(2018)
I barely want to live another day of life at the age of 36 :/
Take, for instance, Harvoni -- a drug introduced in late 2014 which cures Hepatitis C following a single course of treatment. It has done something like $100B in revenue for Gilead Biosciences, and, minimally, earned them $7-10B in profit. (Possibly much more than that.) Its pricing was scandalous, but that's not the issue here; the point is that it was unequivocally one of the most profitable drug launches in history.
Sure, the eradication of Hep C might make it "unsustainable" -- but it's not as though there's a lack of other diseases or maladies to contend with. Take the profits and plant new seeds, buy new technologies, develop new drugs. Besides, the research and development of new drugs has never been a stable business model, and never truly sustainable off one discovery, on account of patent expiry terms, generic competition, etc.
But not here. Someone's gotta make mad bank off of every aspect of this shit here.
“Solution 1: Address large markets: Hemophilia is a $9-10bn WW market (hemophilia A, B), growing at ~6-7% annually.”
“Solution 2: Address disorders with high incidence: Spinal muscular atrophy (SMA) affects the cells (neurons) in the spinal cord, impacting the ability to walk, eat, or breathe.”
“Solution 3: Constant innovation and portfolio expansion: There are hundreds of inherited retinal diseases (genetics forms of blindness) … Pace of innovation will also play a role as future programs can offset the declining revenue trajectory of prior assets.”
e.g. Curing blind children is profitable, since there's so many genetic reasons a child would be blind that you can keep introducing new cures reapplying the same technology.
Most people in the industry could name several examples of cures that are highly profitable.
Not to mention patented drugs are inherently an “unsustainable business” due to the eventual introduction of generics/biosimilars.
Depending on your development pathway, you’d be lucky to get 6-8 years to turn a profit.
It’s not sustainable for businesses who rely on sickness.
Their pricing was considered high enough that it led to a Senate investigation and quite a lot of litigation. (Which likely dug into their profits.)
> https://www.nbcnews.com/health/health-news/company-put-profi...
They could have priced it lower and still have turned a healthy profit. Still, they played the rules of the game as those rules were set, which a Goldman Sachs analyst, at least, ought to appreciate. There's nothing inherently unprofitable about cures, and the nature of the drug development business is inherently unsustainable.
Grow up Goldman.
Since we've mostly run out of small molecule drugs, the (vast?) majority of drugs are developed outside the pharmaceutical industry by biotechs funded by VCs and public investors. It's a well understood pipeline now that takes IP from university tech transfer to VC biotech to pre-revenue* IPO with the final exit being an acquisition by a pharmaceutical company, which comes in with the manufacturing infrastructure to take the drug from phase III trials or approval to the mass market. Once a drug is approved (or the phase III is very promising like Sofosbuvir), pharmaceutical companies trip over each other trying to buy the IP. The industry has offloaded most of the scientific risk to VCs and the public while sharing the rewards with those investors.
As long as the number of pharmaceutical companies doesn't drop to oligopoly/cartel levels and capture the regulators completely, the incentives are strong for one pharmaceutical company to buy a cure and take it to market to undercut a competitor's treatment. Even if an oligopoly develops, since there's no "product market fit" risk and zero scientific risk once a drug is approved, financing the purchase is trivial and starting a new pharmaceutical company to compete with the oligopoly is relatively easy. The manufacturing bit is no joke but the amount of money involved even with a single drug makes starting up a new pharmaceutical competitor totally worth it, since the manufacturing and quality control is a well understood engineering problem.
On top of that, it's practically impossible for every pharmaceutical company to have a drug that treats the same thing without a ton of consolidation in the market. Drug approvals often use active-comparators and standard of care controls that raise the bar for each new drug on the market that treats the same thing. A cure on the other hand is essentially just competing against a single golden standard (there are many exceptions but it's a good rule of thumb).
