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Goldman Sachs questions whether curing patients is a sustainable business model (arstechnica.com)
448 points by DoreenMichele 10 months ago | hide | past | web | favorite | 364 comments



The 'ideal' drug from a business point of view not only not cures the patient long term, it offer a short term mitigation while increasing the risk on relapse and thus future recurring consumption of the treatment. At the same time it can be IP protected to block alternatives and has an insured third party collective payment coverage to guard against the treated running out of funds to afford the perpetual dependency.

This realization goes beyond medicine, and is key to understanding why we live in an 'economy' that produces masses of landfill junk while our technology and manufacturing processes keep on improving.


So we agree medicine cannot be managed as a business, right?

It's ok if healthcare losses money, in fact it should be ok for all public sevices to operate and not being profitable.


I think it's totally ok, and it should be accepted. Public services are meant to be cost centers. If they bring in profits, they do so indirectly (e.g. better health of citizens -> better GDP -> more money in taxes).

The trick is to still find ways to apply pressure so that a service gets better and more efficient in time, instead of attracting parasites that'll use it as money drain. Like a lot of healthcare-related businesses seem to do (heard plenty of horror stories from someone I know who's studying medicine and interned at hospitals, and we're talking about a country with public healthcare).


"parasites that'll use it as money drain" sounds remarkably like shareholders.


The difference is that shareholders lose something (the value of their shares) when they drain a company of its assets. This might still be short-sighted, but there is at least a balancing force.

In public services, where making a loss is o.k. this is just included in the loss, and there is essentially nothing that encourages the 'parasite' to not drain the system.


Well, even that no longer seems to be assured. Plenty of ways to strip a company and make a profit in the short term, destroying the company in the long term.


E.g. Toys R Us. It was bought then saddled with debt by the new investors, and is now dead.


> The difference is that shareholders lose something (the value of their shares) when they drain a company of its assets.

Not if they sell before the shit hits the fan.


> The trick is to still find ways to apply pressure so that a service gets better and more efficient in time, instead of attracting parasites that'll use it as money drain.

A huge part of the problem is the public reaction to how for-profit research is supposed to work.

In theory a cure is highly valuable. People should be willing to pay as much for it as the alternative, meaning as much as it would cost for multiple years of ongoing treatment, plus the value of the inconvenience the cure avoids in participating in the ongoing treatment for all those years. A cure should be more profitable than a treatment because patients prefer it to continuous treatment and are therefore willing to pay more for it.

But a treatment that costs $500/week and continues for 40 years is business as usual. Someone offering a cure with a one-time price in excess of a million dollars is derided as a soulless profiteer taking advantage of the sick, insurers refuse to cover it and everyone starts calling for Congress to pass a law against it.

So the market develops treatments instead of cures.


Nay, sir.

Just because there exists a multi-million dollar over a lifetime treatment regime doesn't mean that it is okay to suddenly "own" an equivalent chunk of cash from everyone cured.

We invent treatments because we CAN'T find a cure. The treatment represents society's best effort to alleviate suffering.

We solve problems so that we don't have to suffer them as a society/species anymore.

Businesses exist until we figure out a way to live without them. Profit should never be the end all justification for doing something.


> Just because there exists a multi-million dollar over a lifetime treatment regime doesn't mean that it is okay to suddenly "own" an equivalent chunk of cash from everyone cured.

The chunk of cash is the only reason the company is doing the research to begin with.

If finding a cure was easy then it would have been found a thousand years ago -- as some of them were. The ones remaining are hard and require a lot of resources to solve. If you want someone to put that kind of money in against a high probability of failure, they have to be able to expect an even larger amount of money to come back to them if they succeed or they won't do it.

The alternative is government funding, but then you're spending pretty much the same money. The taxpayer now has to pay the tab for all the high risk/reward research that didn't pan out. And then you're subject to all the usual government issues with bureaucracy and cronyism and principal-agent problems because you've put a thick layer of abstraction between the researchers and the patient outcomes.


Government is already developing most of the drugs to my knowlege. Univerisites research drugs with public money. Universities then work with companies to commercialise it.

