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'Is Curing Patients a Sustainable Business Model?' Goldman Sachs Analysts Ask (arstechnica.com)
In an April 10 report for biotech clients, Goldman Sachs analysts noted that one-shot cures for diseases are not great for business as they're bad for longterm profits. The investment banks' report, titled "The Genome Revolution," asks clients: "Is curing patients a sustainable business model?" The answer may be "no," according to follow-up information provided. Slashdot reader tomhath shares the report from Ars Technica: Analyst Salveen Richter and colleagues laid it out: "The potential to deliver 'one shot cures' is one of the most attractive aspects of gene therapy, genetically engineered cell therapy, and gene editing. However, such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies... While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow."
For a real-world example, they pointed to Gilead Sciences, which markets treatments for hepatitis C that have cure rates exceeding 90 percent. In 2015, the company's hepatitis C treatment sales peaked at $12.5 billion. But as more people were cured and there were fewer infected individuals to spread the disease, sales began to languish. Goldman Sachs analysts estimate that the treatments will bring in less than $4 billion this year. [Gilead]'s rapid rise and fall of its hepatitis C franchise highlights one of the dynamics of an effective drug that permanently cures a disease, resulting in a gradual exhaustion of the prevalent pool of patients," the analysts wrote. The report noted that diseases such as common cancers -- where the "incident pool remains stable" -- are less risky for business.
For a real-world example, they pointed to Gilead Sciences, which markets treatments for hepatitis C that have cure rates exceeding 90 percent. In 2015, the company's hepatitis C treatment sales peaked at $12.5 billion. But as more people were cured and there were fewer infected individuals to spread the disease, sales began to languish. Goldman Sachs analysts estimate that the treatments will bring in less than $4 billion this year. [Gilead]'s rapid rise and fall of its hepatitis C franchise highlights one of the dynamics of an effective drug that permanently cures a disease, resulting in a gradual exhaustion of the prevalent pool of patients," the analysts wrote. The report noted that diseases such as common cancers -- where the "incident pool remains stable" -- are less risky for business.
Businesses need a profit. I'm sure there are some conspiracy theorists that will crop up around this point, but the amount of research and spending to get only a short burst of financial gain is impractical.
Some would argue that this should be government funded and all I can say is... well good luck, at least in the US we cut that funding for bombs and missiles.
I don't read AC
Former Nazi scientists formed the Grünenthal company shortly following WW2. They were responsible for Thalidomide, they knew the effects of it yet still released it to the market. Who is "the good side"?
"Is eating the rich a sustainable business model?" asks music group Aerosmith. The answer may be "no," according to follow-up information provided.
Inheritance is the sincerest form of nepotism.
Nothing is stopping them from curing another disease and collecting another cool $20B or so.
These guys are what give capitalism a really bad name. Yes, a company can't exist without profits, but it's not like there aren't plenty of diseases we can't cure still. And if you think about it, indefinitely siphoning money from seriously ill people as a business model is pretty sick, no pun intended. We only put up with it as a society because it provides a powerful incentive to actually develop treatments in the first place. But if people start seeing that as a second-best option, I think society will quickly lose patience with them.
Fortunately, there are almost always those willing to offer an improved service that others aren't, if there aren't any significant barriers to doing so. In the end, it doesn't really matter that some slime think it's better NOT to cure people of illnesses outright, letting them suffer for the rest of their lives while bleeding money from them. There will also be those that choose to offer better services, like full cures, for lower overall profits. Because it's the right thing to do.
Sorry, pharmaceutical companies. You'll have to deal with that. If you start deliberately avoiding effective treatment, you invite societal wrath - probably resulting in even more soul-crushing regulation.
Irony: Agile development has too much intertia to be abandoned now.
Cure that disease so the other ones have a chance to take root and you can make money curing them as well!
That's guaranteed long-term profit. you are known as the company that cures things and people go to you before anyone else. What's not to like about this arrangement?
Still waiting on Serviscope_minor to wake up to fucking reality and realize that Jessica Price isn't going to fuck him.
They did NOT lose money on the endeavor. They made extremely large profits for a couple years... and now it's drifted down a lot as the most financially capable potential customers have now been cured. Plus a couple competitive drugs have launched.
But... yeah, they would have done financially much better selling a $20K a year drug to keep Hep-C at bay for these same customers for the rest of their lives.
Of course, not everything is about profit maximization.... it is kind of a nice thing to save thousands of lives. (Unless you are Goldman Sachs, apparently.)
The closest that I've found claims "The only disease ever 'cured' is Small Pox.". And it's infectious.
It's easy to grasp once you accept that you are effectively an animal that exists to make a profit for someone else.
Get with the program or you will die very quickly and even more unpleasantly. This is your only instruction/warning.
Why is Snark Required?
Big pharma has been peddling antidepressants that largely don't work or are actually counter-productive, but have a host of side-effects, including suicide and addictiveness.
Some hallucinogenic drugs such as psilocybin and LSD, on the other hand, have shown remarkable, disease-changing curative properties, but are schedule 1 drugs.
We didn't need Goldman Sachs to reveal that curing patients is not the best model for big pharma. Everybody with half a brain must have known this by now. Enjoy your destructive and never-curing antidepressants.
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
It's almost as if technology is advancing beyond the useful life of capitalism.
Nah who are we kidding, praise the almighty dollar!
so what they're saying is that single-payer is the most economical healthcare system?
Goldman Sachs is a large financial company who's whole buisness is taking other people's money, and investing it to make more money for them while siphoning a portion of it for themselves as payment.
Sure many millionares and billionaries have big ticket accounts, but there's also Joe Shmo, who has a modest 140k, or 200k retirement account there. Since all the money from each account is pooled to give Goldman the capital to invest, failed investments will impact all portfolios.
