Measuring the novelty of recent medicine – Healthcare Economist

All of us need new, improved medicines. Medicine that present incremental advantages (usually referred to as “me too” medicine) are good, however actually revolutionary therapies are even higher. Nevertheless, how does one separate how “novel” a therapy is? Is there a method to quantify this?

The truth is there’s. A method to do that is predicated on the therapy’s molecular construction. As an illustration, the Tanimoto distance measures the the fraction of chemical options which are shared by the 2 chemical compounds. Nikolova et al. 2004 summarizes this method which is calculated as follows:

Krieger, Li and Papanikolau 2022 use this methodology to quantify how drug growth for novel medicine has way more optimistic informational spillovers on the drug growth than incremental medicine. This paper offers an instance of an software of Tanimoto distance beneath.

Utilizing the Tanimoto distance as a measure of novelty, the authors discover the next:

…novel drug candidates are much less prone to acquire FDA approval however are based mostly on extra priceless patents. According to a easy mannequin of expensive exterior finance, we present {that a} optimistic shock to corporations’ internet value leads corporations to develop extra novel medicine. This means that even giant corporations might behave as if they’re threat averse, lowering their willingness to funding in doubtlessly priceless radical innovation.

You’ll be able to learn the complete paper here.