I feel kinda bad for the writer, because it's a good question: no, curing patients is not a good business model, just like public transit is not a good business model.
What a lot of folks neglect are N+1-order effects, because those are harder to quantify and fail to reach the predetermined decision some executive or board or shareholder has already made. Is curing patients a bad business model? Sure, for the biotech company it is, but those cured patients are far more likely to go on living longer, healthier lives, and in turn contribute additional value to society - which will impact others in ways that may also create additional value. That doesn't even get into the jobs and value created through the R&D process, testing, manufacturing, logistics of delivery, ongoing monitoring, etc. As long as the value created is more than the cost of the treatment, then it's a net-gain for the economy even if it's a net loss for that singular business.
If all you're judging is the first-order impacts on a single business, you're missing the forest for the trees.
~public~ transit can be a good business model if it's setup correctly. The majority of Japan's 100 train companies are setup such that they own both trains and complementary interests. Office buildings, shopping centers, super markets, apartments. The better their trains are the better their other businesses do by delivering people to them. The better their other businesses are the more people want to use their trains.
You're both kind of arguing the same thing. If the transit companies also own the places the people are traveling to, they are capturing the value of second order effects.
Eh, without that alignment of interests public transit agencies in the US only care about increasing their budgets. They are at best indifferent if the service is safe, fast, convenient, clean, efficient, etc.
This reminds me of the way ski resorts work in the US. One company builds the ski resort (losing) but also develops all the real estate around it (winning). It only works if it's a resort worth living near.
Or casinos, which are the reverse. Build hotels, entertainment etc (losing) to support traffic to your casino (winning)
There are hotels but the real money for ski resorts is in the condos, timeshares and houses that are sold on the nearby land. When I said "ski resort" I mean lift-serviced terrain and all the supporting infrastructure for skiiers during the day
I think you and the person you are responding to are saying the same thing?
I don't think they literally meant public transit can't be profitable in any scenario, they meant that it takes a conscious choice to put money into transit with the intention of reaching some second benefit, which is a pretty good comparison to this topic too.
The public transit by itself is a money loser compared to alternatives, but by having it in place you get other benefits that make it worth it overall.
While public transit is a good business model, corrupt public transit is an even better business model. The amount of public funds that some US public transit funnels away is astounding.
It's fair to note that Japan's private rail networks have often been joint public/private investments, but I don't think that negates your point.
I think public transit is something the public should invest in, profitable or not, as a service to ourselves (the public). But it can also be done profitably in certain circumstances.
I think trying to get the incentives right is important and that "public" transit rarely gets it right. It relies on politicians to fund it and they have so many strings being pulled on that they can rarely give it the funding it needs. It will always show up as an expense and as such there will always be an incentive to cut funding to "lower the expense". If they ever have a surplus it will be syphoned off to something else instead of invested.
Of course many cities have great "public" (run by the government) transportation for some definition of "great" but many have issues of funding. IIUC, NYC and London are both seriously underfunded. Conversely, AFAICT, these private Japanese trains in a city of a comparible size are not. If you don't want to compare to Tokyo, then compare to Osaka
Yup. North American public transit is frequently a terrible business model because North American land use is designed to push everyone’s daily destinations further and further apart, making all transportation more expensive, and making transit uncompetitive with anything else.
The longer someone lives, the more potential value they can contribute to a society. The opportunity cost is something we've figured out from a medical perspective, but shareholders want returns today, not returns fifty years from now.
The government says that people can stop contributing to society when they reach 67. Some governments completely block you from continuing working.
Some governments recognize that the longer people life, the more pensions / social security / healthcare resources need to be paid to that person.
its much cheaper for governments for people to just die when they retire, tax their wealth at 40% and then free up resources (housing or healthcare) for the next generation.
I don't like the squeezing mindset but if people contribute to their health insurance and don't use those services because they're healthy it could be seen as squeezing those patients but it really isn't, it's just how insurance should work.
There does not look to be a strong correlation between population density and income, at least on a log-log scale across countries. But I would guess that these numbers hide a trend for cities to be richer than rural areas (subsistence farming etc).
>The longer someone lives, the more potential value they can contribute to a society.
This is a function of how old the sick person is, as well as how severe their sickness and hence recovery will be. The data says, for the most part, healthcare is needed when one is close in age to exhausting their body’s capability anyway.
Treat vs cure. You treat them so you can go on treating them. If you cure them, maybe you’ll treat them later and or maybe you won’t - but that’s outside the current bonus cycle / opportunity window.
I'm not sure I agree, when we humans only lived for 50 years there were no time to develop any range of other diseases that we are experiencing now in later life, so even if you cure A there will definitely be many many opportunities to treat anywhere from B-Z.
The issue with that logic there is those basic drugs are mostly generic now. That money is less, and goes to the PBM and generic manufacturers in India.
The FDA needs to declare death a disease that patentable drugs can be developed against. All of a sudden the flood gates get opened to encouraging drug research on anything that keeps people alive longer.
