Less price flexibility, more innovation: the market dynamics of targeted therapeutics

An analysis of how the market for high-profile, high-cost drugs differs from that of traditional counterparts is the subject of a new study published by the Washington DC, USA-based think-tank, the American Enterprise Institute, titled: The Emerging Market Dynamics of Targeted Therapeutics. The article's authors, John Calfee and Elizabeth DuPre, found that targeted biotechnology drugs which attack specific disease-causing biological molecules are bringing new benefits to patients, while creating new pricing dynamics.

Calfee and DuPre noted that, unlike earlier types of drug, which tend to employ small molecule active ingredients that are synthesized via chemical reactions, most of the biologics are giant molecules that are produced as a result of gene or protein engineering. These have been created by utilizing recombinant DNA, molecular cloning, cell culture technology, or a combination of these techniques.

The authors found that there is a lack of a clear or consistent definition of the term "biologics" or even "biotechnology" the US Food and Drug Administration also does not have a regulatory classification for this area. This, in turn, has consequences for competition after patent-expiry.