Monday, April 16, 2018

An Uncomfortable Truth: No $ In Cures, Says Goldman Sachs

In a development more shocking than the capture of a live Bigfoot, a recent Goldman Sachs research report (click here and here) states in black-and-white what many have long suspected: curing diseases is not a viable business model for the companies that develop and manufacture drugs. Instead, drugs that turn terrible diseases into treatable illnesses, kept under control by the perpetual use of medicines that sustain patients but don’t cure them, are marvels of modern capitalism.

Perhaps unwittingly, the Goldman Sachs report confirms that our current medical research model is more crippled than I am. Over the past three or four decades, following the interlocking mantras of “all government is bad government" and "private enterprise is the solution for everything," our society has handed the reins of medical research over to for-profit pharmaceutical, medical device, and biotech companies. Most of these companies are publicly traded, meaning their stock is available for trade on the world's stock markets.

The problem with this formula is that publicly traded companies are mandated by law to be beholden to their stockholders, not the end users of their products. In the case of pharmaceutical and medical device companies, these end-users are sick people, many suffering from hideous diseases like multiple sclerosis. In the cold calculus of the free-market, the job of drug company executives is NOT to produce drugs that offer the best result for the patients who take them (like, say, cures). Instead, providing the best outcome for the companies’ stockholders – in the form of ever-increasing profits and ever appreciating stock prices – is the mandated responsibility of these executives.

In fact, a drug company CEO could very well be engaged in illegal practices if they endorsed their company curing a disease for which it manufactured profitable long-term treatments. In the parlance of the financial world, that executive would be in breach of his or her fiduciary responsibilities. In the parlance of the rest of the world, that executive would likely be given the heave-ho and could spend a good chunk of time in a Club Fed.

Since finding cures for diseases like MS and cancer have eluded researchers for decades, if not centuries, the recent advent of medicines that treat but don't cure have been heralded as modern miracles. The lack of cures has become the accepted status quo, despite the fact that in the days before medical research was dominated by for-profit concerns, dread diseases like polio, smallpox, and tuberculosis were wiped out by government and academic researchers. Now, though, with the science of genetic therapies rapidly advancing, the prospect – or, in the eyes of Goldman Sachs, the problem – of curing diseases is growing tremendously, threatening to upend a business model that has become incredibly profitable. To take just one example, medicines that treat but don’t cure multiple sclerosis generated over $25 billion in revenues during the last year alone.

As more and more disease-related genes are mapped and identified, the universe of illnesses that might benefit from gene therapy is expanding exponentially. Multiple sclerosis is one of those diseases, as it seems every few weeks a new set of genes are discovered that play a role in the MS disease process. The ultimate cure for MS may one day lie in altering the genes that initiate the cascade of failures that leads the body to destroy its own tissues. Ultimately, the genetic profile of individual patients may be used to tailor cures unique to their genetic makeup.

In their research report released last week, Goldman Sachs – a company that is a central pillar of our financial system with a reach far beyond Wall Street – concludes that such genetic therapies represent a vital threat to those invested in companies involved in drug and medical device development and manufacturing. In a report entitled "The Genome Revolution", Goldman Sachs analysts ask, "is curing patients a sustainable business model?" While acknowledging the vast potential of genetic treatments, the report states “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." Heaven forbid! The almighty dollar must rule all, patient and societal well-being be damned.

The report goes on to make several recommendations for addressing the looming financial threat of curing rather than treating diseases, including that companies ignore rare diseases whose small patient pools would make any cures prohibitively expensive, and also that they avoid curing infectious diseases because "… curing patients also decreases the number of carriers able to transmit the virus to new patients", which would, of course, be terrible for business. The report cites the example of Gilead Sciences, which developed a cure for hepatitis C several years ago (click here), but has seen its profits plummet as the population of hepatitis C patients shrinks thanks to the success of Gilead's medication. As a result, the company’s stock value has suffered. More proof that no good deed goes unpunished.

Folks, this Goldman Sachs research paper states in black-and-white what to many has been long apparent but difficult to fathom: there is very little incentive for pharmaceutical companies to research and develop cures for diseases when marketing treatments that transform patients into customers for life is an immensely profitable business model. Those of us suffering from terrible conditions like multiple sclerosis must recognize that hoping for a cure from such entities is akin to hoping that the Easter Bunny hops into your local MS clinic and drops off a cure delicately encased in a colorfully decorated egg.