As far as I know the most productive research places like xerox-parc was pretty open ended. There was not clear profit driven goals.

We also see massive success with open source projects which suggests to me that there are other ways of organizing this research which we have done very little to explore.

Not strange since there is a mssive profit incentive by industry to lobby us against ever trying alternatives.


> Government is already developing most of the drugs to my knowlege. Univerisites research drugs with public money. Universities then work with companies to commercialise it.

That's a nice little scam they put together a while back. If the government funds the research then it shouldn't be patented -- the taxpayer already paid for it, they shouldn't have to pay for it a second time.

But the industry has better lobbyists than the public, so they get the taxpayer to fund the research, then wait to see if it pans out, then buy it for pennies on the dollar after they already have some evidence that it works. If it doesn't work, the taxpayer foots the bill and gets nothing. If it does work, the taxpayers have to pay even more money to use the fruits of the research they already paid for.

It's corruption plain and simple.

> We also see massive success with open source projects which suggests to me that there are other ways of organizing this research which we have done very little to explore.

Open source works, but it's mostly non-governmental.

The thing that worked really well historically was small research trials conducted by individual doctors as part of their practice and then replicated at larger scale if they panned out. That's all but impossible with the current FDA rules, somewhat for good reason (some of those experiments had a tangential relationship with ethics). But the current rules are just crushingly bureaucratic.


>People should be willing to pay as much for it as the alternative

Maybe. But maybe there's also something wrong with expecting that much. Somehow Sidney Farber didn't decide that he was going to charge the families of kids with ALL the actuarial value of the remainder of their lives.

It can be frustrating to see the public, out of ignorance, grossly misjudge the relative contributions to health of, say, a vaccine developer relative to a self-promoting surgeon. But there is something new and rather strange with this way of seeing medicine as a "capture the value"-type enterprise.


> Maybe. But maybe there's also something wrong with expecting that much. Somehow Sidney Farber didn't decide that he was going to charge the families of kids with ALL the actuarial value of the remainder of their lives.

The problem is this. Suppose the total value of a cure is two billion dollars but it takes a billion to do the research. You can say they should get, say, 1.2 billion instead of the entire two, but that isn't actually that much different, and if you make it 0.8 billion then the research doesn't happen. And it's really hard to calibrate that sort of thing -- you can't just look at the amount the research actually cost because that doesn't take into account the risk of failure, which you have to compensate for or you won't get the investment.

Which is also where the apparent inequity comes from, when a million dollars in research produces a billion dollars in profit. But that's usually because it was a thousand to one shot to begin with. If it wasn't, why has it taken this long for someone to take ownership of that huge pile of risk-free money, instead of the cure being discovered 30 years ago and already being out of patent?


>If it wasn't, why has it taken this long for someone to take ownership of that huge pile of risk-free money

Maybe because no one thought of it before?

The picture you're painting is fine if you're evaluating a handful of candidate molecules each with, you'd guess, a 5% chance of having the right PK profile or something.

But for major breakthroughs, there are "unknown unknowns" that make it impossible to estimate that likelihood. It's nice to think that, if you let the full value be captured, it would incentivize more people to pursue one-in-a-million "lottery ticket" cures, but it just doesn't work that way. They're not lottery tickets if they have incalculable odds.

For the most part, the difference between management and cures is in this latter category. I.e. we don't have a cure because we just don't know how to do it, not because we were too cheap to invest in the biochemical trench warfare to find the right molecule.


> They're not lottery tickets if they have incalculable odds.

The odds aren't incalculable. They might have wide error margins, but that's hardly the same thing.

> we don't have a cure because we just don't know how to do it, not because we were too cheap to invest in the biochemical trench warfare to find the right molecule.

You're thinking about this at the wrong level of abstraction. It isn't a matter of having some candidate molecules and we just need some monkeys on typewriters or a huge bank of supercomputers to test them all.

It's that if you want a cure for cancer, you have to pay scientists to look for it. Not knowing where to look is not the same as not knowing how to look. The fact that it's hard is the reason it's expensive.