Because death is not technically a disease, right now if a company came up with a literal immortality pill they wouldn't be able to get it patented or get FDA approval for it.
If you invent a pill that gives old people the mental and physical vigor of 25 year olds, you don't need to patent or trial it as an immortality pill. Just pick one of the many medical conditions associated with advancing age, like osteoporosis or male pattern baldness, and prove that it safely and effectively treats that condition. If the pill cures baldness and also gives patients improved muscle tone and working memory as a side effect, the FDA won't complain about those beneficial side effects.
Once the drug is approved for treating baldness it can be prescribed off-label for other conditions and/or the manufacturer can progressively run trials for treating additional conditions, similar to how GLP-1 drugs originally developed for diabetes treatment have now been tested and approved for treating obesity.
Saying that curing diseases is a bad business model is like saying discovering the world's largest gold mine would be a bad business because you'd eventually run out of gold. The underlying argument doesn't make sense.
No, this is the basic naive argument I'm responding to. It's nice to have long-term recurring revenue, but customers have a very strong preference for a cure, which means the owners of cures will outcompete the owners of subscription treatments. And then to say those cure-owners are in a "bad business", again, is like saying you'd go "aw shucks" if you happened on an enormous seam of gold.
That assumes equal ability to manage a long-revenue-stream treatment that keeps people alive enough not to die but doesn't help them enough to stop taking it. Doable for somethings. Not so much against cancer.
And it assumes none of your competitors spot the cure that you suppressed or simply didn't look for and eat your lunch by taking all those patients away from you.
If you "accidentally" came up with a single-course cure for something like Crohn's or RA while trying to create a every-three-months recurring treatment instead, would you honestly shelve it? No.
You could make an argument that the incentives discourages certain types of research, but that's assuming a certain level of foreknowledge about how to treat or cure a lot of these things that I don't think we have right now.
It doesn't make any sense unless there is only one drug company with a total monopoly. Even if one drug company develops a highly profitable drug which only treats symptoms, all of their competitors still have a financial incentive to undercut them by developing a cure.
In July 2009, journalist Matt Taibbi invoked an indelible image when he described Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
The argument only makes sense under certain assumptions: you can't protect the IP from being copied (leading to competition and eroding economic rents), or the government will place a price ceiling (price controls).
Otherwise, the demand will be highly inelastic, so you cannot really invent a better business model. The pricing power you would wield as the monopoly provider of life & death would be tremendous.
It would be fruitful to put the example in the article under closer scrutiny.
tptacek is right, this whole discussion is silly because it revolves around what exactly "bad" means which is subjective. But if you want to really do calculations about this, you'd need to price out total expected revenue over your time preference window for each scenario. It's not at all obvious which one would win because it depends on at least these variables and probably more:
1. Over what time period you care about. "You" here means a hypothetical pharma executive who cares about his/her incentives. If symptom management makes a billion dollars repeatedly but each billion takes 200 years, and a cure makes a billion dollars once but in five years, nobody rational will want to sell symptom management.
2. Related to (1) what expected market returns are in future.
3. What price premium you can charge for a cure vs symptom management. The former is more valuable to customers.
4. How fast competitors can catch up. Imagine you find both symptom management and a cure for disease X. You keep the cure a secret and bring the subscription to market (for a price much less than what a cure would command). Six months later a competitor releases a cure, simultaneously wiping out your market and capturing all the immediate revenue. That would have been a bad move.
You asked “where’s your math” and then somehow produced a reply with zero math in it. Not even a crude expected-value calculation. Just variables floating in space. So let me show you what the actual math looks like and why your argument falls apart the moment numbers enter the room.
You brought up time preference. Fine. The real comparison isn’t “200 years vs 5 years” because nobody is modeling revenue over two centuries. The real comparison is that chronic therapies have stable, recurring revenue over a long period while a cure gives you one spike and then destroys your own future customer base. If a chronic therapy earns $6,000 a year per patient for, say, 30 years, that’s $180,000 of lifetime revenue per patient before discounting. A realistic cure might command around $60,000 once. Even before discounting, the chronic model is triple the revenue. When you discount future cashflows, chronic still wins because its revenue stream is stable, protected, and repeatable. That’s the math. No handwaving required.
Expected market returns don’t mysteriously rescue cures. They’re already baked into NPV calculations. Chronic therapies have lower revenue volatility, lower development risk, more predictable reimbursement, and better protection from substitutes. The discount rate is effectively lower because the cashflow is more reliable. That’s why any competent finance team values the chronic model more highly. This isn’t a subjective opinion. It’s just how discounted cashflow works.
Your “price premium” angle also collapses once you actually compare markets rather than per-unit price. Yes, a cure could theoretically be priced higher than a monthly pill. But cures annihilate their own future market. Chronic therapies don’t. Charging $100k once is meaningless if the market you just wiped out used to pay $6k per year for decades. Chronic revenue behaves like a long linear stream. Cure revenue behaves like a front-loaded exponential decay curve. That decay is unavoidable because your successful product eliminates the future need for itself.