Investing in companies that develop cures is all good and dandy assuming all are as successful as Gilead. However, for every successful business, there are failed ones. Here, Goldman is basically saying that in the best case scenario the profit was not good enough to justify the investment even if they made an okay profit. After all, that one 'decent' success needs to offset the number of failed companies that Goldman also had their money on.
Assuming they had a net gain including all the losses, then it comes to wither the amount expended was worth the profit. It's more than monetary here, this includes paying for research consultants, retaining experts to vet companies, visits and check ups on said companies as well as all the menagerie of departmental-ism compared to that same expenditure on something else, as you put it.. a company whose drug suppresses the illness that would produce more money over a long period of time.
As a Joe Shmo do you want to see your retirement account grow faster or slower? Big or small, we're all capitalists, and unless Goldman wanted to discriminate accounts (and get sued) every customer they have suffers or gains; details be damned apparently.
I don't read AC
The answer is "yes" when people have to make price-conscious decisions for their healthcare because people naturally will prefer a one time expense over open ended expensive treatments.
If you socialize costs while maintaining private health providers, however, curing diseases ceases to be an objective for doctors or drug companies.
If you socialize costs and have public healthcare providers, one time cures are preferred to ongoing expensive treatments. That's better than the mixed system the US has right now, but it's still worse than a fully private system.
How do you define profit here?
Income minus expenses.
Business only needs to charge at cost in order to maintain their existence.
No, an ROI of zero is not sustainable. If profits are consistently below prevailing interest rates, the business will be liquidated. Investors will be better off buying bonds instead.
A wise old friend of mine used to say, "You don't stay in business by screwing people."
Your friend actually seems rather ill-informed. The oldest type of business does exactly that, is quite successful and persistently survives attempts to put it out of business. ;-)
Businesses need a profit.
That is why we also have government and university based research. For profit corporations are not the only providers.
You need medicine research to be funded by the goverment. Because the companies just said "Ain't no money in it."
Capitalism is a great system as long as there are profit motives, but falls far short where quality and safety are most important, profits be damned.
systemd is not an init system. It's a GNU replacement.
So the business geniuses there think that a 12B peak subsiding to 4B annually is not sustainable? These are the people who brought you the mortgage meltdown and now this wisdom. Why does anyone think they give certified advice?
There's no money to be made in health.
This is the basic reason that a private healthcare system can never be an ethical or ideal system. Making a profit can only come at the expense of someone's health, life, or livelihood. It ultimately places the burden of providing that profit on society as a whole.
The only rational and ethical health system is one that is non-profit.
"What do you despise? By this are you truly known." --Princess Irulan, Manual of Muad'Dib
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This is the basic reason that a private healthcare system can never be an ethical or ideal system. Making a profit can only come at the expense of someone's health, life, or livelihood. It ultimately places the burden of providing that profit on society as a whole.
I've never heard of a pharma company that says it needs more sick people. The reality of that industry is that the big players in the US are by far and away at the forefront of finding new cures and new therapies. After their market exclusivity and/or patents expire, they move on. Do you know who takes over from there? Companies with much smaller margins that make generic medications that are the same from one manufacturer to the next, effectively making them commodities. TFS mentions Gilead Sciences cure for Hep C, so let's drive this point further home using them as an example:
Contrary to popular conspiracy theories, they had the opportunity to create a permanent cure for the disease, and they made no attempt at all to prevent it from being fully effective. The prior-existing pharmaceutical treatments for Hep-C (i.e. anti-viral drugs, treatments for cirrhosis) were already profitable, and they could have simply spent their resources coming up with drugs to treat those symptoms that apply to all people with liver disease, or even in the case of anti-viral drugs, they could have worked for more than just this. But no, they went after the cure, and it cost them a lot of money. Meanwhile, guess what? Other companies are already jumping into this market without waiting for any patents to expire by developing new formulas:
https://www.npr.org/sections/h...
If a cure doesn't pay off, or if Big Pharma doesn't want it to happen, then why the fuck would they bother? Call it unethical all you want, but if any more ethical approaches work, they damn sure aren't delivering anywhere close to the results than the existing "unethical" system does.
So which do you prefer?
1. You pay money to motivate somebody to be interested in creating a cure, and you don't die
2. You say "paying money for a cure is unethical!", nothing ever gets done, and you die
Besides that, the rest of the world should be grateful that the US works the way that it does. The democrats and the rest of the world love to bash our health care and bash the "megacorps" that operate here, but the US private sector has been providing ALL of them the cures, treatments, and therapies to more diseases than anybody else for the past few decades. Cures like this come here for a reason: The political situation here allows cures that work to receive great returns. Meanwhile, the rest of the world (typically) only pays a fraction for these treatments compared to what US citizens do, which effectively means that the US private sector is subsidizing the "free" health care that other countries provide.
So please, try not to take it for granted. And no, this is not to say that our health care system is perfect (believe me, there are plenty of legitimate complaints against it.)
If what you say is as obvious as you say it is, then Goldman wouldn't be asking the question, and this article wouldn't exist.
"I've never heard of a pharma company that says it needs more sick people."
Sure? They usually say that it's not a good business to create cures for rare diseases, because so few people have it. Is that not exactly the same thing?
Of course one-shot cures are sustainable: after you create the cure, you GO AFTER THE NEXT DISEASE. These people are not looking for sustainable "business", they're after sustainable "passive income" (i.e. cash cows to milk without further effort). We're already giving these bio companies enormous favors of society (like government funding and patent ownership) to protect their work. This attitude is simply contemptuous.
So which do you prefer?