> if you want a cure for cancer, you have to pay scientists to look for it.

We do that. It's a two-tier system where the public pays for the science and the companies fish ideas from the science to make into medicines.

>The fact that it's hard is the reason it's expensive.

No, the reason it is expensive is because we've signalled that we are willing to pay large amounts of money, essentially regardless of the actual benefit extended by the state of the art treatment. Even if the state of the science doesn't have much to offer in the way of a cure, you can count on the private sector to make drugs that push the envelope of what we are willing to pay.

But because the job that the private sector does is not the "rate limiting step" as it were, dumping more cash on them is just wasted money.


> No, the reason it is expensive is because we've signalled that we are willing to pay large amounts of money, essentially regardless of the actual benefit extended by the state of the art treatment.

Not the cost of medicine, the cost of medical research. If finding a cure for cancer wasn't expensive then either we've been doing something very wrong or we should have found it already.

And if it's expensive then the reward has to meet the expense in order to get someone to do it.


Which is all well and good if you have the money. Poorer countries have to “make do” with profit driven public services where the exchequer simply doesn’t have the money.

In fact I think this is the sad truth behind a lot of privatisation stories in the West... various government running out of cash but rather than admit poverty put on the rich mouth and claim its “better”


They are profitable on the bigger scale of a national economy. Sadly no one give a damn about that these days. In Germany we have the studies Betriebswirtschaft (business) and Volkswirtschaft (national economy) and the latter is loosing vital ground in politics.

It gets worse if you look to the UK where a of lot public services are handed to companies, for example the merger of all social benefits Universal Credit is run by companies and in a manner that can only be called unprofessional and anti-social.


"Universal Credit" is a horrendous scheme that manages to combine (malicious) ignorance of the needs of its beneficiaries with ignorance of how to run a large software project.

The idea sounds great on paper - there are a lot of different benefits, why not reduce duplication by merging them into one scheme then only asking for personal information once - but it ignores cashflow. People can be left without money to live on for weeks. It's also a classic "big bang" project which just piles the requirements of existing systems together, and hands them to one of the traditional government crony contractors: Accenture, HP and IBM. At least it didn't involve Serco.


Sounds like the Phoenix payroll project here in Canada, except for social services. There is no way this will end well, and I wouldn't be surprised if it leads (indirectly) to the death of clients.


Oh Phoenix is just a incomplete system rolled out too early. Universial Credit is pure evil. The person-gets-benefits-cut-for-having-heart-attack-at-appointment evil. The months-deceased-claimant-gets-invited-for-appointment evil. The benefit-cut-because-assessor-didn't-show-up-for-house-visit evil. The no-benefit-payouts-in-the-first-six-weeks evil.

(those are all real cases you can find in UK newspapers, mostly the Guardian)


You are jumping from one extreme to the other. Creating a public institution with no pressure to make profit is a disaster waiting to happen.

You can certainly keep a 'competitive' environment which is regulated with incentives. And I do agree healthcare needs this, and shouldn't live purely by the free market.


> Creating a public institution with no pressure to make profit is a disaster waiting to happen.

This is the model many rich country healthcare runs on, and provides measurably better outcomes for less expenditure than the US.


In addition, the best healthcare system in the world, according the WHO, is in Cuba, where it certainly isn't run on a for-profit basis. Moving medicine away from the private sector allows for a stronger focus on preventative care, which is significantly less profitable.

I think that worrying about removing the profit motive entirely misses that fact that not only is the profit motive not the only motive for doing things, but oftentimes not even the determinate factor.


As much as I wanted this to be true it doesn’t really stand up to scrutiny. Yes “day to day” access to healthcare is far superior but it’s very week on the high end stuff. Even Castro in his final hours was treated in a Spanish hospital. Ideally we would want some kind of reasonable alternative that exists between these two extremes ...


Correlation != Causation

The more likely explanation for Castro seeking treatment in Spain is that Cuba is a relatively small country of only 11 million, and it should be expected that they're not at the very forefront of the world on every area of medical expertise.


My substantial point still stands.