Another factor is pricing. Treatments are generally priced based on how they impact quality of life because that decides how much insurers are willing to pay, especially the big state healthcare providers that have to do hard cost benefit calculations. If a treatment is making bank, the ceiling for what you can charge for a cure is a significant fraction of the lifetime cost of the treatment, and not just based on the QOL impact. It creates a strong incentive for both investors and insurers to get the cure to market.
* If you think unprofitable tech IPOs are bad, most biotechs that IPO do so with zero revenue, let alone profit. Usually to fund clinical trials.
I do agree with your point that curing diseases is profitable.
What a lot of folks neglect are N+1-order effects, because those are harder to quantify and fail to reach the predetermined decision some executive or board or shareholder has already made. Is curing patients a bad business model? Sure, for the biotech company it is, but those cured patients are far more likely to go on living longer, healthier lives, and in turn contribute additional value to society - which will impact others in ways that may also create additional value. That doesn't even get into the jobs and value created through the R&D process, testing, manufacturing, logistics of delivery, ongoing monitoring, etc. As long as the value created is more than the cost of the treatment, then it's a net-gain for the economy even if it's a net loss for that singular business.
If all you're judging is the first-order impacts on a single business, you're missing the forest for the trees.
The question is: If a capitalist (or agent in a capitalist system) has a choice between a) investing to produce/producing a cure, or b) investing to produce/producing a more-or-less working symptomatic relief, how many agents/capitalists (in decision-making positions) go for choice B, which essentially turns them into legal drug pushers with a money-printing license?
However, I prefer that the value capture is by the public rather than a private corporation.
In reality though, I was not-so-subtly trying to suggest that if something is necessary for the public good (curing diseases) but a bad business model, then perhaps Capitalism itself is the wrong vehicle for that segment of industry and a different option - be it an incentive structure, government-owned pharmaceutical research, or managed economy - is needed.
Society fundamentally needs things that are simply bad business - sheltering everyone (lowers long-term housing revenue), feeding everyone (lowers long-term food revenue), healing everyone (lowers long-term healthcare revenue), educating everyone (lowers the value of degrees/credentials). If our economic model prohibits or discourages achieving optimal resource usage and human outcomes, then it's our obligation to explore and identify alternatives that may improve those outcomes respectively.
They ask it "is this good business" not just because they care about the answer itself but because they want to start a debate on how society should promote the invention of cures.
Like I think most people in most industries are passionate people that really want to do good, but they do need to eat too.
That is what we need to address.
I believe the great innovation of capitalism is markets, and the next era of economic and social progress will be driven by mixed capital/social good markets.
For example, what if you tied the tax rate for an industry to a combination of broad social goods (say, homelessness) and industry-specific goods (say the incidence rate of cancer for cancer drug companies), such that if we’re in a the middle of a homelessness crisis and many people have cancer, the tax rate might be 50%, vs if there is virtually no homelessness and we’ve cured cancer, maybe it’s 10%. Obviously there are other market approaches but eventually they would be converted to capital markets, so something like the above makes sense to me as a start.
Betteridge's law of headlines: "Any headline that ends in a question mark can be answered by the word no."
It's a race to a medium. the problem is the medium is lower than rich people want, and the masses of poorer people who benefit from being lifted above amputation and a wooden leg don't appear in the cashflow as benefactors.
Getting used to a happy medium being lower than many people are used to, is hard.
Uber has almost a 200B market cap for offering private transit. There is a working business model for transit.
In a strict sense, curing a single disease isn't a long term "sustainable business", because you'll eventually push the population of affected patients below a threshold of profitability. The premise of a major pharma company is that they keep finding other treatments.
2018: 448 points, 370 comments https://news.ycombinator.com/item?id=16827248
2021: 104 points, 100 comments https://news.ycombinator.com/item?id=27184116
The problem is our society is set up to give a lot of power and influence to businesses that are precisely interested in their own tree and not interested in the forest at all.
This is how they should think.
This is a function of how old the sick person is, as well as how severe their sickness and hence recovery will be. The data says, for the most part, healthcare is needed when one is close in age to exhausting their body’s capability anyway.