What is the solution to this situation? Well, how about putting a small tax on pharmaceutical company profits, the proceeds of which could be funneled exclusively into publicly funded medical research explicitly targeted at finding the cause and cure of currently intractable diseases. If a tax of 4% were placed on MS medications, which, as stated previously, generated $25 billion in revenues last year, a nifty $1 billion could have gone to fund independent researchers in the search for a cure for the disease. Would it place an undue hardship on MS drug manufacturers if last year’s revenues totaled $24 billion rather than $25 billion? Let’s not forget, pharmaceutical companies are granted extremely long patents on their products and don’t face much in the way of free-market competition. It’s no accident that every MS medication is priced between $60,000-$85,000, despite the fact that some of them have been on the market for more than 20 years.

Yes, I am aware that any talk of increased taxes is anathema to ideologically driven politicians and those who vote for them, but if we are to find our way out of a status quo that sees treating but not curing as perfectly acceptable, some radical changes need to be made. The current state of our medical research model has been corrupted by the siren song of blockbuster drugs, the profits from which are astronomical. As a society, we must reckon with the following question: Are profits more important than patients? Seems to me that in a country where “Life, Liberty, and The Pursuit of Happiness” are held as sacred, the answer should be self-evident. It’s tough to enjoy our inalienable rights while plagued with horrible illness. Will the incessant drive for ever-increasing economic gain dictate the future of medicine, or will we as a society finally stand up and say, “Enough!”

28 comments:

  1. Polio cannot be cured but can be prevented via a vaccine against contracting the disease. Countries such as Afghanistan and Pakistan, where the vaccine is not consistently used, are seeing the return of polio, despite it having been wiped out in most of the world. There is a very SMALL corner of the NIH looking into rare diseases, but sadly yes, large pharmaceutical companies control most of the research monies and cures are not profitable. If there were REAL treatment for PPMS, I'd take it over a long period.

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    1. Yes, of course you are right about polio. Tuberculosis, too, has had somewhat of a resurgence, and is developing antibiotic-resistant strains.

      The NIH does great work, but unfortunately they don't have the funds necessary to bring treatments through large-scale trials. This is the problem with the current system. Lots of promising research in independent and publicly funded laboratories, but they rarely see the light of day due to the dependence on big Pharma to sheppard treatments through the clinical trial process. And, of course, they only choose to do so with compounds that have huge profit potential.

      I'm with you on the PPMS treatments. What are being hailed as "breakthroughs" are hardly blips on the radar…

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  2. At the very least, the newest treatments should come with a free, "I love my my mAb!" t-shirts." Or, "My mom spent the day in the infusion suite and all she brought me home was this lousy t-shirt."

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    1. They certainly should come with some kind of perk. I'm only hoping that we don't see any wave of tragic adverse events in 2-3 years. All of this profound tinkering with the immune system is perhaps playing with fire. Only time will tell, though, and I hope I am absolutely wrong.

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  3. Are profits more important than patients? Asked and answered. Yes, yes, yes. And, now that we have a "deal maker" president, an impotent Congress, a revolving door administrative cabinet, "new" laws that allow corporations to run wild.....etc, etc, etc. Simple answer...YES!!!!! History repeats itself, and the USA is in repitition form. Bitter, bitter, bitter. Where's my Hemlock???

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    1. Hilda, agreed on all fronts. I would say that Congress is not only impotent, but complicit…

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  4. Typo error...repetition . Sorry.

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  5. Mark,
    Great suggestion, lets see if it catches on!
    As a side note, I've been using Medical Marijuana for the past year and have had some real success stories with it, I'd like to see additional research in the endocannabinoid system, I truly believe it does help with my spastic legs and bladder.

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    1. I've been experimenting with medical marijuana as well. Not sure I've noticed any tremendous benefit, other than the fact that it makes the end of the day a hell of a lot easier to handle. Never much enjoyed marijuana as a youth, but this medical stuff is very mellow…

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  6. Hear Hear! You always hit the nail on the head!

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    1. Sometimes I think the nail hit me on the head… Thanks for your kind words, much appreciated…

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  7. What about the stakeholders who suffer because of chronic diseases? Insurance companies who have to pay the 80K for the medications, the hospitalizations, the rehab specialists? They could donate to a cure fund.

