'Is Curing Patients a Sustainable Business Model?' Goldman Sachs Analysts Ask (arstechnica.com) 368
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.
Leeches never truly went out of style in medicine (Score:3)
Not sustainable? (Score:3)
Nothing is stopping them from curing another disease and collecting another cool $20B or so.
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Now you want to invest in other companies that possibly end up like that as a 'best case' scenario? The best case being a 'decent' amount of profit with a number of failed companies that tried to cure X.
It's not sustainable, nor good for cash flow unless you hav
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Even in the realm of mathematical finance a sustainable cash flow is not any sort of prerequisite for profitability. If they can make enough income to sufficiently offset the risk based discounting of the initial investments, then there is no need for the income to be long lasting. It could even come in a single lump sum, as long as that lump is big enough.
In slightly reduced jarg
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Money-Grubbing Sociopaths (Score:3, Insightful)
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.
Re:Money-Grubbing Sociopaths (Score:5, Insightful)
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.
I read the motive of the report very differently than you do.
I think you're reading it as "cures are less profitable than treatments, therefore don't try to cure anything! BWAHAHAHA!!!"
I read it as "curing things is really awesome and we wish you could do more! The problem is it's hard to come up with a business model that makes cures viable, and if you go out of business you won't cure anyone, so we suggest you keep developing treatments for things you can't cure at the same time".
You don't need to assume "money-grubbing sociopaths" to get a crappy situation.
Re:Money-Grubbing Sociopaths (Score:4, Insightful)
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Goldman may have a point that curing a single disease may not be a sustainable business model, but looking at the business as a single treatment for a single disease doesn't make sense -- it's like saying construction isn't sustainable because once you've built a building that person doesn't ever need another building.
Obviously construction isn't about building one building anymore than curing disease is about curing one disease. We need more than one building and we have more than one disease to cure.
It s
There's always another disease lurking. (Score:5, Insightful)
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?
Gilead did OK overall on this. (Score:2)
They did NOT lose money on the endeavor. They made extremely large profits for a couple years... and now it's drifted down a lot as the most financially capable potential customers have now been cured. Plus a couple competitive drugs have launched.
But... yeah, they would have done financially much better selling a $20K a year drug to keep Hep-C at bay for these same customers for the rest of their lives.
Of course, not everything is about profit maximization.... it is kind of a nice thing to save thousands o
It's not Black and White. (Score:5, Insightful)
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.
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But... yeah, they would have done financially much better selling a $20K a year drug to keep Hep-C at bay for these same customers for the rest of their lives.
Maybe. It's worth noting that the drug in question was part of an acquisition, so if Gilead didn't buy Pharmasset then that wouldn't have stopped the drug coming to market. It's also worth noting that they get that $20K/year right up until the point someone else develops either a cheaper treatment or a cure. If you don't go through the fast-track process, it takes, on average, 12 years to get FDA approval from a new drug, so even if you don't patent it then you get at most 8 years of exclusivity in the
How many (Score:2)
The closest that I've found claims "The only disease ever 'cured' is Small Pox.". And it's infectious.
"Cured" non-infectious diseases (Score:2)
I see a lot of people missing OP's point, answering with infectious diseases. Probably because you need both a medical and a historical background to give him an answer -- once a problem is "cured", the memory and attention dedicated to it fades.
Pellagra, Beri-beri, Scurvy, Rickets, Vitamin A deficiency blindness. All cured with population-scale nutritional supplementation, all so rare now that most doctors in the developed world have never seen a real
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depends on what you mean by cure
Taking a pill (pharmaceutical) and have the disease go away forever. And you are talking abut infectious diseases.
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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... [thelancet.com] 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
Your duty is clear (Score:5, Insightful)
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.
Depression is a godsend for big pharma (Score:2, Insightful)
Big pharma has been peddling antidepressants that largely don't work or are actually counter-productive, but have a host of side-effects, including suicide and addictiveness.