Your competition scenario reverses reality. If a competitor can release a cure six months after you, then your own cure had no durable pricing power anyway. Fast follow-on competition obliterates high cure pricing immediately. A cure without monopoly protection has an NPV close to zero because payers always push prices toward marginal cost. Chronic therapies are exactly the type of product where competitive moat, reimbursement stickiness, and prescriber habits create long defensible streams of cash. Again, this is not “subjective.” It’s what actually happens.
And none of this even touches the development side. Investors don’t compare “cure vs cure.” They compare “cure vs chronic,” holding the development cost and probability of failure constant. The expected value formula is simple: EV = p · NPV(revenue) – cost. Since the NPV of chronic therapy revenue is larger in almost every major disease category, the expected value is larger too. This is why cures are pursued only in categories where chronic therapy isn’t viable or the patient population is too small to sustain lifetime sales anyway.
So no, the entire debate isn’t “subjective” and it doesn’t hinge on the mood of a hypothetical pharma executive. It’s math. People call cures a bad business model because superior business models exist and capital flows toward the model with the higher expected return. Chronic care has a structurally higher expected return because the revenue is larger, lasts longer, and is harder to compete away. You can argue about the ethics if you want. But the financial comparison isn’t ambiguous.
I'm sorry, but if you _actually_ think about it, your whole premise is ridiculous.
We'll put aside the obvious fact that drug researchers are, you know, people who presumably got into the industry to help people, which includes themselves and their families.
We'll also put aside the fact that drugs go out of patent relatively quickly, and they'd just lose out to generics. Like they do now.
The simple truth is they don't need to manufacture more clients, because a stream already exists. There are always new people developing new diseases and new issues. There's an incentive to come up with new and better tools to pull money away from generics.
Don't fall prey to paranoid thinking, actually think about it.
> We'll put aside the obvious fact that drug researchers are, you know, people who presumably got into the industry to help people, which includes themselves and their families.
Right and nobody got into the industry to make money. Capitalism doesn’t exist. Genius idea that the whole world and drug industry runs on altruism. You call my idea ridiculous? I was gonna call this paragraph ludicrous, but no, instead I’ll call it genius because only geniuses run with ideas that make no sense to us normies.
> We'll also put aside the fact that drugs go out of patent relatively quickly, and they'd just lose out to generics. Like they do now.
10 years. That’s not a long time at all.
> The simple truth is they don't need to manufacture more clients, because a stream already exists. There are always new people developing new diseases and new issues. There's an incentive to come up with new and better tools to pull money away from generics.
Right so under capitalism investors and business owners redirect capital to the most profitable and least risky ventures. Hence why they call developing cures bad business and developing drugs that require lifelong dependence good business.
> Don't fall prey to paranoid thinking, actually think about it.
I’m not paranoid. I’m realistic. I’d tell you to don’t fall prey to delusional and overly altruistic thinking. But let’s put all of this aside and let me use evidence to prove to it. If my thinking is ridiculous why do so many people agree?
I don’t think you understand that my thinking isn’t paranoid. It’s obvious and normal. Your thinking is the one that is delusional. When billions and billions of dollars are involved and share holders have your neck on the line what comes first is profit and lives second.
>As long as the value created is more than the cost of the treatment, then it's a net-gain for the economy even if it's a net loss for that singular business.
Specifically on this - this is pretty much how pharma companies negotiate prices with governments - using quality adjusted years of life or saving from alternative costs.
> If all you're judging is the first-order impacts on a single business,
However you do have to pay the companies involved otherwise the activity doesn't happen ( as the companies will go bust and cease to exist ) - cf lack of significant research into new antibiotics.
> If all you're judging is the first-order impacts on a single business, you're missing the forest for the trees.
The problem is our society is set up to give a lot of power and influence to businesses that are precisely interested in their own tree and not interested in the forest at all.
> those cured patients are far more likely to go on living longer, healthier lives, and in turn contribute additional value to society
That's not true for diseases that hit those at or near retirement, which is probably most of them. They are mostly drawing pensions without contributing much economically.
Note 1: This is just stating economic facts, not advocating any ghoulish policy.
Note 2: I expect that Note 1 will be ignored.
There are also higher order effects in terms of business model - if you look at the broader business model of health care.
A concrete examples abound in the infectious disease space - many antibiotics are curative of something that would otherwise be fatal - and while there isn't a huge amount of money in antibiotics it has in effect contributed to the larger market of older people's diseases like cancer.
Every intervention simply delays death - and the older you get the more health care you need.
> If all you're judging is the first-order impacts on a single business, you're missing the forest for the trees.
Sounds like typical American C-Suite thinking. From what I can see, maybe Chinese companies see further, and that may just be because the government is so powerful, over there, and the government is known for taking the long view.
> As long as the value created is more than the cost of the treatment, then it's a net-gain for the economy even if it's a net loss for that singular business.
This is precisely the type of work that is best funded through government: Work that can be net positive for the populace but doesn’t have a viable business model attached.