I may be ignorant on this, but don't many of those countries benefit by the r&d funding happening in the US?


R&D doesn't happen in non-profit government corporations either (atleast not largely). Most R&D comes from the manufacturers where the state (or relevant institution) buys the drugs from.

However, in a single payer or similar systems, if a drug company decides to hike the price, the state (or institution) can swallow the cost and continue medical services to citizens until the situation is resolved (either by legislation or court cases). Since the state (or institution) is not a for-profit it doesn't matter as much if they sink a lot of cost as long as everyone can get their medical treatment.


Another thing is that people want to measure success in profit or less taxes paid. A proper healthcare system should have it's success measured in how many citizens are able to be productive because they're not chained down with accommodatable disabilities, curable chronic illnesses, and extreme medical debts.


> R&D doesn't happen in non-profit government corporations either (atleast not largely). Most R&D comes from the manufacturers where the state (or relevant institution) buys the drugs from.

IIRC, the research typically comes from state-funded academics, and the development comes from the manufacturers.


The research only comes from academics when it's actually reproducible. Otherwise it is dutifully ignored and companies perform their own research.


It's all multinational these days. Only 4/10 of the big players are in the US https://www.tharawat-magazine.com/facts/10-largest-pharmaceu... and that's quite logic if you remember that the European market is pretty much harmonized and twice as populated as the US.


The EU market is far from being harmonized medecines regulation wise. it always takes longer to get approval across all EU countries vs one approval in the US. Pricing of drugs is not harmonized at the EU level either and thats a hard block for any launch.


"in the US" is a misnomer. It all depends on if the cost allocation (e.g. HR is pharma's largest cost) has and is attributed to the US.


the US market is the primary market for all big pharma companies regardless of where headquarters are bc it is the biggest

And big pharma companies don't do early stage research. Small companies do. Most of those are in US


They may, but these institutions are keen on cures and not on treatments.

I am completely on the side of having government agencies developing cures and licensing out to companies then. This would avoid the perverse incentive of the OP. It also would stop the pervasive argument that patents are necessary to get new pharmaceuticals developed (I don't believe in patents benefit to society).


Some of the extra money does go to R&D (though that's somewhat misleading: a lot of "R&D" spending is unnecessary duplication of safety trials because the FDA doesn't recognise any foreign medical safety standards, not even e.g. the EU). But a substantial chunk of it is wasteful inefficiencies due to multiple layers of middlemen (there are typically 5 layers between the insurance company that's paying and the company that makes the drug/device) with opaque pricing structures (there are hidden rebates in both directions at every one of those layers). National healthcare systems still have bureaucratic inefficiencies but they do avoid having intermediaries with a direct incentive to bamboozle each other.


"unnecessary duplication of safety trials because the FDA doesn't recognise any foreign medical safety standards, not even e.g. the EU)"

I would say in some cases that is a good thing. https://en.wikipedia.org/wiki/Thalidomide


It's very hard to argue against a safety trial - of course if you duplicate safety trials then there will be occasional cases where you catch something that the original trial missed. But ultimately far more people have died or suffered because a medicine wasn't available yet than been killed or hurt by medicine being approved too early.


Most R&D, in the US as elsewhere, make massive use of public funds.


Which is weird, as that is not factored in the purchase price when buying the product when developed.


yes, you might ask your democratically elected representative about that...


No, that's not true. Private R&D is almost 10x what public R&D is, at least in biotech.


Nope - that's not true.

https://en.wikipedia.org/wiki/Medical_research#Privately_(in...

Private R&D is around 60% - however a large part of that is making minor changes to existing molecules in order to obtain fresh patents.The bigger, riskier research is done by the NIH and other publicly funded bodies. See

https://marianamazzucato.com/entrepreneurial-state/

Also - the quality of privately funded research is much worse, with non-reporting of negative results, data dredging and other dodgy activities being routine - see

https://en.wikipedia.org/wiki/Bad_Pharma


Intriguing. I've often speculated about how private sector research compared with public research, especially in the context of the reproducibility crisis since I assumed that a lot of pharma companies knew that some research couldn't be replicated behind closed doors. I wonder what the quality of proprietary / unreleased studies is- do the links you provide take that into account?


