Pound of flesh

In light of the recent report from Goldman Sachs suggesting medical success is bad business, Russ Swan can’t help but wonder if we are living in a parallel dystopia  

In a dystopian kleptocracy, the true extent of corporate evil is kept hidden from a downtrodden public. Disenfranchised from the wealth creation ladder the proles devote their energies to fashion, fad diets, and exercise regimes in the vain hope of maintaining good health.

Some are lucky enough to have private health insurance, while others fret about the continuous decline in services and treatments from their state provider. They pay their premiums and taxes and hope that, should they need something expensive, it will happen to fall on the approved list of treatments. They mash another avocado onto wholemeal toast and check their social feeds.

Others have an inkling that all is not as it appears. How is it that the relentless march of science, the huge expansion of cleverer and faster laboratory technologies, has not delivered the promised future of cheap and effective medicines? How is it that diseases once considered rare seem to become more common? Where is all that investment in medical technology really going? They smell a rat, but are dismissed as cranks and conspiracy freaks by a government unwilling or unable to ask tricky questions of its major donors.

This reads like the outline of a novel, a sci-fi thriller about some parallel Earth where corporate greed and shareholder value determine the course of everything.

Unfortunately, it also reads like the reality of this Earth in 2018. How else do we explain the jaw-droppingly cynical content of a leaked report from one of the world's biggest investment banks which tells its pharmaceutical clients that they would make more money by being worse at curing disease?

Money, money, money In a report last month (The Genome Revolution) Goldman Sachs (revenues in 2017: $32 billion) pointed out that actually curing disease was not a sustainable business model. The problem is quite simple: once cured, people don’t come back for more expensive treatments.

What is a poor pharma company to do, in this twisted environment where medical success is tantamount to financial failure?

They highlighted US biopharmaceutical firm Gilead Sciences as a case in point. This company has had fantastic success with two products – Solvaldi and Harvoni – which have basically cured Hepatitis C. These are modern wonder drugs, with a 90+ percent cure rate, and their creators deserve to be celebrated and thanked.

The bankers see it rather differently. In the Goldman Sachs reports, analyst Salveen Richter acknowledged that "this proposition carries tremendous value for patients and society" but also presents "a challenge for genome medicine developers looking for sustained cash flow". The success of the drugs "has gradually exhausted the available pool of treatable patients... curing existing patients also decreases the number of carriers able to transmit the virus to new patients, thus the incident pool also declines..."

The numbers back up this repugnant view of what medicine is about. US sales of the Hep C drugs peaked in 2015, at £12.5 billion, but will be just $4 billion in 2018, according to the CNBC report¹ which first broke the story.

A bad taste We all understand that drugs are expensive to develop, and pharma companies need profits to stay in business. Sympathy for the firm might be tempered, though, by the revelation that a 12-week course of Harvoni costs a US patient (or their insurance policy) $94,500. The same 12-week treatment in India costs less than one percent of that, at just $900. Perhaps Gilead is being charitable and taking a hit in the sub-continent. Perhaps.

So what is a poor pharma company to do, in this twisted environment where medical success is tantamount to financial failure?

Goldman Sachs suggests that drug companies target large and growing markets such as haemophilia, high-incidence diseases such as spinal muscular atrophy, and work to maintain a wide and innovative portfolio in their pipeline. This seems like fairly standard business advice.

It stops short of a fourth idea: make the drugs less effective. Yes, you might be able to cure cancer/Aids/malaria – but is that really any good for the balance sheet? Let's just ease the disease, rather than cure it, and keep the punters coming back for more.

Excuse me, but I need to get this taste out of my mouth.

 

Reference

1: https://www.cnbc.com/2018/04/11/goldman-asks-is-curing-patients-a-sustainable-business-model.html

 

Author:

Russ Swan