But while it makes for amazing ragebait and threads full of grievances aired against the healthcare system in general, I think the question isn't very relevant because in Biotech, this is dynamic already essentially forced, cure or not, because of *patent life*. A perfect example of this is Lipitor and Pfizer. Lipitor was not a cure. Statins do not cure you. But it was the most profitable drug of all time. But it eventually went off-patent and now the average price on GoodRX for a 30 day supply is only $6. Pfizer stock has never recovered from that success, though they certainly have a sustainable business.
The modern-day Pfizer is Merck. Merck has probably the most profitable drug in world history (Keytruda) which is far more profitable than Lipitor, and which has massively increased remission rates for a wide range of cancers, so it's somewhat of a cure as well. But that patent life is about to expire, and 46% of Mercks revenue will disappear with it. Of course, new people are diagnosed with cancer every day, and Keytruda will continue to be prescribed in the millions, but Teva and others will sell the generic version and Merck will lose out on the revenue. So the race is on to get more things through their pipeline, acquire some promising assets, and keep the treadmill going. There are 100+ year old mining and oil companies. None are mining the same asset they had one day one, but this doesn't make the industry unsustainable.
Getting approved for weight loss drugs is possible in the US without a ton of work. BMI of 24 and you snore a lot? Possibly covered. High cholesterol and some extra weight? Approved.
There are some things the American healthcare system does very well. Not many, but on occasion things work.
Precisely. Sustainable tech and research must focus on long term disease development, and not merely those already available to the medical industrial complex for continuous revenue. When was the last time we developed a truly new and novel lifelong, chronic but not overly debilitating illness with profitable methods of providing minor alleviation of symptoms? Diabetes is mostly tapped out, cancers are too unpredictable.
Frankly? Covid-19 was a squandered opportunity. There was ample raw material to work with truly innovative medical developments in both pharmaceuticals and medical equipment: long term wearable ventilators with expensive filters that must be regularly replaced; new over the counter medications with rapid half lives for maximum daily dose consumption— heck, bring back otc cough medicine with opioids! Damned effective and great stickiness of user base with only minor churn even after the cough is gone! Instead? Vaccines. Such a waste. The only saving grace there is the massive boost the anti vax community got out of it, so I can at least cross my fingers on a measles come back tour.
There's money to be made selling a cure, but the creative destruction that it can bring will mean entrenched interests will fight tooth and nail (pun intended) to delay it.
This is precisely the type of work that is best funded through government: Work that can be net positive for the populace but doesn’t have a viable business model attached.
There’s another layer to consider even with government-driven efforts: Resources are never infinite. The number of potential R&D opportunities exceeds available research dollars and even human personnel many times over. There comes a point when you need to allocate finite resources to the efforts that provide better cost to benefit ratios. I don’t think it’s helpful to go full hardcore utilitarian, but the reality can be that the cost of coming up with a cure for a rare genetic condition that impacts only a small number of people might be better spent on research toward a drug which incrementally reduces heart disease, for example.
Finding permanent cures for rare conditions is a heart-warming idea, but in reality it’s a lot harder and more expensive than most people assume. Likewise, when people become enamored with these ideas of finding permanent cures for rare genetic ideas they can be missing the big picture that it may not be one of the better uses of that money even if you took raw capitalism and investment dollars out of the picture. There are so many more opportunities for widespread health improvement in the boring conditions and even lifestyle diseases than in hypothetically curing the rare genetic conditions. It may not feel as heart-warming to talk about things like reducing obesity, but we’re witnessing an incredible society-wide health improvement with GLP-1 drugs that is orders of magnitude more benefit across society than something like curing a rare genetic disease.
~public~ transit can be a good business model if it's setup correctly. The majority of Japan's 100 train companies are setup such that they own both trains and complementary interests. Office buildings, shopping centers, super markets, apartments. The better their trains are the better their other businesses do by delivering people to them. The better their other businesses are the more people want to use their trains.
https://ir.tokyu.co.jp/ja/ir/news/auto_20251111595684/pdfFil...