1. You pay money to motivate somebody to be interested in creating a cure, and you don't die
2. You say "paying money for a cure is unethical!", nothing ever gets done, and you die
In option 1 you have the profit motive as the underlying assumption of a cure getting developed. This is not true.
In most of the world roads and schools are funded by tax payers because it is significantly more efficient than having private companies doing the same. It is not a great leap to envision medical research being funded and turned into medicine by tax payers, and the companies working on it being publicly held and working for the good of the public rather than Goldman Sachs. If I recall correctly, the vast majority of medical research is publicly funded, some 80% I believe.
The truth may be out there, but lies are inside your head
The cost of bringing a new drug to market is estimated at $2.5bn (R&D, failed attempts that you have to try before you find something that works, regulatory approval), so the sales in 2015 completely covered the R&D costs with $10bn split between manufacturing costs and profit. The cost of producing Sofosbuvir is around $300 for a course of treatment (at least, that's their target price point for generic versions in developing countries) and the price is over $30K (sometimes a lot more, depending on locale), so production costs amount to around 1% of the revenue. Let's be generous and say that it's 5%, to include distribution and so on. That leaves a little over $9bn profit, after all R&D costs are paid, in their best year. This year, all of the R&D costs are already paid off, so that $4bn is 95% profit. If they completely eradicate the disease this year to the extent that there are no further sales, they will have made well over $20bn in profits, from an investment of around $2.5bn.
Now, I don't work for GS, but I'd be quite happy with a 1000% ROI over a period of 10 years (from discovery to peak) sounds pretty good. That works out at an annualised 25% ROI. If GS can recommend a place where I can get a better return on investment, then I'd be very happy to hear about it!
If they didn't cure the disease, then they'd still have exclusive rights until 2030, but they certainly wouldn't be able to charge as much (people won't pay as much for a treatment as a cure). They wouldn't have made it through the fast-track FDA approvals process, so they probably wouldn't have made any money yet, because they'd still be in phase 2 trials. And they'd have a product whose value could be wiped out instantly if a competitor did produce a cure.
Again, sounds like a cure is a better business model to me. Now that there is a cure, I bet no one is investing in producing an alternative, because by the time it's approved (no fast track if there's an existing cure) they'll only have a few years before generic versions of Sofosbuvir flood the market at $300 per course of treatment.
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I work in pharma (as do you most probably) and my experience shows me that companies with successful drugs approaching LOE (loss of exclusivity) do NOT go gentle into the dark night. Prior to LOE, pricing goes up and every effort is maintained to keep the profits coming. Sometimes it is by creating a new version with new patents to protect it, sometimes it is by turning the product into a pricy generic. Sometimes they DO move on - but only when they see no way they can maintain a multi-million dollar profit stream. I think the Gilead story will send a chill through public companies that are beholden to investors and will direct future R&D funding away from potential cures and toward maintenance medications that patients will need to take for the lifespan of the patent. In our capitalist system, this is the only rational approach for a public company, and Gilead will be used as a shining example of what not to do. Itâ(TM)s a shame itâ(TM)s like this, but given the incentives in healthcare are identical to the incentives Apple has (maximize shareholder value, maximize margins, and maximize profits by sustaining a predictable pool of repeat customers), nothing is going to change.
I see a lot of people missing OP's point, answering with infectious diseases. Probably because you need both a medical and a historical background to give him an answer -- once a problem is "cured", the memory and attention dedicated to it fades.
Pellagra, Beri-beri, Scurvy, Rickets, Vitamin A deficiency blindness. All cured with population-scale nutritional supplementation, all so rare now that most doctors in the developed world have never seen a real-life case. Goiter (Iodine-deficiency type), and neural tube defects (folate-deficiency type) less common than in the past.
Not sure if OP is interested in stuff that has been almost wiped out, but requires individual personal medical attention at some point. For instance, Eisenmenger Syndrome is rarely seen these days -- because many of the underlying congenital heart defects that lead to the condition were found by population-level neonatal screens and surgically corrected in infancy.
... many healthcare professionals make a living off making things worse.
We suffer more in our imagination than in reality. - Seneca
We don't have health care in this country we have disease management. You can't make money off of dead people.
Your sig here!
The big players don't really find new drugs at all. Most of them have cut or eliminated their basic research units.
New drugs are usually discovered and isolated at public universities, then the initial stages of commercialization are done at a startup or various small (or less small, but more diversified) companies, then one of the major pharma companies will buy the rights and take it through the last stages of certification. Or maybe shelve it until a later time.
Alexion Pharmaceuticals, maker of Soliris, the most expensive drug, would say otherwise.
The pharma and business industries don't want cures. That would stifle future earnings potentials. It would be them acting against their own self interest. Such is the price for capitalist and a private healthcare environment.
I think that the opiate crisis is a perfect example of their way of thinking. I guarantees a customer for life.
1. Convince (payoff) doctors that opiates are not addicting and should be more widely prescribed.
2. Lobby the FDA/DEA/etc. to allow a greater flow and easier access to opiates.
3. Get the DEA to back-off on companies who sell unusually large amounts of opiates.
4. Sit back as doctors over prescribe their wares knowing that they will be abused.
5. Watch as people get addicted to their opiates.
6. Produce drugs that counteract the effects of opiates.
7. Jack-up price of the Narcan and other like substances knowing people will pay the inflated prices while keeping the price of opiates low.
8. Sit back and count the cash as it rolls in claiming it is not our fault the DEA approved out actions.
This way the get a customer for life. And get the double bonus with selling them Narcan at an inflated price.
If you applied the template of "what's in the health care/phamaceutical industry's best interests", the answer was always having a sick population. Following that, when people said there was no incentive to cure, only treat, they were called kooks.
