Personalized medicine and treatments for rare diseases are growing in popularity across the United States. However, they do not come cheap. A study in Harvard Business Review by Michael Geruso, Ruth L Newhouse associate professor of health care policy and medicine Anupam B Jena, MD, PhD, and assistant professor of health care policy Timothy J Layton, PhD, explains this.

Even if a patient is insured under a generous health care policy, they may face significant out of pocket costs for specialized medications. The research team says that “this is likely due to what economists call ‘adverse selection’” in which insurance companies push sicker patients towards competitor’s policies because these policy holders will not be profitable.

Insurers that provide good coverage for expensive drugs run the risk of becoming an “insurer of choice” for the sick and expensive patients who use these drugs. Those taking these drugs would be driven to this insurer, therefore raising insurer costs and driving down profits.

The researchers suggest that out of pocket costs be made manageable by policies that shift insurer’s financial incentives and counteract adverse selection. They stress the importance of finding a solution to this high cost issue so that access to these personalized drugs is not cut off to patients.