Goldman Sachs questions whether curing patients is a sustainable business model • Hacker News Board

Re: Goldman Sachs questions whether curing patients is a sustainable business model

#41

Post by PeterStuer » Fri, Apr 13, 2018, 9:04 AM UTC

buvanshak wrote: post #34

PeterStuer wrote: post #24

The 'ideal' drug from a business point of view not only not cures the patient long term, it offer a short term mitigation while increasing the risk on relapse and thus future recurring consumption of the treatment. At the same time it can be IP protected to block alternatives and has an insured third party collective payment coverage to guard against the treated running out of funds to afford the perpetual dependency…

> The 'ideal' drug from a business point of view not only not cures the patient long term... There is another one. Vaccines. Or any preventive medicines that does not actually require people to be sick. You just need to inject massive amount of fear of diseases (Statistics is your friend here) into the populace to create a nice, ever increasing demand of your produce...

I don't agree. Herd immunization is a solid concept. Besides, AFAIK most vaccines do not just work short-term while increasing the likelihood of future vaccination need.

Re: Goldman Sachs questions whether curing patients is a sustainable business model

#42

Post by cornholio » Fri, Apr 13, 2018, 9:04 AM UTC

Sure it is. Gilead made 100 billion dollars curring Hep-C with seed research investments that were probably much less than 1 billion.

So as long as this strong differential and potential for profit exists, drug companies feel competitive pressure to produce better treatments, irrespective of the fact that "milking" the pathology would yield them trillions collectively. It's effectively a "tragedy of the commons" of sorts: a single company trying to capture more of the market ruins profits for everybody else by finding a cure; behold, the magic of the free market.

They can only escape it by entering non-compete agreements and collectively agreeing not to inovate, a substantial claim that requires substantial evidence.

Re: Goldman Sachs questions whether curing patients is a sustainable business model

#43

Post by masklinn » Fri, Apr 13, 2018, 9:10 AM UTC

buvanshak wrote: post #34

PeterStuer wrote: post #24

The 'ideal' drug from a business point of view not only not cures the patient long term, it offer a short term mitigation while increasing the risk on relapse and thus future recurring consumption of the treatment. At the same time it can be IP protected to block alternatives and has an insured third party collective payment coverage to guard against the treated running out of funds to afford the perpetual dependency…

> The 'ideal' drug from a business point of view not only not cures the patient long term... There is another one. Vaccines. Or any preventive medicines that does not actually require people to be sick. You just need to inject massive amount of fear of diseases (Statistics is your friend here) into the populace to create a nice, ever increasing demand of your produce...

> There is another one. Vaccines.

Vaccines are absolute shit from a business perspective. They're expensive to develop, generally cheap to produce, and their administration is a single or limited event point. Sure you've got breadth but you've got no depth, once an individual is vaccinated they're done, or maybe they'll need an other round years from now.

Big pharma companies absolutely hate vaccines, having people pay for repeated treatment is way more business-beneficial.

And as other commenters have noted, herd immunity is a well-studied concept, and vaccines have very much proved their worth multiple times over.

Re: Goldman Sachs questions whether curing patients is a sustainable business model

#44

Post by anovikov » Fri, Apr 13, 2018, 9:11 AM UTC

In theory, market will drive things so the cost of one-shot cure will become equal to the capitalized cost of life-long therapy. Either by making the former more expensive, or the latter cheaper. Until the latter becomes a direct money loser.

Re: Goldman Sachs questions whether curing patients is a sustainable business model

#45

Post by emiliobumachar » Fri, Apr 13, 2018, 9:12 AM UTC

beefield wrote: post #14

watwut wrote: post #7

Earlier quoted context omitted.

That assumes monopoly. Competition should solve that.

Well, somehow getting rid of the monopolies (patents) faces significant resistance.

Getting rid of patents would need to be done in the context of a much larger change, which needs to address where will the money for research comes from. Today it comes from expectations of huge returns if the drug turns viable. It's solvable, but it needs to be addressed. Naively abolishing all patents will halt a lot of research overnight.

Re: Goldman Sachs questions whether curing patients is a sustainable business model

#46

Post by sjtgraham » Fri, Apr 13, 2018, 9:13 AM UTC

xg15 wrote: post #37

sjtgraham wrote: post #32

Earlier quoted context omitted.

There is nothing to say the market won't solve problems. Innovations like Gilead's are inevitable. A cure might make less money than chronic treatment, but once a cure exists nobody is buying the treatment. It's rational to develop the cure if you want returns.