It compares badly. Unfortunately too much private research is allowed to be kept secret - but what is known indicates it's of poorer quality - judged by the kind of metrics the Cochrane Institute use.

Goldacre's book (he also has a blog) is well worth reading - describing _many_ ways in which drug companies can cheat.


Your source is all medical research. Not biotech specifically.


Including the R&D tax credit?



Interesting that funding only started to fall when the concept of Affordable Care act began to get traction? If I'm an investor, that sort of thing gives me cause for pause.


Like what?

Novartis? AstraZenica? Gsk? Bayer? Siemens? Hitachi? Philips? Olympus?

this works quite very much the other way as well..


> This is the model many rich country healthcare runs on, and provides measurably better outcomes for less expenditure than the US.

well I'm living in Germany and I agree with that it is cheaper, but "better outcomes"? I do not think so.

I mean in Germany treating Diabetes means taking Insulin for a life long. However newer studies, actually found out that a treatment where the patient should be dieting and starts to do more sport can actually reduce the needed insulin dose or patients can even completely dismiss insulin or are cured from it completely in rare cases. (not a lot of doctors would actually help the patient or even tell them that this would be beneficial to them, hell not even the public health care sector cares)

However the thing is if you can sell Insulin for a life long to somebody who will probably die earlier you make a profit. On multiple fronts. Treating it means that once the person is cured, he will probably live longer, will have less problems and will probably cost the overall system less (but that's not something that should happen).

So basically in "richer" countries the system is equal to the US, it's just more hidden. care system and government are systems that benefit from each other if patients take treatments over a long time and probably have a reduced life-time. i.e. treatment > healing, at least from a business perspective.


lol you are acting like the rest of the world is developing medecines. The US market is the driving force for 95 percent of drugs developed worldwide, by a very, very wide margin. This is not random.


First: You're not wrong that the U.S. is a leader in pharma.

That being said, the only source I can find for your claim is a throwaway sentence in an op-ed on Forbes (https://www.forbes.com/sites/paulroderickgregory/2012/07/01/...).

I found some more realistic (and sourced) statistics here: http://blogs.sciencemag.org/pipeline/archives/2010/11/09/whe...

That has the U.S. at 47% of drugs developed. Keep in mind those are based on drugs approved by the FDA, so it skews towards the U.S., and especially away from countries like Japan. Adjusted for population (I'm not entirely sure this is fair), that puts us neck-and-neck with the U.K., behind Israel, and far behind Switzerland.


You are talking about providing health care. Not inventing new treatments. Those countries are all using treatments invented developed and funded by the market model which is mostly paid for by us consumers, which is part of why us prices are so high.

The US has the best outcomes in the world if you have money. Which is why rich people from all over the world come here for treatment. We just have lower average outcomes because of access disparities.


[Citation Needed]

The US has average healthcare when money is no object. The weathty often seak treatment outside the US and occasionally wealthy people come to the US on a case by case basis.

The core problem is treatments entail risk, so doing more eventually results in worse outcomes. Further the incentives are around doing more, putting the healthcare system in opposition to heathy patients.


Saldy when you are in need of healthcare, money is the only negotiation power you can have. An insurance company dealing for you has a lot more power, but if you are on your own you have no power to say "right, this vital heart op is too expensive, I'll drive 300 miles for a cheaper provider. ggrrrrl".

That's why universal healthcare is the better solution for everyone.


"Creating a public institution with no pressure to make profit is a disaster waiting to happen."

Why?

Schools are not for-profit institutions (well, not everywhere). Police don't make a profit. Nor does the fire brigade. Or the military, for that matter.

Are all of these disasters waiting to happen?


Your examples are all local government with local accountability to a small group of local voters. At nation-scale the story is different


I don't follow you. How is providing fire brigade services any different from providing health care? Or providing a functional justice system different from providing health care? They all provide concrete but hard-to-quantify value to the society around them, and aim to serve the public good.