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    1. One would think that the insurance companies would be much more activist on these fronts. Seems like they are more than happy to maintain the status quo, though. Case in point: Rituxan costs about $30,000 a year, while Ocrevus clocks in at about $65,000 a year. Both drugs have very similar mechanisms of action. Yet the insurance companies routinely okay Ocrevus, and also routinely reject Rituxan. Go figure… Of course, Ocrevus is FDA approved for MS, while Rituxan is not. There's a whole story behind that, though…

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  8. The former way of doing academic research did not work either, as no research was ever shared ad if anything ever did pan out, any potential treatment tended to get lost in the so called, "valley of death," meaning that nothing ever actually made it to the patients who desperately needed it. Only in the past 10 to 15 years, has sharing research data in journals such as Plos One come to fruition. Sharing information collaboratively between academic research universities is still a novel enterprise and has come about due to the work of organizations such as the former, Myelin Repair Foundation and others looking to discover treatments or even the actual etiology of various diseases. If incredibly complex and multi faceted diseases such as dementia, ALS, cancer, MS cystic fibrosis and legions of others are ever going to be adequately treated, let alone actually "cured," it will required research scientists around the world to work collaboratively and to come out of their insular, isolated silos.

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    1. Absolutely right! What's needed is a "Manhattan Project" style effort to eradicate the diseases that plague mankind. I believe that with the advent of artificial intelligence, recent advances in imaging and diagnostics, and the mapping of the human genome such an effort would produce very tangible results. Unfortunately, in the current political/global environment, such a project is only a pipe dream.

      It astounds me how many opportunities for getting to the roots of some diseases are simply missed. I recently spoke to a gentleman who had three siblings with MS. Seems to me a thorough genetic mapping of all the members in that family, in combination with an equally thorough screening of environmental factors they may have been exposed to might shed much light on MS disease etiology (perhaps through RNA sequencing of their blood and spinal fluid, in addition to other testing). When I asked him if any such effort has been undertaken, he said no one had even expressed any interest. Unbelievable.

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  9. Not good at sharing links of any kind, but info from the "Mouse doctor" in London today was very interesting... actually tying the Epstein Barr virus to several "autoimmune" diseases, such as Lupus, rheumatoid arthritis, MS, inflammatory bowel disease, type one diabetes and several others. Research is coming much closer to making an actual connection.

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    1. Yes, I am convinced that EBV plays a central role in many of these diseases. Incredibly, there is no concerted effort being made to develop an EBV vaccine, even though there is anecdotal evidence that drugs with anti-EBV properties, such as some of the anti-HIV drugs, do seem to moderate MS in some patients. Let's get all of these researchers into a room and get things done, dammit!

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  10. It’s a complex issue, isn’t? On the one hand, you have entities which are acting rationally, namely Pharma responding to legal and shareholder requirements. Along the way, they may also produce worthy medical breakthroughs. On the other, you have a research model which is not favorable for the chronic condition sufferer hoping for a cure. Underlying it all is money, whether making it to satisfy shareholders, having sufficient funds for research, or having access to it to defray necessary medical treatments.

    I don’t know what the solution is. I simply recognize that, given political and economic realities, finding one will not be easy. Sometimes, though, the process of change can be started by truth-telling. Goldman did that with perhaps unintended consequences. You engage in truth-telling all the time through your blog. Finding solutions will likely be a slow process, hard especially for those desperately ill, but Goldman, you, and others, by making your voices heard, will contribute to generating the dialogue necessary to gain traction in making the health delivery system work best for all. For your part in this process, we all thank you and hope you will be able to continue doing it.

    Think of it this way, Marc. You are no longer playing/creating music in the traditional way you used to. You are now creating a different sort of music on a stage far removed from the former one. The personal cost to you has been and continues to be extraordinarily high, perhaps unbearably so. I recognize that. I simply want to acknowledge that you have mined gold from an unpromising source and, what’s more, were generous enough to share your bounty with others in need. That sounds to me like a definition of a life well-lived, a life of which you can be proud.

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    1. Well, as I sit here in my boxer shorts watching the resurrection of "Lost in Space", it sure doesn't feel like a life well lived. But I'll take your words for it, since they are put together so eloquently. And thank you for them profusely…

      Your summation of the complexities of the problem is terrific. To be sure, Goldman is not a benign player in this, as their paper isn't advocating for more cures, but actually for less of them. But, as you say, however light is shed on the subject might lead to a heightened awareness of the predicament.

      Sometimes I fear truth telling might not be enough. I'm not a violent person by nature, but sometimes cracking a few heads does get things done. If only MS patients had the strength to take up pitchforks and torches…

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  11. "Will the incessant drive for ever-increasing economic gain dictate the future of medicine" is the first part of your question. I'm afraid if not gutshot terrified that the answer is "yes" because the people who have the highest bank balances don't need to balance on the same worn tread of twine as any-/everyone else. Sharing information on the needed scale is so So SO far from happening for the benefit of a widely spaced group of people that the word 'group' c/wouldn't be used about them were they not affected by this. Granted, my reply here comes to make me sound as though I'm one of those folks who would grab a shipping crate to stand on in one of the main crossroads in a city, where they would hold a Bible as they ranted at the passing crowd. But... But... Well, hell, there isn't an easy 'but' to fall back on, apart from my own, which has grown with my time sitting in a wheelchair.