There’s another layer to consider even with government-driven efforts: Resources are never infinite. The number of potential R&D opportunities exceeds available research dollars and even human personnel many times over. There comes a point when you need to allocate finite resources to the efforts that provide better cost to benefit ratios. I don’t think it’s helpful to go full hardcore utilitarian, but the reality can be that the cost of coming up with a cure for a rare genetic condition that impacts only a small number of people might be better spent on research toward a drug which incrementally reduces heart disease, for example.
Finding permanent cures for rare conditions is a heart-warming idea, but in reality it’s a lot harder and more expensive than most people assume. Likewise, when people become enamored with these ideas of finding permanent cures for rare genetic ideas they can be missing the big picture that it may not be one of the better uses of that money even if you took raw capitalism and investment dollars out of the picture. There are so many more opportunities for widespread health improvement in the boring conditions and even lifestyle diseases than in hypothetically curing the rare genetic conditions. It may not feel as heart-warming to talk about things like reducing obesity, but we’re witnessing an incredible society-wide health improvement with GLP-1 drugs that is orders of magnitude more benefit across society than something like curing a rare genetic disease.
Public Transit was very much thrown in there as an example of the kinds of societal-good projects that often are "bad" business models or run at a loss (Japan being a very notable exception, kinda). Thing is, anyone even casually looking at n+1-order effects sees that the value created isn't for the transit system itself, but all the components that make it function (jobs, logistics, and materials for trains, rails, signals, ports, tunnels, etc) and all the effects of easing people movement (more money to spend, more job opportunities, cleaner air, safer streets, etc). Real estate is one such effect, provided communities recognize the benefit of real estate near stations and not let naysayers constrict development around them (like you see in much of America, for some reason).
With that logic curing someone of a deadly disease at 10 is good for society because they have much to contribute, but curing someone at 80 is bad for society because their best contributions are behind - and they are a net resource drain. That’s not a good path to head down. (Cure a doctor he generates value, don’t cure a prisoner he drains value).
I think this is a bad argument for socialized healthcare (Which I am 100% for BTW).
Look at retired people, they contribute very little to society. From a purely economical POV, letting them die is the correct course of action. I, and many others, find this morally abhorrent. We should provide healhcare because it is the correct thing to do, not because it is economically viable. The whole point of a society is for its members to live better lives collectively than they would individually, not to maximize some abstract value.
So, determine democratically how much resources we should pool into healthcare and distribute that fairly among ourselves, on an as-needed basis. That's how it works in much of the 1st world, and it works reasonably well. Better than in America, that's for sure, as can be seen by the higher life expectancies and cheaper medicine overall.
I think it's the opposite. I think people are very aware of those effects, and that's actually why they ask the question in the first place.
They ask it "is this good business" not just because they care about the answer itself but because they want to start a debate on how society should promote the invention of cures.
Like I think most people in most industries are passionate people that really want to do good, but they do need to eat too.
Do you believe the current medical research is held back by the price limitations and if we just infuse more money, we'll find cure for many more diseases ?
Even if we consider that, we'll reach the same position as today because if only rich can afford medicine, the market will price that in and it's customer who can barely afford the medicine will shift from middle class to upper middle class and so on.
yeah but the pharma comapnies are only in the business of selling drugs so they would need to diversify into retirement homes or somnething to profit from actually curing people
I mean, that's one way to look at it I suppose, and it's why you see Healthcare Insurers and Private Equity diversify into elder care for a captive audience.
In reality though, I was not-so-subtly trying to suggest that if something is necessary for the public good (curing diseases) but a bad business model, then perhaps Capitalism itself is the wrong vehicle for that segment of industry and a different option - be it an incentive structure, government-owned pharmaceutical research, or managed economy - is needed.
Society fundamentally needs things that are simply bad business - sheltering everyone (lowers long-term housing revenue), feeding everyone (lowers long-term food revenue), healing everyone (lowers long-term healthcare revenue), educating everyone (lowers the value of degrees/credentials). If our economic model prohibits or discourages achieving optimal resource usage and human outcomes, then it's our obligation to explore and identify alternatives that may improve those outcomes respectively.
> In reality though, I was not-so-subtly trying to suggest that if something is necessary for the public good (curing diseases) but a bad business model, then perhaps Capitalism itself is the wrong vehicle for that segment of industry and a different option - be it an incentive structure, government-owned pharmaceutical research, or managed economy - is needed.
I believe the great innovation of capitalism is markets, and the next era of economic and social progress will be driven by mixed capital/social good markets.
For example, what if you tied the tax rate for an industry to a combination of broad social goods (say, homelessness) and industry-specific goods (say the incidence rate of cancer for cancer drug companies), such that if we’re in a the middle of a homelessness crisis and many people have cancer, the tax rate might be 50%, vs if there is virtually no homelessness and we’ve cured cancer, maybe it’s 10%. Obviously there are other market approaches but eventually they would be converted to capital markets, so something like the above makes sense to me as a start.
isn't this just a way of saying that markets aren't representing externalities correctly?
a company doesn't have to pay for bad things they produce as a byproduct (e.g., pollution) and they dont get to benefit from good things they produce as a byproduct (e.g., curing a disease).