As further examples of state level institutions we could also look at coast guard and customs service. And, of course, the tax officials (what ever their local name happens to be in various countries).

A modern nation state is full of public institutions with dedicated personnel to carry the institutions mission.

Public institutions work just fine around the world in various countries, performing a multitude of missions. That's not to say they are immune to various pathologies, but that applies to all organizations, public, private, for-profit or non-profit. Public institutions work fine when they are fulfilling a legally defined obligation under a democratically chosen government.

The thing everyone wants to avoid is pathological cronyism. The key to this is to make sure the political power pool has churn - so there is no predictable kingpin with executive power around whom the power and corruption accumulates. Which, democratically chosen governments provide (with varying capacity, but even two parties is probably enough).

I agree, no one wants to funnel tax payer money just to amass state power. But some things that improve life really cannot in any obvious way be guided by profit mechanism, and some things are just too capital intensive to be able to do on a small scale. The obvious place to look for capital for large scale projects that add value to the general public is the state.

Note: although monarchs do exist as mostly figure heads, modern monarch seldom have executive power. Compare this to some countries with dictators or monarch with actual executive power.


Tell me the different national-scale story, and why if that's not working, it's not the fault of the nation's law or systems of governance?


You have never heard of private military companies? They are extensively used byvthe US mostly for non combat situations. They are very effective, for profit, and much less costly than the regular army.


That a private company works better at some locations does not imply logically that a public institution is a disaster waiting to happen, which was the original claim.

Let's make it a bit more ridiculous and extreme. Would it be a good idea to privatize US nukes? What would profit incentive provide there?

Remember, we are discussing the claim "creating public institutions without a profit incentive is a disaster waiting to happen".


> private military companies...are very effective, for profit, and much less costly than the regular army.

[citation needed] My understanding is that they are more expensive than uniformed soldiers.



It's refreshing to see skepticism of both market-based and government-based solutions. Too often I feel like I am being presented with arguments which require either blind faith in the "invisible hand" or denial that inefficiency increases in the absence of competition.

> You can certainly keep a 'competitive' environment which is regulated with incentives.

This is my preferred approach as well. It's worst weakness is the potential for regulatory capture. I tend to believe that should be addressed by not giving corporations as much power as they currently enjoy in the US: enforcing constraints on participation in politics and requiring transparency, disconnecting health insurance from employment status, enabling clawback of executive bonuses, etc.


> It's refreshing to see skepticism of both market-based and government-based solutions.

This in my opinion is a false dichotomy. The government can be owned/operated by coorporations or by the people or can be an entity in itself.

What I feel is missed by people leaning towards the idea of competition is that it is not a sustainable model under the current framework of ideas. If you optimise a society purely based on profitability, competition is the enemy, since it hinders individual businesses from maximising their profits. Hence the massive business consolidation we have seen in the last decade across the globe.

If you want competition because you want different ideas to be tested, then we need to explain what we want entities to compete for. Focusing on optimising one variable only, i.e. profit, will not work. We need new ideas.


> Creating a public institution with no pressure to make profit is a disaster waiting to happen.

We seem to have no problem with throwing $700 billion per year on the military and nobody is pressuring them to make a profit. Is that a disaster? No? "But that's different!" It's only "different" because that's what we've been led to believe.


The US military is spectacularly inefficient, and the US military-industrial complex is a parasitical behemoth per Eisenhower's critique. It's not like the problem is unknown; the issue is that the state has to have a monopoly on violence, so we live with the inefficiency. Encouraging a marketplace of competing militia would not a viable approach. :)


Uh huh... I'm guessing you aren't a fan of the 2nd Amendment then? Not trying to derail things, but assuming the State MUST have a MONOPOLY on violence is a terrible idea.

We give the government the leeway we do, because it is the best way to provide for the common defense of the nation. NOT because ONLY the State should have violence open to it as an option.

