Goldman Sachs questions whether curing patients is a sustainable business model

This realization goes beyond medicine, and is key to understanding why we live in an 'economy' that produces masses of landfill junk while our technology and manufacturing processes keep on improving.

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.

And it's across the board. I tell myself exactly that when I look at my toothbrush.

A toothbrush lasts about ~3 weeks before needing replacing. I'm sure someone in the industry will tell me that it's because it's made of unobtainium unicorn hair specially designed to make my teeth whiter and all that.

I also have a another plastic brush to clean my shotguns of all things (I do a lot of clay pigeon shooting) -- the construction is identical to a toothbrush, just perhaps a tad bigger. Doesn't have the fancy colored handle.

Now the brush I'm currently using I've been using for 3 years and the brush is still pretty much pristine, after being used to generously scrub bits of sharp, grim metal once or twice a week.

Hmmm... How does that work? Better unicorns? Well, think about it, everyone is changing toothbrush on a monthly basis, that is a huge revenue. Even reducing the lifetime of a toothbrush by 5% would increase the number of brushes sold by a huge amount.

All the while, it creates fantastic amount of plastic waste. Fancy packaging and 100% plastic, possibly not even all recyclable.

Having said that, I do want people who solve major problems to be reasonably compensated. I'm not sure what that looks like.

Let's not forget, Goldman Sachs and its biotech brethren are businesses. All business involves long-term strategic planning, often behind closed doors, to answer the question of "what application of our existing money will make us the most money in the future?" When viewed through this lens, Goldman's statement can be polished up to "of all the biotech investment options we're weighing, investment in outright cures for infectious diseases is less profitable in the long-term because curing people has a nonlinear effect on the patient population." It's a simple statement of fact.

OP's summary, and I strongly encourage you to actually read it if you haven't, goes on to say that Goldman's research suggests long-term research and product investment would be best applied to medical conditions like cancer and aging, for which a cure for an individual doesn't result in a diminishing market.

This isn't nearly as evil-sounding as the article aims to make it sound. At worst, it highlights something we already know: market-based solutions tend to be flawed, and if we want investment in treatments for infectious diseases we need to turn to forces that are exempt from market forces (i.e. government research funding). At best, it's an indication that we can expect more investment to go into things like cancer and age-related diseases.

Because it's an effective product in treating tooth sensitivity(by occluding exposed dentin tubules), but it is also effective in preventing tooth decay when used with fluoride, I can't help but speculate what the motivation was for pulling it off the shelves.

https://medium.com/@ravenstine/the-curious-history-of-novami...

The conspiracy theorist in me wonders if they calculated the potential financial impact in the U.S. of people getting fewer dental caries and realized they'd be making less money overall from related treatments.

In theory, competitors would step in with cheaper, faster cures, preventing the exploitation of patients.

In reality, many if not most patients find themselves at the mercy of medical offices and hospitals which are themselves seeking to maximize profit and therefore have strong financial incentives to prefer expensive, ongoing treatments over cheap, fast cures.

But then I read further. The report cited in the article suggests that companies should focus on treatments for things like common cancers, which has a renewable pool of patients. It also suggests diversifying the portfolio of cures.

It does not say companies should not bother with curing Hep C like illnesses since there's no money in it.

I hope for the sake of all humanity that nobody discussed addressing this particular problem directly.

> Genital herpes simplex was not always stigmatised. It was merely a cold sore in an unusual place until the 1970s. As late as 1975, a study of "Psychological morbidity in a clinic for sexually transmitted disease" does not mention herpes simplex because at that time, no significant morbidity problem (i.e. mental anxiety or illness) was associated with the virus.

> Pedro Cuatrecasas states, "during the R&D of acyclovir (Zovirax), marketing [department of Burroughs Wellcome] insisted that there were 'no markets' for this compound. Most had hardly heard of genital herpes..." Thus, marketing the medical condition—separating the 'normal cold sore' from the 'stigmatized genital infection' was to become the key to marketing the drug, a process now known as 'disease mongering'.

