Goldman Sachs Analyst Asks Whether Curing Patients Is A Sustainable Business Model
from the better-to-ask-whether-the-traditional-drug-development-model-is-sustainable dept
Pharma companies generally like to give the impression that their business is a win-win kind of thing: you get better, they get sales. But sometimes the mask slips, and the real strategy that lies behind the benevolent exterior is revealed. For example, back in 2014 we wrote about the CEO of Bayer, one of the biggest drug companies in the world, openly admitting it developed medicines for rich patients in the West that can pay high prices, not for those in places like India that need them just as much, but can't afford them.
Now CNBC has spotted another revealing remark that probably reflects what many in the Big Pharma world say privately. It appears in a report called "The Genome Revolution" about a new generation of treatments based on powerful genomic techniques like CRISPR. They hold out the hope that many diseases can be cured permanently, for example by editing the patient's DNA to replace genetic code that is causing the problem. The report asks: "Is curing patients a sustainable business model?" It goes on to explain the issue here:
"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."
That's a fair analysis. Given the choice between creating a product that cures people after one use, and another that requires a lifetime's supply, the rational choice for a company is the latter. The analyst's question, shocking as it is, exposes neatly the tension between what Big Pharma and its shareholders may want -- fat, recurring profits -- and what patients and society desire -- a short course of treatment that results in a complete cure. As genomic medicine continues to progress, that question is likely to be posed more frequently, both behind closed doors, and in public debates. It will also bring with it another one: if curing patients isn't a sustainable business model for traditional pharma companies, why not find other ways to fund the development of genomic treatments?
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Filed Under: business models, cures, diseases, gene therapy, genetic engineering, genetics, health, pharmaceuticals, profits
Companies: goldman sachs
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Obviously, treating the symptoms will be much more profitable than curing the disease, however - what kind of an asshole verbalizes such revolting thoughts. Everyone has dumbass ideas, but most refrain from embarrassing themselves with same.
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This story has created a lot of outrage for no good reason. A for-profit company should be investigating the financial effects of new technologies. The report doesn't say people shouldn't be cured—indeed it says gene therapy "carries tremendous value for patients and society", which suggests the opposite. It merely points out the challenge for the business model, as you did; so yeah, maybe health care shouldn't be about profit.
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It's also why they have not, so far, picked up on any "natural" cures or medicines, because they *can't* be patented so they can choke the lives of patients to pay for it.
One life lost due to a big-pharma "cost" prohibition of the medication should equate to a 1 Trillion dollar fine, payable to the family of the person who lost their lives.
That ought to suck the "profit" out of treating instead of curing, or pricing their medication so high that insurance companies (that never pay full price anyway) refuse to pay for it, so their customers can continue supporting pharma's revenue streams on older, less effective, possibly-with-fatal-side-effects medications.
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The only actual research done by big pharma is scaling for production and modifications to keep the patents live.
Real research is done on the taxpayers dime at hospitals colleges and universities.
Capital decisions that cost lives for profit should have Capital/Capitol punishment.
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I just wish this was /s
Look up drug patents in the last 5 years and see how many are new in the 'never before seen type of medication' and how many are 'the same medicine we patented last time, but we added polka-dots (at the molecular level)...
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That's very pessimistic. Note that this isn't a pharma employee saying it, it's an investment analyst. Perhaps they raise the problem in the hope of finding a solution. A profitable one, we can assume, but not necessarily an inhumane one; maybe we'll get governments to pay these researchers and make the financial return elsewhere (e.g. lab equipment/tests—or the entire rest of the economy, because fewer workers will be dead or incapacitated).
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Maybe - but it is based upon observed events rather than corporate propaganda.
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The Free Market will decide the value of life
Another advantage of the patent system is that it is not really a free market.
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Re: The Free Market will decide the value of life
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Re: The Free Market will decide the value of life
Courts and insurers also put dollar values on human lives, the numbers being about 2-10 million US dollars each for developed countries. It's not new.
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Re: Re: The Free Market will decide the value of life
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Re: The Free Market will decide the value of life
The customer is always right. Big pharma, insurance and healthcare companies are investment companies. It's the investors, not the patients, who are the primary customers.
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Re: Re: The Free Market will decide the value of life
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idk
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.. and seemingly they also are happy when you just hurry up and die.
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Duh...
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simple solution for lifetime cash flow
Surgical implants can also be licensed rather than sold.
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Re: simple solution for lifetime cash flow
Not so simple tho - and would led to many hilarious events.
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Re: simple solution for lifetime cash flow
Also pay for patches. That bandwidth is not free! Want to patch out that zero-day hole that lets any hacker control your pacemaker? That will be $10,000.
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Re: simple solution for lifetime cash flow
Monsanto routinely sues (and wins) lawsuits against farmers that replant seeds that have been cross contaminated with genetic sequences that Monstanto has patented. They get away with it because they force farmers using their seed to sign "hold harmless" agreements before they can purchase their seed. Basically the one on the hook is the poor farmer that plants Monsanto, DuPont, or Sygenta GMOs thanks to contract law. And good luck buying seed that is NOT genetically modified in certain crops like soybeans and corn. Over half the world's agricultural seed is controlled by those three corporations and they are locked up in GMO patents. The problem with GMOs isn't that they are dangerous to humans. It's that they're patented and those patents are viral. They taint all fields genetically compatible within many miles around.