This, in a nutshell, is the problem with for profit medicine. If the training signal is money then money will be optimized.
Otherwise, the demand will be highly inelastic, so you cannot really invent a better business model. The pricing power you would wield as the monopoly provider of life & death would be tremendous.
It would be fruitful to put the example in the article under closer scrutiny.
"Having permanent patient by treating only symptoms is better than curing them right away"
Basically living (comfortably, or at all) as a subscription service
For all other businesses, it's a little more complicated. If the patient/employee's knowledge, connections, etc, are valuable enough, then keeping them alive and mentating appropriately is inherently good for the business. The question then is "How do you measure 'enough'?"
I think public transit is something the public should invest in, profitable or not, as a service to ourselves (the public). But it can also be done profitably in certain circumstances.
Or casinos, which are the reverse. Build hotels, entertainment etc (losing) to support traffic to your casino (winning)
Without subsidized roads, its easy for deep pockets to offer exorbitant prices for land and monopolize the roads. Anyone not planning to charge high prices for usage will be held off by high acquisition prices at "market" rates.
There's only so much land and roads possible to a given location, privatized roads is like giving default monopoly. It will turn out just like the isp situation, only worse.
This is questionable. Highly populous countries have worse living conditions than moderately populous ones, currently.
And it assumes none of your competitors spot the cure that you suppressed or simply didn't look for and eat your lunch by taking all those patients away from you.
If you "accidentally" came up with a single-course cure for something like Crohn's or RA while trying to create a every-three-months recurring treatment instead, would you honestly shelve it? No.
You could make an argument that the incentives discourages certain types of research, but that's assuming a certain level of foreknowledge about how to treat or cure a lot of these things that I don't think we have right now.
Even if we consider that, we'll reach the same position as today because if only rich can afford medicine, the market will price that in and it's customer who can barely afford the medicine will shift from middle class to upper middle class and so on.
I've never understood this argument. Our companies make money off of people in other countries. I understand that our costs are higher in the US, but I don't get how we're subsidizing the rest of the world when they pay for the drugs as well. It just seems like our funding scheme for healthcare is broken. What am I missing?
This is one of those things that sounds clever but is total nonsense. Communism sounds nice too. The key problems are: a) incentives and b) ability to see the trees instead of pretending to see a forest because you are blind to the details.
a company doesn't have to pay for bad things they produce as a byproduct (e.g., pollution) and they dont get to benefit from good things they produce as a byproduct (e.g., curing a disease).
I'm not even close to being a libertarian, but I find that people expect biotech companies to swallow billions of $ of loss as some sort of public good. Reports like these are an attempt to better harmonise their survival model. Companies need to make money to offset their losses, if not to profit. And while biotech companies can profit, these can very quickly be offset by the cost of a single clinical trial - IIRC it costs $1 billion to take any new drug from trial to completion now. Imagine discovering the next penicillin in your garage and then needing to raise $1 billion to cure people with it?
The analysts recommendations are fairly tame - companies should target cures for diseases with a lot of sufferers (a social good) + note that there are a LOT of genetic diseases that could benefit from a single-shot cure.
Again, not a sympathiser for "big pharma" if that even exists, but I wonder how sustainable a model this can be if companies can get their stock wiped out by a single bad trial. Pharma is notorious as a risky investment - which for some, might sound like a problem for rich people. But really, it then becomes a problem to fund experimental research, the kind that pays off.
I'm not looking to defend pharma companies here, only to frame a slightly more reasonable set of terms for this debate. I'm sure such reports have their harms - rare, incurable diseases will get less attention. But we need a solution that acknowledges the constraints, not one that merely wishes away the limits of capital and sustained long-term research.
I don't think they literally meant public transit can't be profitable in any scenario, they meant that it takes a conscious choice to put money into transit with the intention of reaching some second benefit, which is a pretty good comparison to this topic too.