> Since the creation of the herpes hype, some people experience negative feelings related to the condition following diagnosis, in particular if they have acquired the genital form of the disease. Feelings can include depression, fear of rejection, feelings of isolation, fear of being found out, and self-destructive feelings. These feelings usually lessen over time. Much of the hysteria and stigma surrounding herpes stems from a media campaign beginning in the late 1970s and peaking in the early 1980s. Multiple articles were worded in fear-mongering and anxiety-provoking terminology, such as the now-ubiquitous "attacks", "outbreaks", "victims", and "sufferers". At one point, the term "herpetic" even entered the popular lexicon. The articles were published by Reader's Digest, U.S. News, and Time magazine, among others. A made-for-TV movie was named Intimate Agony. The peak was when Time magazine had 'Herpes: The New Scarlet Letter' on the cover in August 1982, forever stigmatizing the word in the public mind

The Goldman guy's opinion is that the industry should focus on treating the conditions that affect the greatest number of people, double down on innovation, and turn their focus towards improving the lives of the elderly—which we're all counting on being, once the promise of gene therapy cures the maladies younger and middle aged people suffer from.

Oh, the horror!

A free market works when players have information symmetry and can make free decisions of sound mind. We otherwise resort to regulation, for example to rein in natural monopolies. Regarding chronic treatments, there's nothing the government can do (within this narrow focus) to reduce demand - but the government can set the rules. Specifically, the government can regulate that pharmaceutical companies must balance their research spending between chronic treatments and one-shot cures, rather than going all-in on chronic treatments. The government can set a lifetime cap on revenue from an individual patient for a given drug, such a cap being formulated on the basis of the cost of development and the number of expected patients (i.e. market size - larger markets will have more patients and a lower cap per patient needed to recoup the cost of development), with production guarantees (since the per-unit cost of doses is trivial) for after the lifetime cap is reached. Indeed, such a production guarantee could be met with a publicly-owned-and-funded company tasked with producing generic versions of drugs for patients who have hit their lifetime cap - essentially, a generic drug company prohibited from selling to customers who haven't proven that they have paid more than the lifetime cap, which produces generic versions of drugs still protected under patent, which is now re-defined not as the exclusive right to manufacture but the exclusive right to manufacture and sell without restriction.

>To get around the sustainability issue overall, the report suggests that biotech companies focus on diseases or conditions that seem to be becoming more common and/or are already high-incidence. It also suggests that companies be innovative and constantly expanding their portfolio of treatments. This can “offset the declining revenue trajectory of prior assets." Lastly, it hints that, as such cures come to fruition, they could open up more investment opportunities in treatments for “disease of aging.”

In other words, Sachs is saying that just because you cure a disease, that doesn't mean you can sit on your ass. You have to keep finding diseases to cure. O, the horror.

why doesn't goldman sachs just grow humans and harvest their organs?

Here's how it goes- Government X issues a prize of $10B to whichever company comes up with a new drug for, say, blood pressure. (10B being about as much as a company would get in revenue for a blockbuster drug.)

Companies submit their drugs, which are then tested independently (see http://www.alltrials.net/ if you want to know why that's important), and if they are found to have passed the requirements in a strictly yes/no manner, they get the money.

The IP for the drug then passes to the government, which can then manufacture and sell it at generic rates.

Like everything there are down-sides to this method, but it would sidestep a lot of the issues around companies' incentive alignment with healthcare.

No great product mind I've ever studied sacrificed making a great product for a more profitable, adequate product.

In the long run, the company that makes the best product always wins. Apple was never worried about cannibalizing the iPod to make a better product in the iPhone. You won't find anything in Amazon's leadership principles[0] that could justify this kind of thinking. Even Wal-Mart, after pressuring their suppliers for lower costs, doesn't keep the difference as profits. They push their prices lower and build trust with the customer.

Curing patients is absolutely a sustainable business model, and only the most small minded, short-sighted Wall Street suit would think it isn't.

[0]https://www.amazon.jobs/principles

Capitalism breeds inequality and so it does harm.

Now I don’t see this as black and white. The free market is a useful tool one can use in healthcare WHERE it makes sense.

However that is not nearly as many places as the conservative free market fan club thinks it is.

This ought to be a reminder that more market does not equal better. More market thinking in health care is to the contrary going to bring worse results.

It is an extremely difficult problem to solve which means they only way to deal with it is through experimentation, tinkering and data gatering. Not through ideological silver bullets.