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Economic Impacts of Medical Breakthroughs - 4/24/15

It is difficult to find economic phenomena that are purely beneficial.  With almost all things, there is good and bad.  Take medical breakthroughs as an example.  One might think that increasingly effective therapies for various conditions could only be a good thing.  But even medical progress can produce some undesirable outcomes. 

The Wall Street Journal recently highlighted the financial impacts of a pricey pill made by Gilead Sciences Incorporated.  The pill represents a highly effective therapy for hepatitis C.  This therapy, known as Sovaldi, comes with a wholesale cost of eighty four thousand dollars per person over the course of treatment, or one thousand dollars per pill.  State Medicaid programs around the country spent more than one point three billion dollars on hepatitis C therapies through the third quarter of last year, or nearly as much as the states spent in the previous three years combined. 

Predictably, the price has sparked an outcry from insurers, policymakers and others concerned by the cost of treating roughly three million Americans with hepatitis C, which can trigger cirrhosis or cancer of the liver.  Sovaldi was Medicaid’s third largest drug expenditure after Abilify, an antipsychotic medication and a generic version of Lipitor.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.