Goldman Sachs asks in biotech Report: Is curing patients a sustainable business? (2018)

It doesn’t matter if it is a sustainable business. People will do what they can to maximize their income now. If 10 companies are withholding a cure to milk the patients, any one of them can break from that strategy at any time, with near-instant financial reward and competitive advantage. It is not a stable equilibrium.

As long as government regulation prevents them from forming a cartel.

It shouldnt be limited to companies within the country. Any foreign company can be a market disruptor here. Assuming the drug approval admin isnt working alongside the 'cartel'.

Yet meanwhile, women entered the legal profession in the 1920's but wages did not catch up until the 1960's when the Equal Pay Act was passed. Economics 101 would say you could snap up competent female lawyers for a little more than they were paid at their current firm and thus wages would creep up, yet this would not happen.

And then there's medical tourism, for the people who prefer to shop at one of the other 'cartels'

Ah yes, the cartel, a famously stable arrangement that never ends in cheating or betrayal.

Not sure why you're being down-voted. Efficient markets for talent shouldn't tolerate racism/sexism/etc, but all the historical evidence is to contrary. It's almost as if rational _homo economicus_ is a bad foundation.

And only in the very particular scenario of a national-only cartel which has not successfully roped in other international pharma companies.

I don’t think so. It’s not that law firms intentionally passed up on bidding a little more for women because they were as good as men but cheaper. It’s because they thought the women were simply less good.

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.

Not if one of those companies patents the cure.

Patents are intended to temporarily restrict competition. In order to get that, the inventor has to publish the invention.

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.

And as long as those cartels aren't powerful enough to buy the government into submission.

It's not a surprise that especially at elite college it's classical economics that is taught in the gen. ed. courses. Its models are simple, and plainly visibly wrong.

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.