> I feel kinda bad for the writer, because it's a good question: no, curing patients is not a good business model, just like public transit is not a good business model.
Betteridge's law of headlines: "Any headline that ends in a question mark can be answered by the word no."
Energy123's law of headlines: Any headline that ends in a question mark will have an associated comments section mentioning Betteridge's law, despite that law having being empirically falsified.
Selcuk's Law of Generalisations: Any mention of an adage will have an associated comment claiming that it can be falsified by giving at least one counter-example.
Public transit is a good business model if you don't have to compete with government subsdized roads and you don't have government limits on what you can charge. Good luck finding anyplace without those.
> Public transit is a good business model if you don't have to compete with government subsdized roads and you don't have government limits on what you can charge
Without subsidized roads, its easy for deep pockets to offer exorbitant prices for land and monopolize the roads. Anyone not planning to charge high prices for usage will be held off by high acquisition prices at "market" rates.
There's only so much land and roads possible to a given location, privatized roads is like giving default monopoly. It will turn out just like the isp situation, only worse.
Subways in NYC had found ways to compete with each other before the government took over. (though admittedly this was enabled by very dense areas, and long term not the best for the overall city). However your point is destroyed by counter example.
>> If all you're judging is the first-order impacts on a single business, you're missing the forest for the trees.
This is one of those things that sounds clever but is total nonsense. Communism sounds nice too. The key problems are: a) incentives and b) ability to see the trees instead of pretending to see a forest because you are blind to the details.
Public transit is a great business model, what are you talking about? The only time it seems to be a bad business model is when governments take it over and run it. Transit relies on recurring customers paying you basically every day, or subscribing. It has a reliable, stable revenue stream which is relatively inelastic, which are generally precursors for a good business model
Not sure if this is just a misunderstanding but Uber is not "public transit" (a term of art), which is what GP is talking about. Uber is just not relevant to the point GP was making.
Uber's business model is to be a loss leader to hamper competition, then jack up rider rates and lower drive rates. This is technically a 'working' business model, but hardly one that benefits the people.
Uber more generally exists not as a service provider but as an international legislative bulldozer: everywhere will be reduced to the misery of the land of the free. They exist only to fuck up worker protections in every form they take.
Of course it's sustainable. Gilead Sciences is a $155B company originally built on a single drug (Sovaldi) that literally cures Hepatitis C. Now they are more diversified and have a stacked pipeline. The business model just changes to one like oil or mining exploration where you find a deposit with a limited lifespan and you have to keep the treadmill going to find new ones before the mother lode that funds your firm is all tapped out and you go bust.
But while it makes for amazing ragebait and threads full of grievances aired against the healthcare system in general, I think the question isn't very relevant because in Biotech, this is dynamic already essentially forced, cure or not, because of *patent life*. A perfect example of this is Lipitor and Pfizer. Lipitor was not a cure. Statins do not cure you. But it was the most profitable drug of all time. But it eventually went off-patent and now the average price on GoodRX for a 30 day supply is only $6. Pfizer stock has never recovered from that success, though they certainly have a sustainable business.
The modern-day Pfizer is Merck. Merck has probably the most profitable drug in world history (Keytruda) which is far more profitable than Lipitor, and which has massively increased remission rates for a wide range of cancers, so it's somewhat of a cure as well. But that patent life is about to expire, and 46% of Mercks revenue will disappear with it. Of course, new people are diagnosed with cancer every day, and Keytruda will continue to be prescribed in the millions, but Teva and others will sell the generic version and Merck will lose out on the revenue. So the race is on to get more things through their pipeline, acquire some promising assets, and keep the treadmill going. There are 100+ year old mining and oil companies. None are mining the same asset they had one day one, but this doesn't make the industry unsustainable.
This is sort of true but skips the main problem with the framing. "Sustainable" doesn't even matter. If I drill an oil well for $100 mill and it throws off $30 mill a year of profit for 10 years and then dries up, it's a great use of capital. The idea that something with a life of "not forever" is bad by nature is silly.
It doesn’t matter if it is a sustainable business. People will do what they can to maximize their income now. If 10 companies are withholding a cure to milk the patients, any one of them can break from that strategy at any time, with near-instant financial reward and competitive advantage. It is not a stable equilibrium.
It shouldnt be limited to companies within the country. Any foreign company can be a market disruptor here. Assuming the drug approval admin isnt working alongside the 'cartel'.
Patents are intended to temporarily restrict competition. In order to get that, the inventor has to publish the invention.
The time limit creates incentive to go to market. Let’s say a company invents and patents a cure for cancer. If they just sit on it, they’ll get zero revenue, zero return on the cost to discover it… and then in 20 years their competitors can all use it for free. Not a sustainable business model—intentionally.
Yet meanwhile, women entered the legal profession in the 1920's but wages did not catch up until the 1960's when the Equal Pay Act was passed. Economics 101 would say you could snap up competent female lawyers for a little more than they were paid at their current firm and thus wages would creep up, yet this would not happen.