Sure, OTOH, this company made a lot of money, and ultimately making money for the executives, even if it bankrupts the company, is the goal of the corporate leaders, i.e. the company (see private equity's "getting your bait back", and this Nobel Laureate's paper on bankruptcy for profit (PDF)). So, in terms of making huge scores for the executives, it can make sense in that context.
But make no mistake - it is most certainly in the health care / pharmaceutical industry's interests to treat, not cure.
This reveal, not anything to do with Donald Trump, may be the moment the Republicans lost the midterms.
This is yet another misleading headline from Ars.
From the CNBC report it was quoting, which in itself is only quoting excerpts:
https://www.cnbc.com/2018/04/1...
"Goldman Sachs analysts attempted to address a touchy subject for biotech companies, especially those involved in the pioneering "gene therapy" treatment: cures could be bad for business in the long run.
"Is curing patients a sustainable business model?" analysts ask in an April 10 report entitled "The Genome Revolution."
"The potential to deliver 'one shot cures' is one of the most attractive aspects of gene therapy, genetically-engineered cell therapy and gene editing. However, such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies," analyst Salveen Richter wrote in the note to clients Tuesday. "While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow."
"The report suggested three potential solutions for biotech firms:
"Solution 1: Address large markets: Hemophilia is a $9-10bn WW market (hemophilia A, B), growing at ~6-7% annually."
"Solution 2: Address disorders with high incidence: Spinal muscular atrophy (SMA) affects the cells (neurons) in the spinal cord, impacting the ability to walk, eat, or breathe."
"Solution 3: Constant innovation and portfolio expansion: There are hundreds of inherited retinal diseases (genetics forms of blindness) Pace of innovation will also play a role as future programs can offset the declining revenue trajectory of prior assets."
You can argue with the financial analysts view but I see nothing wrong in his analysis.
We expect the price of newly released compounds to be high as manufacturers make what they can up front in the limited time that they have exclusive rights to produce it. But what proves our system is corrupt is those sudden price spikes for compounds whose patents have expired. These spikes occur in the US market because someone has cornered the supply of the generic in the protected domestic market. And why is there a need to "protect" the US market for generics at all? If American patients were able to operate in a free market and fill prescriptions for generics through Amazon on the open world market, the Daraprim and colchicine train wrecks would never have occurred.
The other problem is that nobody knows what new, branded compounds actually cost. Those news-making high prices are list prices, not the actual price paid by insurers and foreign governments which buy in bulk for their patients. The US governmental agencies that supply medical services are forbidden by law to negotiate for bulk pricing. Patients have no idea what the actual going rate for any medication is. These laws were put in place at the behest of Big Pharma.
If it's going to be a free market, it has to be a free market for patients as well as manufacturers.
Period. This is probably a big reason why public health care on average is so much better then US in large parts of the world, and especially Europa.
Profits before the cures for smallpox, cancer, hepatitis-C, etc?
Well, I guess blame the parents applies to those analysts. As well as those patients.
WARNING: Smartphones have side effects--most of them undocumented.
The pharma and business industries don't want cures. That would stifle future earnings potentials. It would be them acting against their own self interest. Such is the price for capitalist and a private healthcare environment.
Did you even read the post you replied to? It made a detailed case explaining exactly why cures are good business that big pharma should (and, quite obviously, does) want, based on capitalistic incentives for generating large profits. You reply with a flat, unsupported assertion of the opposite, ignoring all of the solid argumentation you're replying to.
What kind of thought process motivates people to post such stupidity? I suppose you at least had the sense not to sign your name to it. You made yourself look like a fool, but at least you're an anonymous fool.
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
https://www.washingtonpost.com... https://www.fiercepharma.com/s... Most of pharma's "R&D" is spent on marketing.
This is why health care must be a non-profit business. As soon as it is about maximizing profits the goal is to keep folks from dying, but sick enough to require permanent medical care. This report also shows that financial megacorps like GS have ZERO ethics. That they even bother with such a report is utterly disgusting.
Building green highways, a comprehensive network of cycling paths completely free from motorized traffic, would radically transform pharmaceutic and healthcare industries.
Because a cityful of people cycling to work in the rain and the cold would be highly profitable for them.
Let's get one thing straight: the company that innovates cures has only a limited time frame for profiting from the risks they took in developing the cure or treatment.
Small molecule drugs are treatments. For a small molecule drug that time horizon is about 12 years (drug development after invention and regulatory approval time cuts it back from 20 years). Then the generics enter the market, and well, the profitability of treatment goes bye-bye.
The picture is better for biologic drugs because biosimilars are harder to get approved and cannot undercut the price of the innovator product as much because manufacturing costs are so high for biologics. The statutory exclusivity period is 12 years for biologics under the Affordable Care Act.
The genetic editing cure market is brand new. Yet it will be constrained by the same laws and market forces that constrain small molecule drugs and biologics. An innovator only has a limited time of profitability. For the innovator the time to profit from a cure and a treatment will be about the same. But the price that can be charged for a cure instead of a treatment will be much higher. The profitability of cures instead of treatments should be better for the innovator than the innovator, if not the market as a whole. Cures screw the generic companies, not the innovator.
I see a certain parallel with the private prison industry.
1. Ability to charge more for a cure than a treatment. On average, it costs $8k per year to treat someone with diabetes. That isn't the cost of medication - it's the cost of medication, hospitalizations, tests, supplies, etc. Pharma only gets about 20% of that - $1500 per year. But a cure for diabetes could be priced at $70k and still be less expensive than 10 years of treatment. Which business would you rather be in? $1500 per patient per year for 10 years or $70k lump sum up front?
