Limits to the Development of Causal Treatments in Neurodegenerative Diseases – Indications for Market Failure?

The Situation

The Yuvedo Foundation commissioned a NERA team led by former Managing Director Prof. Dr. Frank Maier-Rigaud to explore the incentives to develop new drugs, in particular in the area of neurodegenerative diseases (NDD) such as Parkinson’s disease (PD). 

NERA's Role

Prof. Dr. Frank Maier-Rigaud and his team, Robert Lauer, Dr. Laura Robles, and Johannes Mattke, prepared a report for the Yuvedo Foundation that explores and compiles possible economic explanations that may be responsible for the lack of causal or disease-modifying treatments for some NDD such as PD. These economic explanations, which are alternative or possibly  complementary to scientific challenges in the development of new drugs, are developed based on a review of the economic literature, including health economics, industrial economics, regulation, and finance theory. They are also based on qualitative interviews and existing empirical and qualitative studies in NDD and in particular PD. In addition, normative economics is used to determine if any incentives in place lead to socially optimal market outcomes or may give rise to market or regulatory failures. 

The Result

The report found the following:

  • Based on qualitative evidence and theoretical foundations reviewed, there are indications that some of the mechanisms leading to suboptimal outcomes – market or regulatory failures – may also be present in the context of NDD such as PD. 
  • Further empirical and theoretical research is strongly recommended to identify the relevance and magnitude of the specific market and regulatory failures and on this basis allow appropriate remedies and countermeasures to be devised and deployed.
  • New financial incentive schemes, closely monitored by empirical and case-specific research, may help to set the right incentives to overcome any market and/or regulatory failures.

The Yuvedo Foundation published the NERA report on their webpage. You can find the report also on SSRN. For a short presentation by Prof. Dr. Maier-Rigaud, see here (at minutes 26:50-34:50).