Not sure why you're being down-voted. Efficient markets for talent shouldn't tolerate racism/sexism/etc, but all the historical evidence is to contrary. It's almost as if rational _homo economicus_ is a bad foundation.
I don’t think so. It’s not that law firms intentionally passed up on bidding a little more for women because they were as good as men but cheaper. It’s because they thought the women were simply less good.
It takes awhile for people to change their view. If you come from a society that has for thousands of years said women couldn’t do jobs like be a lawyer as well as men, it’s not crazy that it would take you 40 years to figure out that wasn’t true.
It’s not a bad foundation when it comes to something like what we’re discussing, allocation of capital by professional investors in the medical space. They’re pretty close to homo economicus, but they’re still human so they still err.
Off course curing patients is viable. I am a doctor and I live off from it well enough. Now, if GS means "searching for potential methods to cure patients", then the answer is it depends. Is searching for new oil fields worthless? Or for a new battery technology? The low, even medium, hanging fruits have long been chopped. We have to climb ladders to reach the high hanging ones. This is called investment and is getting more and more expensive.
This reminds me of the new-ish treatments that promise to regrow tooth enamel or prevent the growth of bacteria that causes cavities. These won't get widespread adoption until the American Dental Association or whatever says they're safe/effective, but there's a clear conflict of interest because it would have a huge negative impact on their members' business model.
There's money to be made selling a cure, but the creative destruction that it can bring will mean entrenched interests will fight tooth and nail (pun intended) to delay it.
There are 190+ other countries that can also approve it (or that aren’t organized enough to care about drug approvals). If there was an amazing treatment working in Lichtenstein, we’d hear about it.
Thanks for chiming in. What do you think they do, and why do you think they are perceived as being more effective than they actually are? Any thoughts on the bacteria-morphing one?
I don't know too much about the bacteria stuff. Regarding enamel, the native structure is very intricate and contributes to the properties. Most of the acellular chemical reminalization just deposits disorganized minerals on the teeth. It might be improved vs. doing nothing (I'm not sure but I do use fluoride reminalization from the dentist) but its not regenerating your enamel. Imagine just slapping some concrete or mortar all over a slowly decaying intricate brick wall vs. rebuilding the brick structure; you may mitigate complete collapse but you didn't fix the decaying brick wall.
Yes, I knew a few of the authors from my time in grad school. Certainly much closer to mimicking the enamel structure but not a commercial therapy yet.
Depends on the market. Everyone dies eventually. Every near-fatal illness you suffer is a windfall for the medical system and ensures another windfall later.
For all other businesses, it's a little more complicated. If the patient/employee's knowledge, connections, etc, are valuable enough, then keeping them alive and mentating appropriately is inherently good for the business. The question then is "How do you measure 'enough'?"
The basic premise is kind of dumb because it’s irrelevant.
For one thing, the pharmaceutical industry isn’t one company, it’s hundreds. The example given (Gilead) is of one company that ate a market. They made $70 billion (and continuing) curing Hep C. They probably don’t lose sleep at night about the hundreds of billions in future revenue that will have prevented the other pharmaceutical companies from making when that disease is gone. This is one case where profit incentives align with human welfare.
Look at fisheries. They’re collapsing everywhere due to overfishing, the very definition of unsustainable business, because each individual fishermen’s incentive is to catch as much as they can.
For another, not all diseases are eliminated by the invention of a cure. Cures for cancer would lead to us living longer and getting more cancer. Cures for emphysema might cause more people to smoke and induce demand.
That questions belies a misunderstanding of how the pharmaceutical industry works and I'm having a hard time figuring out if the journalist made a mistake or the report was written by someone with little experience in the industry (I haven't read it).
Since we've mostly run out of small molecule drugs, the (vast?) majority of drugs are developed outside the pharmaceutical industry by biotechs funded by VCs and public investors. It's a well understood pipeline now that takes IP from university tech transfer to VC biotech to pre-revenue* IPO with the final exit being an acquisition by a pharmaceutical company, which comes in with the manufacturing infrastructure to take the drug from phase III trials or approval to the mass market. Once a drug is approved (or the phase III is very promising like Sofosbuvir), pharmaceutical companies trip over each other trying to buy the IP. The industry has offloaded most of the scientific risk to VCs and the public while sharing the rewards with those investors.
As long as the number of pharmaceutical companies doesn't drop to oligopoly/cartel levels and capture the regulators completely, the incentives are strong for one pharmaceutical company to buy a cure and take it to market to undercut a competitor's treatment. Even if an oligopoly develops, since there's no "product market fit" risk and zero scientific risk once a drug is approved, financing the purchase is trivial and starting a new pharmaceutical company to compete with the oligopoly is relatively easy. The manufacturing bit is no joke but the amount of money involved even with a single drug makes starting up a new pharmaceutical competitor totally worth it, since the manufacturing and quality control is a well understood engineering problem.
