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Goldman Sachs Asks: 'Is Curing Patients a Sustainable Business Model?' (cnbc.com)
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." From a report: "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."
Richter cited Gilead Sciences' treatments for hepatitis C, which achieved cure rates of more than 90 percent. The company's U.S. sales for these hepatitis C treatments peaked at $12.5 billion in 2015, but have been falling ever since. Goldman estimates the U.S. sales for these treatments will be less than $4 billion this year, according to a table in the report. "GILD is a case in point, where the success of its hepatitis C franchise has gradually exhausted the available pool of treatable patients," the analyst wrote.
Richter cited Gilead Sciences' treatments for hepatitis C, which achieved cure rates of more than 90 percent. The company's U.S. sales for these hepatitis C treatments peaked at $12.5 billion in 2015, but have been falling ever since. Goldman estimates the U.S. sales for these treatments will be less than $4 billion this year, according to a table in the report. "GILD is a case in point, where the success of its hepatitis C franchise has gradually exhausted the available pool of treatable patients," the analyst wrote.
No, they're got a point. Of course it isn't a sustainable business model. But that's OK. As long as the business gets a good ROI over time time period it doesn't matter if the profits dry up eventually. All this means is if you're going to value a company over the longer term, you should probably take effects like this into account.
There are two choices, and they have their detractors:
1. Socialism: We all pay for this and enjoy the benefits of a healthy society.
2. Ferengi: Mortgage. Because the treatment works so well, it is also expensive, and the only way to finance it is by taking a lifetime loan. If you need a second treatment, better take a second mortgage then.
"Everybody's naked underneath" -- The Doctor
No, it's actually about high time somebody asked this question.
The devil is not not talking about it, but what you make
of that information. If the answer is "no", and the commonly agreed upon consequence
is that we stop curing, then that's a big problem.
But if the answer is "no", and the consequence is that we need
to work towards making medical care a non-profit social enterprise,
then that's a totally different pair of shoes.
In any case, whatever the answer and whichever way the debate
about the consequences goes, it all begins with the answer.
(If you don't want the debate to make a turn for the most inhumane,
then I guess you better be part of it early on instead of getting
busy grinding your pitchfork just yet...)
They are just freeloading on research done by others, while contributing nothing to the advancement of medical knowledge.
Your caricature is inaccurate. Many Libertarians oppose intellectual property rights. Others support reforms of the existing system.
Libertarian perspectives on intellectual property
No, it's actually about high time somebody asked this question.
I've recently been thinking about this a little in terms of game theory: Insurance companies see medical care as an expense and premiums as income. Patients see medical care as a benefit and insurance premiums as an expense. This has led to a system with a whole lot of problems, but the fundamental flaw is that the two sides have fundamentally conflicting goals.
How can we rework this into a better system?
The first thing we need to do is define the goal of the system, and "longer average lifespan" seems like the right goal. We can also add a quality of life rider by saying that anyone can check out if their life becomes unbearable, with lots of safeguards against coercion and suicidal depression and such. (I imagine a process similar to sex-change operations - the patient has to really want it over an extended time, and have psychiatrist buy-in.)
With "longer average lifespan" as the goal, now how do we pay the doctors?
One answer might be to assign to the *doctor* (primary care physician) a monthly fee per patient, regardless of that patient needing medical service. If patients could switch to a new doctor at any time and for any reason, doctors would then have incentive to a) provide the best medical care, b) compete with each other for quality of service, and c) keep their patients healthy, happy, and long-lived.
This seems to work at the "primary care physician" level, but it isn't a good fit for specialist and above, hospital care and ER. The PCP should feel free to refer a patient to a specialist without incurring a drop in salary, and an ER doc should have incentive to save a patient's life without regard to payment.
Also, medical research should be included, so that there's incentive to cure diseases instead of masking symptoms.
Anyone good at game theory like to add to this model?
"Cancer survival rates" are a baloney statistic. What matters are mortality rates. If I diagnose a cancer earlier and the treatment does exactly nothing, my survival rate improves while the mortality rate stays the same. In fact, if I can diagnose false positives, my survival rate looks even better while mortality stays constant. The more harmless lumps I remove from the breasts of healthy women, the better and better my survival statistics look.
Measured by mortality rate the US is not substantially better or worse than any other rich industrial nation, including the UK. It is a myth that the US system is better at all.