2. Marketing costs. Everyone talks about how much pharmas spend on marketing compared to R&D- while ignoring that large pharmas spend more on R&D as a % of revenue than almost any other industry. But with a cure, a lot of the marketing costs go away. You don't need to tell people how much better a cure is than treatment A or treatment B - they already know. The marketing costs that remain are convincing the payers (insurance companies, government bodies, etc.) to pay. Insurance companies especially would make the argument (internally) that it makes much more sense to pay $8k per year: the odds are good that a diabetic will be someone else's customer within 3 or 4 years due to a job change, unemployment, etc.
You're right. Capitalism is terrible. And yet, preferable to any other economic system anyone has thought of.
My Other Computer Is A Data General Nova III.
For years, the big pharmaceutical companies have focused on producing new drugs that don't cure anything, but just ameliorate symptoms for a while. Drugs that people continue buying for the rest of their life are their big money-makers. Think blood pressure drugs, statins and other cholesterol drugs, and, of course, the big cash cows, Viagra and its act-alikes. Conversely, no one is investing much in vaccines and antibiotics -- they are only used once to cure a patient.
U.S. citizens die sooner than even U.K citizens.
Perhaps. But TFA isn't about retail medicine. It is about funding R&D. For medical R&D, America does far more than any other country. Europeans are basically freeloaders leeching off American R&D spending.
In 2015, America spent USD 47B on R&D, while Europe spent EUR 33.5B (USD ~41B):
* https://www.efpia.eu/publications/data-center/the-pharma-industry-in-figures-rd/pharmaceutical-rd-expenditure-in-europe-usa-and-japan/
That money also seems (at least in the past) to have more productive results:
* https://news.stanford.edu/pr/2009/pr-light-pharma-study-082109.html
Of the top ten Big Pharma companies, nine spend more on marketing than R&D (the one exception being Roche, with a delta of USD 300M):
* https://www.vox.com/2015/2/11/8018691/big-pharma-research-advertising
According to fundamental economic principles, if a person is productive (means, produces goods and services for the community, and in return gets money from the community), and a disease inhibits that productivity, then the cure of said disease would lead to the increased production (wealth) that the involved society would enjoy. The Goldman analyst was using a myopic analysis which simply looked at the immediate gain from the individual drug, rather than the big picture. Combining truly curative measures with long term productive relationships with the patient, or with a life insurance policy, would be a superior strategy. Also, doctors could sleep a little easier at night and Hyppocrates would not have to spin in his grave (as much).
Because a cityful of people cycling to work in the rain and the cold would be highly profitable for them.
It is not fresh air or rain what is dangerous for health. It is obesity.
Is that really a sustainable business model?
There are all sorts of things that are profitable... and illegal. This sort of reasoning is the result of pure psychopathic thinking, and should be a warning sign to the rest of us.
This isn't some sort of "bold strategic thinking" because it is a question that normal human beings simply shouldn't ask.
I've never heard of a pharma company that says it needs more sick people.
Then you haven't been listening to them. They do say it, frequently, and have been saying it for decades. This isn't a new idea. Lots of people in the pharma industry have been talking about this problem for a long time. And yes, they see it as a problem. A lot of people in the industry really want to help humanity by curing diseases, but the economic incentives make it really hard for them to do that. It's easy to get funding to develop a new weight loss medicine or a new drug for erectile dysfunction. But for decades malaria was basically ignored, even though it was one of the biggest killers in the world. It took Bill Gates donating a billion dollars toward curing malaria before any real progress finally started to happen.
Antibiotics are an even better (worse?) example. We've been overusing them for years, because that's how pharmaceutical companies made more money from them. As a result, there are now bacteria resistant to all known antibiotics. We desperately need to develop new ones, but hardly any money is getting spent on it. Why would a company spend money developing a drug when they know lots of restrictions will immediately get put on it to keep bacteria from becoming resistant to it too?
Sometimes capitalism just isn't the right tool for the job. This is one of them, and people in the industry have been saying it for a long time. If you haven't heard them, that means you haven't been listening to them.
"I'm too busy to research this and form an educated opinion, but I do have time to tell everyone my uninformed opinion."
Sure, cures can be a decent business model, but treatments are far better - especially for diseases which will kill you or drastically reduce quality of life. People will pay almost as much to survive one more year as they would to be cured completely, the limiting factor is how much money they have available to pay in any particular time-frame. And 30K/year for 10 years is a lot more profitable than 30K once. Plus, it's not like the patent expires and then generics take over the market - everybody wants the brand name thanks to the perceived lower quality of generics (and kickbacks to the doctors prescribing them), not to mention the expense of setting up a production line and getting your specific product approved.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
The medical industry is full of perverse incentives. Companies will never do clinical tests of any remedy that can't be patented, and managing diseases is much more profitable than curing diseases. I propose a different funding model: the health insurance providers band together and research medical procedures that will save them money, rather than maximize pharma profits. Of course, that requires all the insurance companies work together as a consortium -- I imagine the Pharma execs would start screaming for anti-trust regulation if that happened.
I've abandoned my search for truth; now I'm just looking for some useful delusions.
Healthcare in the US, like many things, is focused on wealthy consumers. Wherever you are from, I guarantee you have countrymen flying to doctors in the US to receive the best care in the world.
You can't possibly discuss what you think profit is, without understanding how many $2.5bn FAILURES they had to endure before they achieved success with one. If one in 20 drugs make it, that's a bad business model. If it's more like one in 4 or so, this could be a more reasonable model.
The $2.5bn number includes failed attempts. It's a lot less than that if the first drug you try makes it all the way through clinical trials, but that doesn't happen very often.
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Ah, good to see you advancing the need for non-profits in this part of society and the economy!
Starships were meant to fly, Hands up and touch the sky - Nicky Minaj
Producing a lifelong addiction to the medication is the preferred business model and always has been the "gold standard" for business. Every dealer of illicit drugs knows that fact.