The public transit by itself is a money loser compared to alternatives, but by having it in place you get other benefits that make it worth it overall.
Even medical drugs take a while to develop but somehow the sales has to be “right now”.
For one thing, the pharmaceutical industry isn’t one company, it’s hundreds. The example given (Gilead) is of one company that ate a market. They made $70 billion (and continuing) curing Hep C. They probably don’t lose sleep at night about the hundreds of billions in future revenue that will have prevented the other pharmaceutical companies from making when that disease is gone. This is one case where profit incentives align with human welfare.
Look at fisheries. They’re collapsing everywhere due to overfishing, the very definition of unsustainable business, because each individual fishermen’s incentive is to catch as much as they can.
For another, not all diseases are eliminated by the invention of a cure. Cures for cancer would lead to us living longer and getting more cancer. Cures for emphysema might cause more people to smoke and induce demand.
Sounds like typical American C-Suite thinking. From what I can see, maybe Chinese companies see further, and that may just be because the government is so powerful, over there, and the government is known for taking the long view.
It takes awhile for people to change their view. If you come from a society that has for thousands of years said women couldn’t do jobs like be a lawyer as well as men, it’s not crazy that it would take you 40 years to figure out that wasn’t true.
It’s not a bad foundation when it comes to something like what we’re discussing, allocation of capital by professional investors in the medical space. They’re pretty close to homo economicus, but they’re still human so they still err.
Some governments recognize that the longer people life, the more pensions / social security / healthcare resources need to be paid to that person.
its much cheaper for governments for people to just die when they retire, tax their wealth at 40% and then free up resources (housing or healthcare) for the next generation.
That's not true for diseases that hit those at or near retirement, which is probably most of them. They are mostly drawing pensions without contributing much economically.
Note 1: This is just stating economic facts, not advocating any ghoulish policy. Note 2: I expect that Note 1 will be ignored.
Because death is not technically a disease, right now if a company came up with a literal immortality pill they wouldn't be able to get it patented or get FDA approval for it.
https://ourworldindata.org/grapher/population-density-vs-pro...
There does not look to be a strong correlation between population density and income, at least on a log-log scale across countries. But I would guess that these numbers hide a trend for cities to be richer than rural areas (subsistence farming etc).
In July 2009, journalist Matt Taibbi invoked an indelible image when he described Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
Of course many cities have great "public" (run by the government) transportation for some definition of "great" but many have issues of funding. IIUC, NYC and London are both seriously underfunded. Conversely, AFAICT, these private Japanese trains in a city of a comparible size are not. If you don't want to compare to Tokyo, then compare to Osaka
https://www.keihan.co.jp/corporate/ir/individual/
https://www.hankyu-hanshin.co.jp/docs/integratedreport2025_j...
Of course it is, if you charge the right price, just like “building and selling (not leasing out) houses” can be a good business model.
No subscription or 2nd order effects needed.
We'll put aside the obvious fact that drug researchers are, you know, people who presumably got into the industry to help people, which includes themselves and their families.
We'll also put aside the fact that drugs go out of patent relatively quickly, and they'd just lose out to generics. Like they do now.
The simple truth is they don't need to manufacture more clients, because a stream already exists. There are always new people developing new diseases and new issues. There's an incentive to come up with new and better tools to pull money away from generics.
Don't fall prey to paranoid thinking, actually think about it.
Or more bluntly: sell a product or sell a subscription
Also, not that vast if you consider the amount of people who have the information needed to realize what is going on.
A concrete examples abound in the infectious disease space - many antibiotics are curative of something that would otherwise be fatal - and while there isn't a huge amount of money in antibiotics it has in effect contributed to the larger market of older people's diseases like cancer.
Every intervention simply delays death - and the older you get the more health care you need.
Specifically on this - this is pretty much how pharma companies negotiate prices with governments - using quality adjusted years of life or saving from alternative costs.
