Economics of Stratified Medicine


Challenge: Stratified, or “personalized” medicines target specific patient sub-populations on the basis of a clinical characteristic that predicts treatment response such as a companion diagnostic test based on a genetic biomarker. Stratification is driving a trend from the deployment of blockbuster therapeutics to targeted “niche-busters,” which could fundamentally alter the nature of the biomedical industry, regulatory requirements, payer economics and patient access to medicine. Although individual case studies of particular instances have received much attention, a rigorous analysis of the economic and financial implications of increasingly stratified medicines for industry structure, profitability, competitive dynamics and long-term sustainability has yet to be publicly performed and disseminated.


  • Define innovative value metrics for stratified medicine products that combine clinical biomarker/diagnostic with therapeutic agents
  • Develop pricing models based on new value metrics models
  • Develop simulation models for alternative development plans for joint development of combined diagnostic/therapeutic products in order to define approaches that reduce cost, time, and regulatory risk
  • Test and refine simulation models to establish validated tools that enable corporate decision-making and guide policy on issues related to stratified medicine across the value chain.


Program Director: Mark Trusheim, Visiting Scientist, MIT Sloan School of Management and President, Co-Bio Consulting, LLC. (617) 281-4987

Ernst Berndt, PhD, Louis E. Seley Professor of Applied Economics, MIT Sloan School of Management

Sponsors and Collaborators

  • Adaptive Pharmacogenomics LLC
  • Bionest Consulting
  • Bristol-Meyers Squibb
  • Co-Bio Consulting LLC
  • Eli Lilly and Co.
  • Exploristics
  • Food and Drug Administration
  • GlaxoSmithKline
  • Hoffman La Roche
  • IMS Health
  • Janssen Pharmaceutical Companies of Johnson & Johnson
  • Merck & Co.
  • Merck Serono
  • The Merck Foundation
  • Merrimack Pharmaceuticals
  • MIT
  • Pfizer
  • Van Andel Institute



Trusheim, Mark R., Breon Burgess, Sean Xinghua Hu, Theresa Long, Steven D. Averbuch, Aiden A. Flynn, Alfons Lieftucht, Abhijit Mazumder, Judy Milloy, Peter M. Shaw, David Swank, Jian Wang, Ernst R. Berndt, Federico Goodsaid, Michael C. Palmer. Quantifying factors for the success of stratified medicine. Nature Reviews Drug Discovery 10:11 November 2011

Trusheim, Mark R., Aitken, Murray L., Berndt, Ernst R. Characterizing Markets for Biopharmaceutical Innovations: Do Biologics Differ from Small Molecules? Forum for Health Economics and Policy 13:1 Article 4 2010

Hughes, Bethan. Developing Tools for Stratified Medicine. Nature Reviews Drug Discovery 8:12 919-920 December 2009

Trusheim, Mark R., Ernst R Berndt and Frank L. Douglas. Stratified Medicine: Strategic and Economic Implications of Combining Drugs and Clinical Biomarkers. Nature Reviews Drug Discovery, 6:4 287-293, April 2007.
Trusheim_Stratified Medicine Strategic and Economic Implications of combining drugs and cliniical biomarkers

Trusheum, Mark R, Ernst Berndt. Economic challenges and possible policy actions to
advance stratified medicine. Future Medicine, Personalized Medicine (2012) 9(4), 413-427.

Economic Challenges & Possible Policy Actions to Advance Stratified Medicine

MIT Stratified Medicine Model Overview
MIT Strat Med Model Ver 2-0 Overview

MIT Stratified Medicine Model: Trastuzumab Adjuvant Therapy (Herceptin)
Herceptin Reference Scenarios

MIT Stratified Medicine Model: Panitumumab (Vectibix)
Vectibix Reference Scenarios




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