The morally neutral report said pharma had 3 solutions: address large markets, address disorders with high incidence, constant innovation and portfolio expansion.
Curing is not sustainable, but they missed an obvious 4th solution which is to leak new incurable diseases with tailor-made ongoing life treatment options.
Citation needed.
By law, non-profits cannot turn their income over to any sort of shareholder, which means that the only people who can make money from it are the people who actually work for the nonprofit. You might disagree with how much some top-level execs are being paid or whatever, but the net cost to society from all the dividends paid to people whose sole contribution was a little bit of operating capital is staggering by comparison.
And if all hospitals were nonprofit, then there would also be no need for them to compete with one another, which means there would be no need for advertising, which also makes up a healthy chunk of the cost of healthcare.
Every dollar spent on competing against other hospitals or passed on to shareholders is a dollar that could have been spent on improving patient care or reducing the cost of patient care. Now you might argue that they would instead spend it on raising doctor and nurse salaries, and you might be right, but even if that is true, wouldn't you rather have salaries that encourage the best and brightest to go into the field, rather than salaries that barely pay off their medical school debt and the cost of malpractice insurance?
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You seem to have misunderstood. I'm not talking about the best AVERAGE care. I'm talking about the best care PERIOD. I'm talking about cost-is-no-object healthcare.
In other words, the distinction is between the "best healthcare" (US) and the "best healthcare system" (Nords)
Look, we have a lot of software developers in here. Do any of you really believe your job is in jeopardy or potentially unprofitable, simply because whatever you code will become obsolete and unused within a decade or so? Hopefully not, because you realize it's about continually updating what you write and coming up with brand new things to code. You don't learn to code so you can write one thing, and then expect to sit back and profit from it for the rest of your life - deciding you never need to code again.
That seems a lot like this article.... complaining because if you successfully make a drug to cure a disease, it will eventually stop being useful because you made the disease go extinct. So what? You've got PLENTY of other diseases you can work on curing, and plenty of opportunities to help alleviate symptoms with other drugs in the meantime, while you try to find more cures. If you are good at doing these things,you'll continue to be very profitable.
if we switched to Medicare for all. We could pay off the national _debt_ with that money. If you're a fiscal conservative you pretty much have to support Medicare for All.
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alive and cured them were made in Europe. Most of that kind of research is done in Europe because you can't get the US to pay for research that isn't profitable.
More money spent doesn't necessarily mean better outcomes when the point of that spending is to bring in profits on a short term scale. If anything most basic science is being done in Europe and the US is leaching off it that (much more valuable) science.
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It's really about the fixed costs being covered in the US. That whole thing about bulk pricing is just a mechanism for stabilizing revenue flows.
Americans could NEVER be offered prices similar to Europe/Canada/South America because manufacturers would have to reallocate the fixed costs to those other countries. This would blow up THEIR pricing and also slow down recovery of the fixed costs the investors were so eager to recoup in the first place. The shareholders' lawsuits would clog the courts for a decade.
With the insurance companies, lobbyists, legislators, and manufacturers locked in an unholy embrace there is unlikely to be any change in the near future.
My two cents.
That's just not what happens. In practice you have single payer systems where doctors remain private but the government is the single payer (e.g. single insurer). This maintains the incentive to keep costs down. Meanwhile, and I know this sounds crazy, most doctors are good people who would prefer to permanently cure people. That's because they're close enough to their patients to see their suffering and empathize with them. We also spend a healthy chunk of their educational time encouraging them to believe this too (bordering on indoctrination to be honest).
Being a doctor is insanely hard work. To do it you have to love it for it's own sake. Nobody's going to make it through 8 years of medical school and 8 years of residencies just 'cause the money's good. You need a level of obsession that transcends money to pull that off (unless you're talking General Practitioners, but they just do OK).
A mixed system is fine, which is why most places do single payer. The point where the profit motive breaks the system is when it's time to pay doctors. That's not surprising. If you put biz people in charge of paying you give them an incentive to not pay. You fix that with single payer. As for your Doctors, you need to pay them well, but it doesn't take Rock Star money any more than you have to pay working musicians like that because Doctors _like_ being Doctors.
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Technically the Communists won WWII.
Capitalism won the cold war.
Whooooosh!
"Sure, we could save humanity, but where's the profit in that? Fuck 'em."
Palaces, barricades, threats, meet promises
This is exactly why many things should not be left to business. Those things need to be handled by society - and for many things that means leveraging tax dollars to do what is right for the minority negatively impacted by policies - such as those driven by the Goldman-Sachs statement - from the majority. The research and development funded through these programs will actually help us all through the development of new technologies, and advancement of fundamental science applications beyond the original target, that would be in the public domain (if you need a reason beyond ethical considerations to do what is right). That, of course is a long term viewpoint which, while most beneficial, is not on the radar of current business economic theory which puts quarterly profit increases as the only measure of success.
A corporation is really a social contract between the owners of the corporation and society that allows that organization to gain benefits above and beyond that of a person (lower tax rates, special legal considerations/access...etc), not only to benefit the owners, but also to benefit society as a whole. With the means of low cost production distributed now in the hands of people given technological advancements in the last few decades (e.g. 3D printing, VR/AR, the Internet etc), and corporations automating both mental and physical tasks via information technology (cloud computing, AI etc) and robotics (the next evolution in harnessing technology to increase human power that started with domestication of animals, through mechanical impacts of the industrial age), the argument that jobs are the primary benefit of corporations to society is growing thin. Beyond profits for the shareholders/owners, what benefits to society do corporations provide?