There's plenty of artificial gene sequences already patented. Based on already established case laws, it's entirely possible, even if it sounds absurd, that redistributing any patented gene sequences could result in royalty fees. Want to have that child with your genetically altered spouse? That'll be $10k please for the dominant gene replication royalty.
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Oh - well, that makes it ok then
It's not nice to patent mother nature
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That. Research into it and let the generics use at will. Also, I think we should have some type of universal healthcare provided by the government but that would be too Communist of me (even if capitalist countries all around have such model in place).
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Mind I personally think it has devolved into a kleptocracy.
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True, but Communists routinely confuse the two.
You're thinking of the liberal socialism adopted by European governments following the Second World War.
I don't mind socialism as long as it's of the classically liberal variety, i.e. it allows for and enables private enterprises to flourish. It's when it becomes oppressive to the individual and to society that it's a problem, but that's the same for any philosophy including capitalism.
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It's a pretty disgusting thing for the guy to say, considering these cases will always exist. I shouldn't have been shocked, but eh... that's capitalism to the nth degree for you.
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The treatment will cost $500 (or more) a month for the rest of your life.
Needless to say the healthcare is for the rich.
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As far as "encouragements" from big pharma, you'll have to be a bit more specific as I don't subscribe to tinfoil-hattery nonsense and insinuations.
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I find that hard to believe.
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Do you understand how insurance, of any kind, works?
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What don't people understand about investment chasing return? If I am investing my money, do I want to invest it in something that will generate a lot of money or a little money? What do you choose?
Why are you surprised that this is the way of the world? If you don't like it, why don't you start your own company in order to cure diseases and make very little money?
As for gene editing? This could actually cause the end of mankind. "Of course the wolf has wings"
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If it's patented, and then only until the patent runs out. Of course, if someone has $100K, they might as well buy a round-trip ticket to some country without pharma patents, and save $90K. (Or if you're looking for a scifi plot: spend the $100K to fly into space and manufacture the stuff outside of Earth jurisdiction, just to spite the phama companies.)
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How? Contrary to popular science fiction belief, there are hard limits on how much you can edit genes and DNA. Should we be careful? Yes. Is it going to wipe out all humans in the blink of an eye? Not likely.
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Want to cure big pharma prices?
Medicare/Medicaid
Social Security
Anything above that, has to come out of their salaries, which will be limited to that of the lowest paid Teacher in the country.
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Re: Want to cure big pharma prices?
Make them eat their own cooking.
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Patents
Given such a patent system, the difference in profits between life-time drug treatments and one-time cures is much less pronounced. The drug company can't keep milking the medicine sales for the life of it's patience, because the patient will be able to turn to a low-cost generic.
What if it's a rare disease where there is no low-cost generic? It's patents to the rescue again. The purpose of the patent system is to make an invention available to the public. Patent examiners that are doing their jobs well should reject patent applications that don't contain sufficient information to reproduce the invention (or drug, in this case). At this point, the inventor can, of course, re-appply, but this time they should include the necessary information.
When this system functions properly, the cost to create and market generic drugs should be greatly reduced, thus again expanding the field of drugs available via generic markets.
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What would you rather have: good health and a research program directed by need instead of shareholder profit or the secure knowledge our country is the most awesome because we don't follow others?
I think the choice is obvious and if you don't agree with me you are a traitor. Also when I am personally and troublingly affected by this horrible program I am planting my (awesome!) flag on, It will still be your traitorous fault for letting the system get this bad.
/s
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At least in the current system there are many different people who can attack problems from many different angles.
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You may have been kidding but this is exactly how insulin pumps work, although they are not internal. Yet. As soon as it's out of warranty (4 years for the new Medtronic pumps) it gets replaced with a new $10,000 model. And in the case of the current generation, a new $10K model that doesn't work as well. Being diabetic with a pump costs about $2000 a month at retail, not counting the pump itself.
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But really, the mortality rate will hover around 100% in either case so...not very funny.
The comments about a functioning Patent system being the REAL solution for motivating and monetizing medical innovation while also benefiting society are more on point than the "heartless bastards!" outrage posts though.
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They do have a point ...
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Re: They do have a point ...
I've never had difficulty getting a doctor to prescribe an antibiotic when my stomach issues flared up.
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Workarounds available - even if GS has a point
While the discussion on the ethics of selling a $50 - Drug for nearly $100 K is ongoing, Gilead shows that money can be made with new one-shot cures.
And it could be argued that Gilead's approach does encourage investment in drug development and benefits mankind (even if the high prices may be questionable, they will drop sharply when patents expire).
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Curing patients...
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Get Patents Off Medicines And Medical Appliances, Etc.
We should ban all patents on medicines and medical appliances forthwith and fund it via taxes. That would quickly put a stop to profiteering and guarantee that medicines actually work as intended.
A girl can dream.
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This is "common law"!
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What is implied is even worse: Roundup Ready people. The "one shot cures" may even be freely available once their new business model demonstrates recurring revenue.
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What about competition
Survival of the fittest.
But that wouldn't be fair, would it? We need government regulation to make sure that the inferior competitor is not injured by competition. Because... shut up.
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