Some hallucinogenic drugs such as psilocybin and LSD, on the other hand, have shown remarkable, disease-changing curative properties, but are schedule 1 drugs. [drugs.com]
We didn't need Goldman Sachs to reveal that curing patients is not the best model for big pharma. Everybody with half a brain must have known this by now. Enjoy your destructive a
Almost as if capitalism is meeting it's end (Score:5, Insightful)
Nah who are we kidding, praise the almighty dollar!
so... (Score:2)
so what they're saying is that single-payer is the most economical healthcare system?
socialized medicine is at fault (Score:5, Insightful)
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.
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Why would a company trying to maximize profits even offer the 1 time cure at any price, when they don't have to and can charge as much as you can afford for the rest of your life instead?
If you privatize profits at all, that's what you get. How you pay for it makes no difference. Which is why only one country in the developed world does it that way, and why they have the worst health outcomes in the developed world.
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Because they would go out of business when a competitor enters the market and does offer the cure.
Absolutely right: if you privatize profits while socializing costs, that's all you get: that's crony capitalism and utterly dysfunctio
Re:socialized medicine is at fault (Score:4, Insightful)
I don't think you understand how this market is working.
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.
Every system will choose a cure over a treatment, for reasons including cost.
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.
This has nothing to do with the socialized vs private on the cost side or the provider side. In each case they will take the best and cheapest available option, a cure if available or a treatment if not.
The motive for treatment over cure comes from market pressures on the R&D side. Drug companies need to decide what projects to fund. Given a choice between developing a treatment or trying to make a cure, they might choose the treatment because it has a better return. The rest of the system needs to make do with what treatment options are given them.
You can call it unethical, but if the ROI on the treatment is 200% but only 80% for the cure then you're not going to stay in business making cures all the time.
Now you could fix this by socializing R&D (public universities do this to an extent), but it's not clear that they'll do a better job of drug development than drug companies.
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You can call it unethical, but if the ROI on the treatment is 200% but only 80% for the cure then you're not going to stay in business making cures all the time.
Why not simply charge more for the cure so that ROI is 210 % ?
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You can call it unethical, but if the ROI on the treatment is 200% but only 80% for the cure then you're not going to stay in business making cures all the time.
Why not simply charge more for the cure so that ROI is 210 % ?
Martin Shkreli is that you?
Though in all seriousness I covered this a bit in my other response, drug pricing is fairly arbitrary but at a certain point people simply won't buy it.
I think that might be a bigger problem when dealing with private insurers over public.
If it's a public insurer they may be willing to pay for a cure that costs as much as 20 years of treatments because they expect to be covering the person for another 50 years.
But a private insurer might only expect the patient to be a client for a
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Fair enough.
How about this: the insurer funds the development of the cure, and happily takes the 80% profit margin, instead of paying for the 200% ?
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When costs are socialized, who has an incentive to reduce costs? Patients certainly don't, because they don't bear the burden of their treatments. The government or regulated insurers don't, because the more they spend, the more power they have and the higher their revenue. And health care providers don't either because, again, they earn more if they spend more.
Now, European nations are a little bit better at cost control in their
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Absolutely. And the way competition is being suppressed through socializing costs.
Who is this "everyone"? As a patient, I have an incentive to buy the cheaper treatment. But as a doctor or regulated insurance company, I don't, and it is doctors and regulated insurance companies that actually purchase treatments on behalf of patients. They don't spend their own money, so they don't care what things costs. B
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In a free market, that would be true. But we don't have a free market in healthcare. Meaning, the people who actually make the purchasing decisions (doctors, hospitals, and regulated insurance companies) have an incentive to spend more money on treatments, not less, because their profits are effectively a percentage of what they spend;
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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.
I thought about this a bit more and realized I was wrong (and you were more wrong than I first realized).
I still don't think the payer, private or socialized, makes a big difference, but to the extent is does make a difference private insurance is the one that prefers treatments instead of cures.
Consider a treatment that costs $100K/year and a cure that costs $1M.
A socialized payment system will obviously choose the $1M since it's going to be caring for that patient for decades.
