Properly Valuing Investment in the Development of Gene Replacement Therapy

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Properly Valuing Investment in the Development of Gene Replacement Therapy

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The passage of the Housing and Economic Recovery Act in July of 2008 expanded the federal government’s authority to place Fannie Mae and Freddie Mac into conservatorship. As exercised, under the conservatorship the government secured the right to stock warrants worth 79.9% of the company as well as a ten percent dividend on its gross investment. The existing shareholders kept the other 20.1%.

Abstract

Gene Therapy represents a dramatically different approach to the disease treatment, promising complete cures rather than the management of chronic illnesses. Because of this the standard payment models used by insurance markets may not work effectively, leading to moral hazard problems and a potential under-investment in such treatments.

Keywords: drug prices, insurance, cost-benefit analysis

JEL Classification: I11, I13

Brannon, Ike and Lo Sasso, Anthony T., Properly Valuing Investment in the Development of Gene Replacement Therapy (March 2019). Available at SSRN: https://ssrn.com/abstract=3373135 or http://dx.doi.org/10.2139/ssrn.3373135
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Ike Brannon

The Jack Kemp Foundation

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Anthony T. Lo Sasso

University of Illinois at Chicago – School of Public Health
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