I think that is the question we should all be asking ourselves as we make decisions about what products to purchase, and what investments to make (e.g. most working people have 401K accounts - and thus are shareholders/owners themselves in some small way). If a company invests in a long term view then they should be rewarded. If they don't, then they are not fulfilling their social contract. This would be encouraged if regulations were put in place to make investment in long term research count as much as profits in the stock markets' analysis of corporate performance. Furthermore, given the nature of some long term research costs, tax incentives should be made available to corporations that invest, and penalize those who don't.
Finally, there are many things that are just too big, and too important for corporations to handle. These items will need to have government funding. There's no way around it if you want to protect and provide needed advancements and resultant benefits to society.
Lodragan Draoidh
The more you explain it, the more I don't understand it. - Mark Twain
You're missing one major factor: profit motive is what incentives people to create "the next great cure." No profit motive...no funding of research...no advancements.
I'm not sure what the motivation for writing it was, but it seems to be more of a rhetorical question given that it already offers three solutions, the third of which is what growing businesses already do anyways:
"Solution 3: Constant innovation and portfolio expansion: There are hundreds of inherited retinal diseases (genetics forms of blindness) Pace of innovation will also play a role as future programs can offset the declining revenue trajectory of prior assets."
The reality is, you'll never run out of diseases that can be cured or at least managed with treatment. Even if you came up with a treatment for chronic disease that never gets cured, it still ends up being commoditized no matter what happens, so no matter what, there is no such thing as an endless treatment cash cow.
That sounds like it's probably the case for designer drugs that ultimately don't do a whole lot beyond what existing medication does (and there is ongoing debate about whether they should be allowed to make the kinds of ads that they do, especially when targeted at the last remaining cable TV demographic: Old people.) However I'd be curious to see these numbers after those have been filtered out. I personally am seeking treatment for keratoconus that comes via a drug made by a company called Avedro. I don't know about you, but I aint ever seen any advertisements for it (the associated procedure is corneal crosslinking, which even few doctors have heard of.) The way I know about it is because it's such a common condition that results in blindness in the absence of intervention. People who have this have usually heard about it by now.
1. Ability to charge more for a cure than a treatment. On average, it costs $8k per year to treat someone with diabetes. That isn't the cost of medication - it's the cost of medication, hospitalizations, tests, supplies, etc. Pharma only gets about 20% of that - $1500 per year. But a cure for diabetes could be priced at $70k and still be less expensive than 10 years of treatment. Which business would you rather be in? $1500 per patient per year for 10 years or $70k lump sum up front?
Of that $1500 per year, how much of that is actually profitable for pharma? As far as I know, a big expense is in the insulin, which is created by means of an e. coli bacteria that has been genetically modified to shit human insulin. Really, that's how it's made, before that they used to puree cow and pig pancreases. Probably not a cheap thing to not only harvest, but to sterilize, purify, and then store cold and ship cold. Besides, you're missing the bigger picture here: They patients are all spread across a sea of many competitors. Imagine a captive market of all of them coming to you, and only you, for a period of 5 years, and they pay that amount to you, and only you. That will pay off a LOT more than simply entering the diabetes supplies market.
Of course, diabetes is kind of an odd one. Almost every type-2 diabetes patient I've met kind of doesn't give a shit about having diabetes or managing it properly. The warning signs exist for years and years before any permanent damage occurs, and even after it does, they still tend to ignore it. If some treatment or cure did come around, I doubt most of them would even use it. If I wanted to make smaller profits off of diabetes over a long period of time, I'd target their commodities, since they also apply to broader markets than just diabetes patients.
Common sense should tell you that health and healthcare aren't the same thing, meanwhile you're gathering metrics on the first, ignoring the second, and then claiming to be debating the second. If you want the best possible health care for any given condition in the world, then you're going to find it within the United States, period. Whether or not it's available to you in particular is a separable topic.
Pharma shill
And I would have gotten away with it too if it weren't for you meddling kids.
Besides, you're missing the bigger picture here: They patients are all spread across a sea of many competitors.
That's why I brought up the difference in marketing costs. If you had a cure for diabetes you wouldn't have to pay to compete for marketshare - you would just own the market, full stop.
I've never heard of a pharma company that says it needs more sick people.
How often do you talk to the pharma companies?
The reality of that industry is that the big players in the US are by far and away at the forefront of finding new cures and new therapies.
Great! Seems that since the US Pharma industry is the best, and provides unparalleled healthcare we need to double down so that we can achieve even greater advances. You have proven that this is what is needed.
So health insurance has been a problem for years, and a positive feedback loop existed, where it was becoming too expensive fopr employers to provide insurance. This must be accelerated until no one can afford it. Then all will be healthy.
Sarcasm off now.
Part one is what happens when a medical industry is run soley for profit.
Yes - the pharmaceutical companies were awash in money, and yes, they did some good with it. But yes, they also picked things to cure that would in turn make them the most money.
This makes perfect sense in a business designed to make as much money from as many people as possible, for as long as possible. That is why we have maintenance medicines for things like strokes and blood pressure and cholesterol that people take every day of their lives. Yet these selfsame people often die of the problems caused by that anyhow - it's the perfect drug, may or may not work, may or may not die of a stroke or heart attack anyhow. But they are a full time income source.
The most awesome illustration of this is the new drugs to treat Alzheimer's. They do not cure you. They are only prescribed after you already exhibit the confusion and dementia of Alzheimer's. What they do perform is a slowing of the disease. You spend some more years demented, shitting in a depends, living in a nursing home. Their claim to fame is they prolong your death. MOre money for the Nursing home and the medicine providers, probably a coinkey-dink I've already told my family that if I ever become demented, if they put me on those meds, they better hope there isn't such a thing as ghosts, because I'll be a fucking angry murderous one.
Now to the financial aspect.
