Using statistics can can improve clinical trials and outcomes – Dimitris Bertsimas

MIT Sloan Professor Dimitris Bertsimas

MIT Sloan Professor Dimitris Bertsimas

From Times Higher Education 

Sometimes science can be personal. When my father, who was living in Greece at the time, was diagnosed with stage IV gastric cancer in 2007, I set out to find the best possible care for him. As is the case with many patients with advanced disease, drug therapy was his best course. So, after unsuccessful surgery in Greece, he came to the US for treatment.

I contacted the most prestigious cancer hospitals in the country and found that they all used different drugs in different treatment regimens to treat advanced gastric cancer. As both a son and a scientist, I was surprised to discover that there was no standard treatment – something I would later realise was true of many different kinds of late-stage cancers.

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‘Health care loans’ for Hep C cure — Andrew Lo and David Weinstock

MIT Sloan Professor Andrew Lo

MIT Sloan Professor Andrew Lo

From Boston Globe

A new class of medications was recently approved that cures more than 95 percent of people with Hepatitis C in only six weeks at a cost of about $84,000 per person, and new therapies with price tags that are likely to exceed $1 million per person are now available or coming soon. How can patients possibly afford them?

In an article published in the journal Science Translation Medicine, we outline a feasible market-based solution that could immediately expand access to transformative medications, including cures for Hepatitis C and cancer. The basic concept is to convert a large upfront medical expense into a series of more affordable payments, akin to getting a mortgage when buying a house. The challenge of curative medications that only require a short course of therapy is that the whole price is paid upfront — how many homeowners could buy their houses using only cash? Instead, most home buyers get a mortgage and make monthly payments for as long as they benefit from owning the house or until the full amount is paid. We propose the same solution to overcome the liquidity problem that prevents access to curative medications, which we call “health care loans,” or HCLs.

The second problem with upfront payment is the possibility of buying a “lemon.” Patients could unexpectedly relapse, die, or suffer a terrible side effect, in which case there’s no opportunity to recoup a portion of the upfront payment. Therefore, we propose that amortized payments stop if the benefit stops (i.e., if the “cure” doesn’t cure), thereby linking payment more closely to therapeutic value.

There are, of course, many complex ethical considerations and social ramifications related to the pricing of highly effective therapies above a threshold that permits universal access. Price gouging — like the recent 5,000 percent increase for a generic medication by Turing Pharmaceuticals — is a concern. To address this, some politicians and advocacy groups have proposed that prices be capped by legislation. Capping prices would stifle innovation and disincentivize drug development, the exact opposite of what we need.

Our HCL proposal has many advantages over price caps. It incentivizes (rather than disincentivizes) the development of highly effective therapies, because the greater the benefit, the greater the payment. And it can be implemented immediately. Our calculations indicate that bonds with competitive return characteristics could be raised to support HCLs across a range of financial scenarios. The creation of a large and liquid market for HCLs would give payers and lenders greater negotiating leverage with drug makers to get better pricing. Linking payment to value would establish a paradigm in which medications that offer very little benefit, like many of the recently approved cancer therapies, could not have exorbitant prices.

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A bold new way to fund drug research — Roger Stein

MIT Sloan Senior Lecturer Roger Stein

MIT Sloan Senior Lecturer Roger Stein

From TED

Believe it or not, about 20 years’ worth of potentially life-saving drugs are sitting in labs right now, untested. Why? Because they can’t get the funding to go to trials; the financial risk is too high. Roger Stein is a finance guy, and he thinks deeply about mitigating risk. He and some colleagues at MIT came up with a promising new financial model that could move hundreds of drugs into the testing pipeline. (Filmed at TED@StateStreet.)

Roger Stein wants to bring financial engineering to the world of drug funding.

Watch the video on the TED site.

Roger Stein is a Senior Lecturer of Finance at the MIT Sloan School of Management. 

Could financial engineering cure cancer? — Andrew Lo

From Financial Times

Financial engineering failed dramatically in the financial crisis, but maybe it could be used to help persuade institutions to invest in cancer research. Professor Andrew Lo of MIT’s Sloan School of Management explains how to Long View columnist John Authers.

Andrew W. Lo is the Charles E. and Susan T. Harris Professor, a Professor of Finance, and the Director of the Laboratory for Financial Engineering at the MIT Sloan School of Management.

Watch the video at the Financial Times.