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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.
"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.
U.S. citizens die sooner than even U.K citizens.
They are often bankrupted by medical expenses.
And yet, they keep voting for these policies.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Nothing is stopping them from curing another disease and collecting another cool $20B or so.
I don't think its a hard fact that businesses need to profit. We need to get over ourselves that everyone has to make a dime off everything for simply showing up as a middleman (which at this point is all health insurance companies are really doing).
Actually, the US raised funding for that, and bombs and missiles, and cut taxes on everyone. Budget limitations are for suckers.
Your ad here. Ask me how!
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.
That is true. With that being said...I read this as a "Hey people, incentivize us in some way" pitch.
They've noticed the reality. Its clear there are larger benefits to society by not dragging someone down with a disease their entire life. I think they've asked, "So how do we make this work, that's not the business we are in."
--
"I have noticed a few repeating trends about people... " - Raven Kaldera
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?
How much did they lose with unsuccessful treatments?
Is Curing Society's Ills a Sustainable Political Model?' Slashdot User Asks.
Requiem for the American Dream
It's almost as if technology is advancing beyond the useful life of capitalism.
Nah who are we kidding, praise the almighty dollar!
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.
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.
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. ;-)
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.
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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What do you consider to be a cure?
Type 2 diabetes can apparently be solved in a considerable number of cases by exercise, changing your diet, and of course the result of losing body fat. Not long ago there was a study conducted in the UK: http://www.thelancet.com/journ... But then again the UK has socialized medicine. For them it's more expensive and less profitable to treat a disease over a prolonged time than finding a solution that is of a more permanent nature. At least in the Type 2 case most patients can continue to stay in remission on their own and don't need expensive support from the pharmaceutical industry.
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.
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
Switzerland is also a powerhouse in drug making, especially if you count it per capita or per GDP. And they have an Obamacare-like system, with the exception that "basic" insurance plans must be non-profit. The insurers themselves do not need to be non-profit, and can offer additional coverage, package deals with other insurance, or special access to non-basic treatments as additional profitable add-ons. But basic insurance, which everyone must have (with subsidies if it takes more than a certain percentage of your income), everyone must accept, and covers all life-saving and common treatments, is non-profit here.
There are a lot of possible solutions, and the US is surprisingly close to something that works and yet insists on sticking with something that has the worst outcomes in the world... if the current political leadership would get off their high horse and try to figure out something that works for people instead of businesses the problem is solvable.
E pluribus unum
The reasons US life expectancy is lower are not much related to the health care system unless you think drug overdose, suicide, car accidents, etc. are failures of the health care system. Only about 4% of US bankruptcies are caused by medical bills -- if you read the Warren et al. papers claiming higher rates, you find they are self-rebutting. (For example, they asked for potentially multiple causes of the bankruptcies they studied, with medical expenses being one of those causes, and then they added a bunch more bankruptcies to their "medical bankruptcies" group just to make that group larger.)
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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So the drug companies have made a market decision that American will pay more for the same drugs than Europeans (and this happens in every market which is why computers are more expensive in one country while cars might be cheaper and so on), exactly how is this freeloading again?
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.
Have you seen drug prices in America? Europeans pay a small fraction of what Americans pay for the same drug.
And in every foreign market, US pharma makes money, at prices that are consistent with the competition and general price level in each country. This includes Mexico.
There is no country that can control prices outside its own borders. Americans pay more because we are chumps who are willing to put up with it.
Europeans are basically freeloaders leeching off American R&D spending.
No we are not.
According to the economist the european union spent $275 billion in medical r&d compared to $366 billion spent by the USA in 2011. You would also need to add especially Switzerland, Norway and Russia spending if you are talking about europe as a continent. I do not think the magnitude of those numbers changed considerably in the last 7 years.
Concluding: Yes we thank the USA for spending more on R&D than we do, but we are also far from being freeloaders.
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.
unless you think drug overdose, suicide, car accidents, etc. are failures of the health care system
As a matter of fact europeans consider drug overdoses as failures of the health care system and society. We do not declare war on drug adicts, we consider them to be sick and try to treat/cure them.
Let's be realistic. Switzerland doesn't have an obamacare like system, they have a system which is similar to Canada's though. In Canada, insurance is optional but the healthcare system is funded through taxes. All critical care is covered. But you'd be foolish not to carry supplemental insurance here, because things like drugs, injection pumps and so on aren't covered. Obamacare was basically the worst of all possible worst things that could have been put into place, and basically put all of the power directly into federal hands(aka DC). Compare to Canada, where the only federal has control is with the military, native reserves, territories(yukon, nvt, etc). Each province is responsible, each province must have a minimum level of care. That care level is determined by a 3rd party, the system also uses a "top up" method from federal general revenue funds paid into provincial healthcare budgets.
It's not perfect, it's not fun waiting 3-9 months for a MRI either. Nobody likes to wait 160 days for cancer treatment to start either, or 120 days for bypass surgery. But that's what we've got. It's also not fun living in remote parts of provinces and having to travel 4hrs+ to go to the hospital either, but that happens too. But people generally don't go bankrupt from primary treatment, but they do go bankrupt from secondary treatment.
if the current political leadership would get off their high horse and try to figure out something that works for people instead of businesses the problem is solvable.
The current political leadership tried. It was shot down by rino's and democrats. Then several different groups tried again, modeled after a system in montana(which was modeled off canada's system) and again it was the same rinos and democrats that shot it down. Doesn't seem to be a leadership problem there, but there is a "political self-interest" and "lobbyist interest" that is very happy with the current garbage known as obamacare. Just ignore the people who can no longer afford insurance because of it, or took the penalty because it was cheaper.
Om, nomnomnom...
Have you seen drug prices in America? Europeans pay a small fraction of what Americans pay for the same drug.
And we pay less in Canada, but European countries do the same thing that Canada does. Every province pools together and buys in a group and that gets a volume discount(it's cheaper to buy for ~29m then 300k). Now ask yourself why states don't band together and buy in group-bulk like other places do.
Om, nomnomnom...
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
Not willing to pay full price for a product while expecting another person to pay for the R&D? Yeah I'd call that freeloading.
Pharma researchers at drug companies have repeatedly said that new drugs could not be made without charging the US such high prices. The rest of the world gets new medicine because US citizens get screwed.
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).
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."
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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Currently, every state in the U.S. has a separate insurance market, and there are 50 states. No scaling needed. Q.E.D.
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I kind of like to look at it in terms of dollars per person:
The real problem isn't that the EU spent half what the U.S. did, but rather that most of the world is more like that third bullet point than either the first two.
As of 2014 (the latest stats I could find), the U.S. provided 45% of global medical R&D spending. So if the U.S. cut its spending to EU levels, we'd lose somewhere on the order of a quarter of the world's medical R&D spending.
This is not to say that the EU necessarily needs to step up its game—there are plenty of other countries that are contributing far less—but U.S. spending on medical R&D is decreasing pretty significantly, so if nobody else picks up the slack, then medical tech is likely to stagnate pretty badly in the near future.
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I hate to tell you this, but most pharmaceutical R&D is already done by the U.S. government. Every single drug approved between 2010 and 2016 was at least partially funded by NIH grants.
Most drugs today are initially researched by academic institutions, most of which rely heavily on NIH grants to cover their costs. Then, those patents get sold to small businesses, who do the next phase of trials. Then, they get sold to bigger businesses that fund the final phases of trials and manufacturing. Businesses do the development, but government does the actual research.
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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.