The situation was 100 percent unsustainable.
When the health care industry shifted to the new model back in the 70's, it set in motion a process that was once setting broken bones and normal life medical problems, to one of a huge array of maintenance medicines, and diagonostic machinery that needed people to use to amortize it. So insurance rates begin to climb.
It worked okay for a while. but eventually the rates were getting high enough that some outfits were dropping coverage, and those that weren't were increasing the employees cost at double digit rates and even more per year.
Then one of the most anti-capitalist anti freedom things happened. The pre-existing conditions evil. If you were working somewhere (or even had your own business) and had a problem - they would take care of it, but you were now stuck. If you left for another job, you couldn't get health insurance coverage. Or laid off. And if you had your own business, they'd do their best to get you to drop your coverage. My Wife's boss, who had a blood clotting issue, and his wife, who had some other problem, in 2005 were paying something like 50 K a year for health care.
So while it has become a political football, with a lot of people in a white hot rage about how the magic Negro from Kenya destroyed the country by using a healthcare plan of one of his Republican opponents, the truth is, the system was failing badly.
Allow me to illustrate the problem.
The cost of healthcare was rising quickly. A lot of people were losing their healthcare, or they were going bankrupt when the minimal plans they could afford wouldn't cover much.
But they still got sick. Lack of healthcare doesn't mean you are condemned to good health.
So where did they
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
You sound like someone who only speaks English as a second language or has no critical reading skills.
There's no money to be made in health.
This is the basic reason that a private healthcare system can never be an ethical or ideal system. Making a profit can only come at the expense of someone's health, life, or livelihood. It ultimately places the burden of providing that profit on society as a whole.
The only rational and ethical health system is one that is non-profit.
That is why we who have universal (government funded) healthcare get cured and live more years in good health.
Leslie Satenstein Montreal Quebec Canada
Trying to re-write history? Capitalism won that war and everyone knows it. Maybe you forget about all the supplies the US sent to Russia? Lend/lease, etc. They would have been overrun without Capitalism. They were clueless and depended on the US Patent office and admitted it. That's capitalism. Fountain of knowledge and progress for society. Only the stupid deny that (stupid as in they don't know any better, not that they're not intelligent. Smart people can be stupid).
Communism kills.
To the point in Japan, the communists weren't even in that action except for one day. So your statement is ignores history and facts.
That is the most American thing I have heard in ages! Yea, sure, money can grease a lot of wheels but believe it or not there are many people in the world working on medical solutions not to make money but to make world a better place. However the odds are they are not working in the USA. BTW, while a lot of stuff is developed in the USA it should be mentioned that other countries have actually developed stuff to.
I don't see anywhere that he called it "obvious". Goldman is asking the question for the "obvious" reason...they, and all of their investors are in it for the ROI. If it wasn't sustainable, then it would never happen, now would it?
Just another day in Paradise
Let's, just for the sake of argument, say all of this is true. Why do you suppose everyone isn't throwing their spare change into big pharma stocks?
Just another day in Paradise
"Sure, cures can be a decent business model, but treatments are far better "
That all depends on the price of the cure, and the price of the treatment. A $50k cure beats a treatment that returns anything less over time (not counting anything here for inflation, or price changes). Also, with treatment, once you get off patent, you run into competition. Just look at the cost of generic Lipitor these days.
Just another day in Paradise
"We desperately need to stop abusing them"
FTFY
Just another day in Paradise
>That all depends on the price of the cure, and the price of the treatment.
Indeed, and IF you are confident you can get people and/or their insurance companies to cough up 10-20x as much money the first year for a cure, then maybe the cure is worth it.
But, you need to be that confident BEFORE you even begin to develop the cure - AND you need to be confident that you can develop a cure for the same price as developing a treatment (good luck - cures are generally a lot more challenging). Because if it costs you 5x as much to develop a cure, then to get the same return on investment you'll need to charge 50-100x as much for it instead of just 10-20x. Given that outlook, developing treatments is easily the safer and more profitable investment. You don't even need to explicitly collude with the competition to not develop a cure, you just need to rely on them doing the same basic risk/reward calculation.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
but I aint ever seen any advertisements for it
The first article explains this: "Most of this marketing money is directed at the physicians who do the prescribing, rather than consumers".
"For every expert, there is an equal and opposite expert"
Aerosmith would (an should) get eaten then. If you get a chance to see the special on the band Kansas, listen to what they have to say about Steven Tyler.
Just another day in Paradise
The only marketing that should be required is a single publication in an appropriate medical journal, which the physician should be a subscriber to. Drug selection and treatment plans for a disease or condition should be made solely on the merit of peer reviewed articles and studies, or by recommendations by a medical board who has done this already.
It should not be made based on which drug company handed out the most free dinners, fancy pens or coffee mugs.
It could just as easily cost you 5x as much to develop a treatment as a cure...non argument, it just depends. Same with your confidence statement regarding returns over time. Oh, and let's add in the cost of side effects of being on meds for years. You and I could argue this until the cows come home, but in the end...It all depends on a variety of items, and thus "treatments are far better" is not accurate w/o investigating and due diligence, which is why this question is even coming up.
Just another day in Paradise
Healthcare itself? Maybe, maybe not. There certainly are more complications that prevent normal market forces from working very effectively. But you can't make a profit at the expense of someone's health or life for very long - if you're taking in sick people and discharging sicker or dead people consistently (worse than other options, at least), you will go out of business.
More to the point, R&D isn't really part of the healthcare system itself. Profit motives can be really useful there.
Examine even your most deeply held beliefs. Nobody is always right.
"We can't do this because we'd lose $1B if we did" is really different from "We want there to be more sick people".
Examine even your most deeply held beliefs. Nobody is always right.