But a private system may only
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You're presuming a socialized payment system that makes rational decisions based on what's best for society and for patients. That's absurd. Look at the current federal budget: are they spending money in rational ways?
And that is precisely the reason... (Score:3, Insightful)
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.
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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.
Sadly a lot of the research leveraged by big pharma is already publicly (i.e. taxpayer) funded [theguardian.com]. The idea that the pharma companies need to make huge profits in order to fund R&D is a convenient myth; it's all about generating short-term shareholder value. These days big pharma companies are more concerned with mergers [theguardian.com] and acquisitions [theguardian.com] than investing in research.
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Very much so. And quality and safety need not be the primary motive; these can be achieved by setting minimum mandatory standards and enforcing them. it works reasonably well in health care already, as well as in other industries. Not perfectly, sure, but the same is true for the public health care facilities we had: they didn't really care that much about quality because patients had no other place to go, and they were getting paid either way.
No. That's why ... (Score:2)
... many healthcare professionals make a living off making things worse.
People who suggested this were called kooks (Score:2)
If you applied the template of "what's in the health care/phamaceutical industry's best interests", the answer was always having a sick population. Following that, when people said there was no incentive to cure, only treat, they were called kooks.
Sure, OTOH, this company made a lot of money, and ultimately making money for the executives, even if it bankrupts the company, is the goal of the corporate leaders, i.e. the company (see private equity's "getting your bait back" [google.com], and this Nobel Laureate's paper o [nyu.edu]
A key political moment (Score:2)
This reveal, not anything to do with Donald Trump, may be the moment the Republicans lost the midterms.
Another case of misleading headline (Score:2)
This is yet another misleading headline from Ars.
From the CNBC report it was quoting, which in itself is only quoting excerpts:
https://www.cnbc.com/2018/04/1... [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."
"The potential to deliver 'one
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The analysts weren't raised right (Score:2)
Profits before the cures for smallpox, cancer, hepatitis-C, etc?
Well, I guess blame the parents applies to those analysts. As well as those patients.
Non-profit health care! (Score:3)
Generics/Biosimilars: Timeline Always Limited (Score:2)
Let's get one thing straight: the company that innovates cures has only a limited time frame for profiting from the risks they took in developing the cure or treatment.
Small molecule drugs are treatments. For a small molecule drug that time horizon is about 12 years (drug development after invention and regulatory approval time cuts it back from 20 years). Then the generics enter the market, and well, the profitability of treatment goes bye-bye.
The picture is better for biologic drugs because biosimilars ar
Re:A hard fact. (Score:4, Insightful)
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.
Re:A hard fact. (Score:5, Insightful)
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.
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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
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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.
You can either educate yourself and learn the truth, or continue following your beliefs because they agree with your political views. Which will you choose?
Re:A hard fact. (Score:5, Informative)
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.
Re:A hard fact. (Score:5, Interesting)
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 see, so the USs high expentiture on health failing to actually help the majority of the population is... Europe's fault. With that attitude, it's not surprising that the helthcare problem in the US continues.
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Freeloaders? So you think that we in Europe does not pay for the patents and drugs sold by US companies?
Have you seen drug prices in America? Europeans pay a small fraction of what Americans pay for the same drug.
Re:A hard fact. (Score:5, Insightful)
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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.
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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.
It's not really about buying in bulk (Score:3)
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
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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.
Clearly you have never been to Basel.
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Europeans are basically freeloaders leeching off American R&D spending.
No we are not.
According to the economist [economist.com] 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.
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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 o
EU R&D ~ US R&D (Score:3, Informative)
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://
The cancer drugs that kept a family member of mine (Score:4, Interesting)
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.
Re:A hard fact. (Score:4, Interesting)
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.)
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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.
Re:A hard fact. (Score:5, Insightful)
Is Curing Society's Ills a Sustainable Political Model?' Slashdot User Asks.
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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).
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Health insurance companies are not just middlemen. They are in the business of risk pooling. That's the reason insurance exists.
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Businesses absolutely need to make a profit -- overall and long term.
