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Comment by yummyfajitas | Hacker News Reader

Investment in biotech is low because the returns are low, not because of a high discount rate.

It's getting harder to discover new drugs and get them through the FDA gauntlet. Most of the low hanging fruit has been found, and additional fruit won't necessarily pass comparative effectiveness without huge (and expensive) trials. After it makes it to market you are subject to political risks - price controls, lawsuits over side effects too small to find in clinical trials, etc.

It's hardly clear that the valley is even a good short term investment. Most tech companies focus heavily on growth, not profits.

Why do you believe that biotech has higher long term returns than the valley?

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> Investment in biotech is low because the returns are low

As I understand, investment in biotech is low because the time to realize returns is long, not because the returns are low (even after adjusting for time). The time it takes to bring a product from concept to market in biotech is virtually an eternity by Silicon Valley standards.

Also, the long term cash outlay for a drug that might have side effects discovered long after the patents run out. It is a very chancy business with a lot of failures per success. There are much better things to investment in.

Why do you believe that biotech has higher long term returns than the valley?

That's precisely the problem. Within my lifetime the current antibiotics will become useless, we will be where we were before 1937 (discovery of sulfanilamide), physicians will be as good as they always were at prognosis, but helpless in the face of bacterial infections. The apocalypse is coming, and capitalism is no tool against it.

The issue of fewer drug targets than in the past is not something that any economic system can solve. That's just chemistry.

As for the rest of it, it's true that capitalism can't fix the FDA or foreign price controls. Lets hope Charlie Stross is right and the capitalists can take over the government and fix this.

So, that's being too nice--recall that market forces are what have led to the overprescription of these medications and also the creation of the environments (hospitals) in which they flourish and mutate.

Yes, we would likely be better off with a Pigouvian tax on antibiotics - that's the economist solution. Unfortunately, neither the capitalistic system nor the democratic process has any real way to get us there.

Pigouvian tax on antibiotics - that's the economist solution

The Swedes and British manage extremely well with national guidelines that physicians actually adhere too. In some disciplines there is no alternatives to the technocrats.

Heh, the takeaway I've gotten from some of Stross's novels is that AI makes "capitalism" indistinguishable, at least from the point of human beings, from a centrally-planned managed economy. So there could be a future in which AI's become sufficiently advanced at serving human needs that we all live as komrades in a utopian communist society.

"Lets hope Charlie Stross is right and the capitalists can take over the government and fix this."

> ...but [capitalism does not require democracy] means that the interests of the public (labour) are ignored by states increasingly dominated by capital (because of [automation privileges capital over labour]) unless there's a threat of civil disorder. So states are tooling up for large-scale civil unrest.

Let us hope, indeed. Sounds like fun.

In the Chinese curse sense?

I don't understand how this is a critique of capitalism. Doesn't this argument of shortsightedness apply to all economic and political systems?

The specific defect here is that right now, today, a capitalist country is not, in your estimation, putting enough capital behind biotech to solve the problem of antibiotic-resistant bacterial infections. More expansively, you're saying that Capitalism is incapable of making this effort.

It sounds facile, but what's the alternative? Isn't this a defect of every economic and political system on the planet, not just capitalism? Cuban communism is not putting sufficient capital in play to solve this problem as well, you know. Nor is passive anarchy in eastern Africa putting enough capital towards solving the problem.

Even assuming that more capital would magically solve this is kind of a naive viewpoint; serendipity and advancement in parallel fields has played a much larger role in advancements in medical technology than directed research has [citation needed], and for all we know, advances in information technology could hold the answers to solving this problem in a much more effective way.

The notion that a directed, centrally planned effort can solve problems (rather than just implement those solutions) is one that is historically unsupportable in any context.

Within my lifetime the current antibiotics will become useless

Also, bananas will be extinct by 2008, and there won't be enough oil or food.

"additional fruit won't necessarily pass comparative effectiveness without huge (and expensive) trials"

Ah, that may explain the statistic I recently saw that Phase III trials are taking up 90% of the budget necessary to bring a new drug to market.

Think of a study that needs 3 lab test per day for each of the participants. These tests aren't cheap and a multi-year study with a couple of hundred participants with shipping costs (overnight) for the samples. It does ring up quite a bill.

Plus, oh, finding and keeping enough people in the study willing to get 1-3 blood draws a day???

Yow. I thought that by Phase III safety was pretty well established and you'd be looking for efficacy endpoints, surrogate or real. Emphasis on endpoint ... but I guess not.

But ... if vague memory serves, from the overview of some Phase III trials, maybe not the first one, I remember more like hundreds of participants. Maybe not quite a thousand, but a lot.

They don't have to be blood samples. I remember one which was blood, urine, and stool each day. Also, each sample might have multiple tests performed. Its a pretty interesting logistical problem.

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