> If all you're judging is the first-order impacts on a single business,
However you do have to pay the companies involved otherwise the activity doesn't happen ( as the companies will go bust and cease to exist ) - cf lack of significant research into new antibiotics.
That's why the above happens.
If a molecule, synthesis path, or mechanism has already been disclosed in the literature by multiple labs, then that is public prior art and it cannot be patented.
Therefore, If there were dozens of other researchers coming up with the same drug the patent is legally invalid.
So it seems you’re the one not making sense.
The time limit creates incentive to go to market. Let’s say a company invents and patents a cure for cancer. If they just sit on it, they’ll get zero revenue, zero return on the cost to discover it… and then in 20 years their competitors can all use it for free. Not a sustainable business model—intentionally.
Look at retired people, they contribute very little to society. From a purely economical POV, letting them die is the correct course of action. I, and many others, find this morally abhorrent. We should provide healhcare because it is the correct thing to do, not because it is economically viable. The whole point of a society is for its members to live better lives collectively than they would individually, not to maximize some abstract value.
So, determine democratically how much resources we should pool into healthcare and distribute that fairly among ourselves, on an as-needed basis. That's how it works in much of the 1st world, and it works reasonably well. Better than in America, that's for sure, as can be seen by the higher life expectancies and cheaper medicine overall.
OK then, where's your math?
tptacek is right, this whole discussion is silly because it revolves around what exactly "bad" means which is subjective. But if you want to really do calculations about this, you'd need to price out total expected revenue over your time preference window for each scenario. It's not at all obvious which one would win because it depends on at least these variables and probably more:
1. Over what time period you care about. "You" here means a hypothetical pharma executive who cares about his/her incentives. If symptom management makes a billion dollars repeatedly but each billion takes 200 years, and a cure makes a billion dollars once but in five years, nobody rational will want to sell symptom management.
2. Related to (1) what expected market returns are in future.
3. What price premium you can charge for a cure vs symptom management. The former is more valuable to customers.
4. How fast competitors can catch up. Imagine you find both symptom management and a cure for disease X. You keep the cure a secret and bring the subscription to market (for a price much less than what a cure would command). Six months later a competitor releases a cure, simultaneously wiping out your market and capturing all the immediate revenue. That would have been a bad move.
If you invent a pill that gives old people the mental and physical vigor of 25 year olds, you don't need to patent or trial it as an immortality pill. Just pick one of the many medical conditions associated with advancing age, like osteoporosis or male pattern baldness, and prove that it safely and effectively treats that condition. If the pill cures baldness and also gives patients improved muscle tone and working memory as a side effect, the FDA won't complain about those beneficial side effects.
Once the drug is approved for treating baldness it can be prescribed off-label for other conditions and/or the manufacturer can progressively run trials for treating additional conditions, similar to how GLP-1 drugs originally developed for diabetes treatment have now been tested and approved for treating obesity.
Again, this is not “subjective.” It’s what actually happens
This isn’t a subjective opinion. It’s just how discounted cashflow works.
You can argue about the ethics if you want. But the financial comparison isn’t ambiguous.
|nue) ... cost. S|
(Feel free to compare this to your own writing style to get some clarity for what to fix up next time before pasting LLM output).
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
Later
In case you were typing while I updated this, the first version of this comment didn't notice your minus sign, but it stuck out to me and when I checked it was so funny you used an en-dash I couldn't not include it.
If behavioural economics or political economics were taught instead, anything with models that have explanatory power it would be viewed as lefty and revolutionary, and that would really upset donors. Consequently we are stuck with homo oeconomicus.
A drug that maintained telomere length doesn't treat anything directly.
A drug that slows down metabolism and extends life by 20% on average, not patentable.
So invent it here, patent it everywhere, and sell it in the countries that allow it to be sold.
This is already happening in the form of privatization and monopolization of hospitals and healthcare services like regional hospitals and life flight air ambulance services putting profits ahead of patient outcomes.