However, this does NOT mean that they need to profit off of everything they do. They could use profits from one product to help subsidize non-profit operations elsewhere, and gain good will in the process.
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businesses do NOT need to make a profit. Spotify hasn't made a profit yet, but it's still an existing business. It's a hard fact that businesses do NOT need to make a profit.
I guess you've never run a business.
PROFIT (noun): a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.
If a drug company can't make a profit on their existing drugs they will not have the capital to invest in new ones.
They can get the capital through direct borrowing or investors but either way they need a profit to pay them back.
Re:A hard fact. (Score:5, Funny)
Actually, the US raised funding for that, and bombs and missiles, and cut taxes on everyone. Budget limitations are for suckers.
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But really, it's marginal compared to what was spent or 'invested' in 'security'.
Re:A hard fact. (Score:5, Insightful)
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
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A public-private partnership of some kind can promote these kind of investments, but there's also many things that could go wrong. Direct company grants would be optimal, but then that opens bureaucracy and expenditures on 'vetting' companies as well as possible sham companies that will still get through (cough)theranos(cough).
Supporting the middle men such as GS to make the investments and the 'minnowing' is also risky for obvious reasons.
I honestly don't know exac
Government and university based research (Score:2)
Businesses need a profit.
That is why we also have government and university based research. For profit corporations are not the only providers.
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Re: A hard fact. (Score:2)
You managed to miss the part where nearly every business on the planet exists to profit off someoneâ(TM)s hardship or desire. Grocey stores? Plumbers? You bet.
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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.
Screwing people is a major business (Score:5, Funny)
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. ;-)
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So researchers should develop new drugs in their free time? Yeah, that will work.
And before you say "government," let me remind you that nobody wants the compassion of the IRS and the efficiency of the DMV in their health care.
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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 [pnas.org] 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. Busine
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Agreed. It's so huge a problem that people are confused by your statement.
It's like the pay-to-use operated bathrooms you sometimes see in very poor countries. Any American who has to pay a trivially small foreign coin to pee will do it, and at the same time immediately think "This is CRAZY. I can afford this, but this encourages people to pee on walls, shit in the grass, etc. This should be free because it helps society and EASILY pays for itself."
Anyone from almost any country other than the US would
Re:There's no money to be made in health. (Score:5, Insightful)
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.
Re:There's no money to be made in health. (Score:5, Informative)
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... [npr.org]
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.)
Re: There's no money to be made in health. (Score:5, Insightful)
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.
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"I've never heard of a pharma company that says it needs more sick people."
Sure? They usually say that it's not a good business to create cures for rare diseases, because so few people have it. Is that not exactly the same thing?
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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,
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Re:There's no money to be made in health. (Score:5, Insightful)
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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The pharma and business industries don't want cures. That would stifle future earnings potentials. It would be them acting against their own self interest. Such is the price for capitalist and a private healthcare environment.
Did you even read the post you replied to? It made a detailed case explaining exactly why cures are good business that big pharma should (and, quite obviously, does) want, based on capitalistic incentives for generating large profits. You reply with a flat, unsupported assertion of the opposite, ignoring all of the solid argumentation you're replying to.
What kind of thought process motivates people to post such stupidity? I suppose you at least had the sense not to sign your name to it. You made yourself
Re:There's no money to be made in health. (Score:5, Insightful)
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.
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We expect the price of newly released compounds to be high as manufacturers make what they can up front in the limited time that they have exclusive rights to produce it. But what proves our system is corrupt is those sudden price spikes for compounds whose patents have expired. These spikes occur in the US market because someone has cornered the supply of the generic in the protected domestic market. And why is there a need to "protect" the US market for generics at all? If American patients were able to o
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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 dysfunctio
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I see a certain parallel with the private prison industry.
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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 n
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Building green highways, a comprehensive network of cycling paths completely free from motorized traffic, would radically transform pharmaceutic and healthcare industries.
Because a cityful of people cycling to work in the rain and the cold would be highly profitable for them.