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    1. It is horrific what sitting in a wheelchair does to one's physique. I used to have a lien swimmers body, and I suppose I still do have a swimmers body, but that swimmer would be a walrus…

      I too am afraid that we are correct in our assessment that money will continue to drive medicine well into the future. I've stated many times that capitalism is a wonderful engine for creating wealth, perhaps the best mankind has come up with – with the exception that it is a system of "winners" and "losers", and those losers are usually left without much representation – but the marriage of medicine and capitalism is an unholy one. There has to be a better way…

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  12. Although curing disease does put a damper on their bottom line the industry may just adjust the price of a cure accordingly. For example, the Hep C drug Solvaldi (I think that is correct) can eliminate the virus completely and can prevent liver cirrhosis and or cancer. The company will just calculate the price of patients' treatment based on the population lifespan and future earnings. If the average patient will live an extra 30 years due to the drug at an annual gross income of $50K then the cost of a cure is $1.5 million or at the minimum the cost of a new liver and surgical transplant. There was good article from Forbes regarding this very topic some years ago. Sorry I don't have the reference. Everything, including life, has a cost.

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    1. Yes, your calculus is correct, but unfortunately it is not the calculus that rules on Wall Street. In an environment where companies are expected to continuously increase profits from quarter to quarter, such long-term potentials such as reduced cancers and liver transplants hardly factor into the equation.

      This is where the insurance companies could step in, but so far, crickets…

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  13. Meanwhile, certain MS advocacy organizations have such close ties to this for-profit system that they don't truly represent patients' interests.

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    1. Yes, the advocacy groups, or at least most of them, are firmly entrenched in the status quo and have no real reason to upset the apple cart…

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    2. Or the hospital cart chock-a-block with iffy meds. It's such a frustrating situation.

      I hope that your blog post is read and shared by many. And I hope that anyone in a position to donate dollars to an MS advocacy organization researches said organization's use of their funds. Most people donate, of course, because they're kind and genuinely want to help. Unfortunately, their hard-earned dollars may only be used to pay copywriters to craft appeals for more money.

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  14. For me, this is yet another argument for a single payer health system. In my admittedly over-optimistic imagination, I would like to see outcome-based compensation. The better the outcome (cures are much more valuable than treatments), the higher the financial reward. If this all involved tax dollars, the taxpayers would demand that the emphasis would be on cures whenever possible. Research done by the NIH already trys to focus on outcomes since there’s no financial reward to taxpayers for finding never ending treatments. Under this type of system, everyone would have the same goal...reduce costs. The most effective way to reduce costs would be to reduce illness. Yes, I know Big Pharma is not going to like this since it would turn that entire industry on its head. Rest assured, I would not lose any sleep. Not even a little bit. I know this doesn’t stand a snowball’s chance of becoming reality. My foolish optimism is probably derived from my own ongoing research with medical marijuana. I too have had some success with this stuff but I’m still not quite ready to call it a success. Further study is warranted. I’ll keep you posted... if I remember.

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  15. Hey Brian, while I'm all for single-payer in theory, I know that in practice it is a less-than-perfect system. I have a brother who lives up in Montréal, and many readers from Great Britain. My brother has had some bad experiences with the Canadian healthcare system, mostly in terms of lack of access to certain kinds of doctors, and long waiting periods for certain procedures. The folks in Great Britain (MS patients) have very strict guidelines as to which drugs they can receive and when. Ocrevus has not received an approval in Great Britain, as it is not deemed cost-effective. Whether that's a good thing or not I guess still needs to be determined.

    Also, not quite sure how single-payer would change the medical research model. It certainly would upend things, but without financial incentive I think we would see a slowdown of research overall.

    By no means am I defending our current system, which I think is a total piece of crap. I suppose some sort of public/private hybrid system might work well. I know that Switzerland's healthcare system, which is public/private, works very well, but it's a much smaller country.

    As I stated in a previous comment, what's really needed is a Manhattan Project style massive effort directed exclusively at finding the cause and cure of a variety of diseases. Funding for this I think would have to be public, and that would mean raising taxes which is anethema to all of the tax cut zealots that seem to have the upper hand these last 30 years.

    It's all a very confounding conundrum, but one thing is certain: the system as it now stands will not result in cures anytime soon, especially for diseases like MS in which patients can be turned into customers for life.

    Thanks for your comments…

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