Before Jevons, economists were unable to think on marginal terms. If price should be related to marginal utility, then cost pricing nowadays is outdated. However, when someone suggests value pricing, you must ask immediately about what is value for him, and maybe it is not the same than for me. A paper on lab testing and its value suggests the following:
The value of a diagnostic arises not because of its direct effect on a patient’s health but because of the information it provides on a patient’s likely response to a particular therapy. Personalized diagnostic testing reduces – though does not eliminate – the trial-and-error associated with empirical medicine, where physicians and their patients try an initial set of therapies and decide to continue or discontinue them on the basis of realized efficacy and side effects. In this manner, personalized diagnostic tests transform medical care from what economists call “experience goods,” whose quality can only be determined through consumption, to “search goods,” whose quality can be learned before consumption
Personalized diagnostic testing offers several advantages over an empirical, trial-and-error approach to medicine. These benefits include the avoidance of side effects, potentially reduced financial costs of therapy (e.g., if a patient is identified as a likely nonresponder to an expensive therapy and the alternative is cheaper), potentially reduced opportunity costs of time – not just in terms of physician visits but also time lost on an ineffective or even harmful treatment, and improved or earlier access to effective care. Not only do patients receive value from personalized testing and treatment, but providers and health care systems benefit by avoiding ineffective, or wasteful, health care that accompanies less targeted, traditional treatment approaches. Specifically, a diagnostic test will be most valuable when the therapy being evaluated is expensive relative to alternatives, when side effects are frequent and severe (thereby making the empirical approach relatively less safe), and when delay from an alternate therapy can severely harm an individual’s health (e.g., metastatic cancer)The concept is clear, its measurement is still uncertain.