On top of that, it's practically impossible for every pharmaceutical company to have a drug that treats the same thing without a ton of consolidation in the market. Drug approvals often use active-comparators and standard of care controls that raise the bar for each new drug on the market that treats the same thing. A cure on the other hand is essentially just competing against a single golden standard (there are many exceptions but it's a good rule of thumb).
Another factor is pricing. Treatments are generally priced based on how they impact quality of life because that decides how much insurers are willing to pay, especially the big state healthcare providers that have to do hard cost benefit calculations. If a treatment is making bank, the ceiling for what you can charge for a cure is a significant fraction of the lifetime cost of the treatment, and not just based on the QOL impact. It creates a strong incentive for both investors and insurers to get the cure to market.
* If you think unprofitable tech IPOs are bad, most biotechs that IPO do so with zero revenue, let alone profit. Usually to fund clinical trials.
Thats simply not true. To argue to an absurd reduction, if that were true the NHS would preference amputation and wooden limbs over all other treatments for infected limbs. They still preference paths short of amputation.
It's a race to a medium. the problem is the medium is lower than rich people want, and the masses of poorer people who benefit from being lifted above amputation and a wooden leg don't appear in the cashflow as benefactors.
Getting used to a happy medium being lower than many people are used to, is hard.
The most important part of public healthcare is keeping that base level of treatment so any private medical healthcare needs to be at least this mediocre to be worth it.
I generally agree but look at the qualifications for weight loss drugs in the US vs the UK.
Getting approved for weight loss drugs is possible in the US without a ton of work. BMI of 24 and you snore a lot? Possibly covered. High cholesterol and some extra weight? Approved.
There are some things the American healthcare system does very well. Not many, but on occasion things work.
The analyst is stuck in the past. Genomic solutions are personalized medicine. As long as there are new people, and new combinations of genes, there will be problems to solve.
We get threads about this on HN a couple times a year, and I feel like people have never thought this through. The company that cures T1D or MS will make approximately eleventy jillion dollars. The mustache-twirlers engineering MS into a chronic manageable disease rather than curing it would simply be outcompeted and put out of business by the straight-mustached cure owners. If you believe the mustache-twirlers are capable of suppressing knowledge of a viable cure, I'm going to have fun selling you on a lot of more-plausible conspiracy theories; for instance, the faked moon landing, which would have required less collusion and been less impactful to the world.
In a strict sense, curing a single disease isn't a long term "sustainable business", because you'll eventually push the population of affected patients below a threshold of profitability. The premise of a major pharma company is that they keep finding other treatments.
Scientists are routinely independently re-discovering each others discoveries. The effort to discover cures to important disease is intense. The conspiracy to suppress a cure would have to be vast.
You don't have to suppress a cure, you can just choose not to release information that reveal one or spend research money in directions that lead to a cure.
Also, not that vast if you consider the amount of people who have the information needed to realize what is going on.
This only makes sense if you believe that the science leading to a disease cure occurs in exclusively one lab controlled by a giant pharma company, and not instead in dozens of labs in university biomedical programs around the country.
If it happened in dozens of labs… how the fuck does big pharma hold patents on certain drugs? The existence of a patent means the drug was developed and patented by one entity.
If a molecule, synthesis path, or mechanism has already been disclosed in the literature by multiple labs, then that is public prior art and it cannot be patented.
Therefore, If there were dozens of other researchers coming up with the same drug the patent is legally invalid.
Also like, ~everyone who works in pharma, from the grunts up to the C suite, is genuinely interested in making people's lives better and improving health. Profit is a strong motive, but it is not the only motivating force.
The problem with investors these days is that too many of them seem so focused on short-term gains and showing their numbers increase quarter-over-quarter that we seem to be incapable of looking at an investment over a longer period of time.
The report-writer must have been from Goldman Sachs' B-team. It takes five minutes to turn up ample evidence which demonstrates that curing patients can be extremely profitable.
Take, for instance, Harvoni -- a drug introduced in late 2014 which cures Hepatitis C following a single course of treatment. It has done something like $100B in revenue for Gilead Biosciences, and, minimally, earned them $7-10B in profit. (Possibly much more than that.) Its pricing was scandalous, but that's not the issue here; the point is that it was unequivocally one of the most profitable drug launches in history.
Sure, the eradication of Hep C might make it "unsustainable" -- but it's not as though there's a lack of other diseases or maladies to contend with. Take the profits and plant new seeds, buy new technologies, develop new drugs. Besides, the research and development of new drugs has never been a stable business model, and never truly sustainable off one discovery, on account of patent expiry terms, generic competition, etc.
What is the significance of 7-10B if it is "possibly much more than that"? Even if it was $15 billion that's a 15% margin. How is that scandalous pricing?
They could have priced it lower and still have turned a healthy profit. Still, they played the rules of the game as those rules were set, which a Goldman Sachs analyst, at least, ought to appreciate. There's nothing inherently unprofitable about cures, and the nature of the drug development business is inherently unsustainable.
