Economics of Expensive Medicines
May 30, 2019
Andrew Lo, an MIT economist with a focus on healthcare economics, joins Jorge Conde to unravel the intricate world of pricey gene and cell therapies. They discuss the concept of treating payments for these innovations like a 'mortgage for a cure,' examining who pays and the potential system overload. The conversation explores the paradoxes of drug discovery, the promise of combination therapies, and how healthcare markets might operate like biological systems, revealing a dynamic interplay between economics and medicine.
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Gene Therapy as a House
- View gene therapy's value like a house purchase: it's a lifetime of health.
- This contrasts with chronic treatments, which are like renting health.
Mortgage for a Cure
- Think of payments for gene therapy as a 'mortgage for a cure'.
- Amortize payments over the patient's life, shifting responsibility between insurers.
Cure Valuation Challenge
- Agreeing on a cure's value is difficult; patients, society, and payers have different perspectives.
- Unlike a house, a cure's value is subjective and harder to determine.