If your ultimate goal is sustainable profit, it would be rational to not even look for a cure at all. As long as there is no practically usable permanent cure, everyone has a stable source of revenue from chronic treatment solutions. Once anyone develops one, the chronic treatment would become significantly less attractive (as you say), so revenue would become less predictable for all parties, including the party tha…

> If your ultimate goal is sustainable profit, it would be rational to not even look for a cure at all.

If you have a monopoly.

Re: Goldman Sachs questions whether curing patients is a sustainable business model

#47

Post by Broken_Hippo » Fri, Apr 13, 2018, 9:15 AM UTC

pintxo wrote: post #15

dschuetz wrote: post #4

A healthy person is bad for pharmaceutical business and doctors, yet very good for health and life insurances.

Not sure about that. Insurances require a certain level of "damage" probability, else no one would get insurance in the first place. If you could cure any illness with a $5 pill, I'd guess no one would get health insurance. This is somewhat different for life insurances, as you could still be run over by a (self-driving) car and die.

" If you could cure any illness with a $5 pill, I'd guess no one would get health insurance."

It is highly unlikely we'll ever get there, especially for genetic disorders and things like that. But who knows. Nevertheless, people will still get run over by a car and be injured, along with a multitude of other, very common accidents. Of course there would still be insurance.

Besides, a good amount of insurance in the world is government-funded. (non-us countries, medicaid, subsidies for private care). Another portion is at least partially paid by employers. These folks don't need the certain level of "damage probability". Employers get an extra bonus with decreased absenteeism, and they might possibly be able to stop paying for insurance altogether.

Re: Goldman Sachs questions whether curing patients is a sustainable business model

#48

Post by xg15 » Fri, Apr 13, 2018, 9:17 AM UTC

cornholio wrote: post #42

Sure it is. Gilead made 100 billion dollars curring Hep-C with seed research investments that were probably much less than 1 billion. So as long as this strong differential and potential for profit exists, drug companies feel competitive pressure to produce better treatments, irrespective of the fact that "milking" the pathology would yield them trillions collectively. It's effectively a "tragedy of the commons" of s…

It would still require that the company that develops the cure could make more profit off it than it would make with chronic treatments.

So if you went purely for profit, you could only develop a cure if:

- you could price it higher than the price of the chronic therapy over the full lifetime of a patient.

or

- you could sell it to more patients than you could have sold the chronic treatment. A lot more, because every patient will only buy the cure once.

So even then the incentives would probably lead do driving the price of drugs up significantly. You'd also still have no incentive to actually eradicate a disease.

Re: Goldman Sachs questions whether curing patients is a sustainable business model

#49

Post by buvanshak » Fri, Apr 13, 2018, 9:19 AM UTC

masklinn wrote: post #43

buvanshak wrote: post #34

Earlier quoted context omitted.

> The 'ideal' drug from a business point of view not only not cures the patient long term... There is another one. Vaccines. Or any preventive medicines that does not actually require people to be sick. You just need to inject massive amount of fear of diseases (Statistics is your friend here) into the populace to create a nice, ever increasing demand of your produce...

> There is another one. Vaccines. Vaccines are absolute shit from a business perspective. They're expensive to develop, generally cheap to produce, and their administration is a single or limited event point. Sure you've got breadth but you've got no depth, once an individual is vaccinated they're done, or maybe they'll need an other round years from now. Big pharma companies absolutely hate vaccines, having people p…

Vaccines provide, a nice, predictable, ever increasing demand. It is even possible to create arbitrary demand in the case of preventive measures such as these.

Profit from any normal drug is dependent on chance that a certain number of people will fall sick of the corresponding disease. The company cannot also count on outbreaks since it will have no clue when, where and for which disease the outbreak will occur. The expire date for drugs means that the companies will not be able to stockpile these drugs in hopes that there will be an outbreak some point in future..

Re: Goldman Sachs questions whether curing patients is a sustainable business model

#50

Post by xg15 » Fri, Apr 13, 2018, 9:19 AM UTC

sjtgraham wrote: post #46

xg15 wrote: post #37

Earlier quoted context omitted.

If your ultimate goal is sustainable profit, it would be rational to not even look for a cure at all. As long as there is no practically usable permanent cure, everyone has a stable source of revenue from chronic treatment solutions. Once anyone develops one, the chronic treatment would become significantly less attractive (as you say), so revenue would become less predictable for all parties, including the party tha…

> If your ultimate goal is sustainable profit, it would be rational to not even look for a cure at all. If you have a monopoly.

It's enough if you already have a sustainable business selling chronic treatments. Which I think would be likely for the kind of companies that have enough resources to be able to research a permanent cure at all.