The Senate has investigated ticket scalping at a Taylor Swift concert in Washington DC. That means nothing beyond "it's expensive and that makes me angry!" Yes, they could have priced it lower. 10% lower. (Of course that would have meant $10 billion less for other research and potential disease cures, but who has time to think about that!) And you know what would have happened? The Senate would have investigated because "that's still expensive and it makes me angry!"
I do agree with your point that curing diseases is profitable.
So if the pricing hadn't been "scandalous" by your definition, would it still have been profitable? You do realize that the profits are there because of the pricing, right?
Sad but necessary headline (if you don't get attention, no one clicks) that kinda obscures what the report marks as a solution - and no, it's NOT refusing to cure patients.
I'm not even close to being a libertarian, but I find that people expect biotech companies to swallow billions of $ of loss as some sort of public good. Reports like these are an attempt to better harmonise their survival model. Companies need to make money to offset their losses, if not to profit. And while biotech companies can profit, these can very quickly be offset by the cost of a single clinical trial - IIRC it costs $1 billion to take any new drug from trial to completion now. Imagine discovering the next penicillin in your garage and then needing to raise $1 billion to cure people with it?
The analysts recommendations are fairly tame - companies should target cures for diseases with a lot of sufferers (a social good) + note that there are a LOT of genetic diseases that could benefit from a single-shot cure.
Again, not a sympathiser for "big pharma" if that even exists, but I wonder how sustainable a model this can be if companies can get their stock wiped out by a single bad trial. Pharma is notorious as a risky investment - which for some, might sound like a problem for rich people. But really, it then becomes a problem to fund experimental research, the kind that pays off.
I'm not looking to defend pharma companies here, only to frame a slightly more reasonable set of terms for this debate. I'm sure such reports have their harms - rare, incurable diseases will get less attention. But we need a solution that acknowledges the constraints, not one that merely wishes away the limits of capital and sustained long-term research.
>Where an incident pool remains stable (eg, in cancer) the potential for a cure poses less risk to the sustainability of a franchise.
Precisely. Sustainable tech and research must focus on long term disease development, and not merely those already available to the medical industrial complex for continuous revenue. When was the last time we developed a truly new and novel lifelong, chronic but not overly debilitating illness with profitable methods of providing minor alleviation of symptoms? Diabetes is mostly tapped out, cancers are too unpredictable.
Frankly? Covid-19 was a squandered opportunity. There was ample raw material to work with truly innovative medical developments in both pharmaceuticals and medical equipment: long term wearable ventilators with expensive filters that must be regularly replaced; new over the counter medications with rapid half lives for maximum daily dose consumption— heck, bring back otc cough medicine with opioids! Damned effective and great stickiness of user base with only minor churn even after the cough is gone! Instead? Vaccines. Such a waste. The only saving grace there is the massive boost the anti vax community got out of it, so I can at least cross my fingers on a measles come back tour.
“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.”
It's easy to handwave "capitalism makes curing patients unsustainable" but here we have three strategies for sustainable cures that have a positive impact on society.
e.g. Curing blind children is profitable, since there's so many genetic reasons a child would be blind that you can keep introducing new cures reapplying the same technology.
Curing blind children is profitable. If cured, they will likely have more children. Surely some of their children will also be blind, so the company profits will increase.
Meanwhile over in the world where the government sinks a lot of money and energy into its citizen's healthcare, government-funded labs are exploring permanent cures for all kinds of problems via genetic therapy.
But not here. Someone's gotta make mad bank off of every aspect of this shit here.
>In general the US actually subsidizes pharma for the rest of the world.
I've never understood this argument. Our companies make money off of people in other countries. I understand that our costs are higher in the US, but I don't get how we're subsidizing the rest of the world when they pay for the drugs as well. It just seems like our funding scheme for healthcare is broken. What am I missing?
The question is: If a capitalist (or agent in a capitalist system) has a choice between a) investing to produce/producing a cure, or b) investing to produce/producing a more-or-less working symptomatic relief, how many agents/capitalists (in decision-making positions) go for choice B, which essentially turns them into legal drug pushers with a money-printing license?
Capitalist system solve this with competition. If there is already market of people paying for more-or-less working symptomatic relief then it's proof these people are actually a good market to sell a cure for x100 price of relief.
No not really. Just allow euthanasia and be done with it. Yes. there are moral grounds to it. You don't want to live life, why can't you just do it peacefully?
I barely want to live another day of life at the age of 36 :/
What a lot of folks neglect are N+1-order effects, because those are harder to quantify and fail to reach the predetermined decision some executive or board or shareholder has already made. Is curing patients a bad business model? Sure, for the biotech company it is, but those cured patients are far more likely to go on living longer, healthier lives, and in turn contribute additional value to society - which will impact others in ways that may also create additional value. That doesn't even get into the jobs and value created through the R&D process, testing, manufacturing, logistics of delivery, ongoing monitoring, etc. As long as the value created is more than the cost of the treatment, then it's a net-gain for the economy even if it's a net loss for that singular business.
If all you're judging is the first-order impacts on a single business, you're missing the forest for the trees.
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