Anyway... Back to healthcare... The type of structure that made the military industrial complex problematic was specifically that the industrial part was doing everything they could via lobbying/bribery to maximize profit. A shift to a model where we attempt to minimize waste, and maximize effective treatment/cures turns the quality equation on it's head. You still run into the issue where riskier grants that 'may work' are going to have a harder case to make in order to be issued, but I think that once one gets away from trying to build industrial supply chains predominantly for treatments that don't result in cure, you would start to see materials and expertise to get industrial supply chains built period may become more easily accessible if not perhaps become much cheaper.


> I'm guessing you aren't a fan of the 2nd Amendment then?

The 2nd Amendment is completely compatible with the philosophical concept of monopoly on legitimate violence as articulated by Weber.


>> the state _has_ to have a monopoly on violence

I think that the whole point of 2nd Amendment to US Constitution was to prevent government monopoly on violence. The possibility of citizens making successful military rebellion against the state was supposed to keep the government in check.


> The issue is that the state has to have a monopoly on violence

A monopoly on violence in what context? The planet? That doesn't seem to be necessary for most countries. Within the country itself? That's the job of local law enforcement.


"Monopoly on violence" is a term with a lot of history. I'm using it in the same sense as Max Weber, where the state is defined as the "human community that (successfully) claims the monopoly of the legitimate use of violence within a given territory."

https://en.wikipedia.org/wiki/Monopoly_on_violence#Max_Weber...

All the critiques on this thread about competing authorities such as local law enforcement, the second amendment, and so on, none of them invalidate the idea of legitimate use of force defining the state. Weber accounts for all those points.

The closest thing we have to an actual marketplace among authorities wielding violence is the competition between jurisdictions (one municipal police department against the one the next town over, the state police in one US state vs another US state) -- but that's not the same as a commercial marketplace.

The only critique I think is relevant is the idea of mercenaries, a.k.a. private military contractors. But there again, those mercenaries are part of the military-industrial complex, which is an extremely stunted marketplace as it's largely a government monopsony.

We don't use economic competition to determine who holds authority on the legitimate use of violence. As a consequence, we don't get the full benefit of marketplace competition in maximizing the efficiency of our armed forces -- but we also don't have perpetual civil war.


> the issue is that the state has to have a monopoly on violence

That is not the case in the USA, where the absence of such a monopoly is written into the federal constitution.


Are you talking about 2nd amendment? If so, that's not a grant to violence by any means. If you want to test if the state really has a monopoly on violence, try being violent, or simply disobedient with an officer of the state.


The state doesn't have to have a monopoly on violence; as the use of private military contractors has proven.


> The state doesn't have to have a monopoly on violence; as the use of private military contractors has proven.

I don't think you know what the "[state] monopoly on violence" means. It does not mean all people authorized to use force are directly on the government payroll.


Rectang misused it first, by claiming "encouraging a marketplace of competing militia would not a viable approach. " Even though mercenary corporations are in fact competing militia.


Whatever large portion of the military we are not comfortable contracting out is going to continue missing out on the efficiencies induced by marketplace competition.


"Creating a public institution with no pressure to make profit is a disaster waiting to happen." Do you really think that we should ask the army to be profit oriented? What about the coast guard, Justice, Child protection service? Imagine all of this public institution comming to your house and start the conversation with "You have a nice family, it would be a shame if ..."

To expect results or effects is not the same as making profits.


You can have a competitive environment without a profit motive. You judge on results, not profitability.


This. Bothered to login to say what you said.

We talk about AI optimized to create paper clips accidentally running amok and turning the world into paper clips. Why isn't profit a similar problem? Government agencies are just AI running on meat. Give them success parameters different than raw profits.

Honestly, why can't we see this as just a variant of the instrumental convergence problem?


OTOH, academia is supposed to be this type of meritocratic, results-driven ideal, and look where we are there. I suppose this a consequence of the measure that we use to "judge results". Do we start assigning healthcare R&D companies an "impact factor"? I know the journal impact factor is a bad example since it is criticized for being gameable, but I'm just using it to convey what I mean.


↑ ... instrumental convergence problem sounds sexy! drool


>Creating a public institution with no pressure to make profit is a disaster waiting to happen.

Aren't most public institutions non-profits? Don't many of these work well? What makes you think that a (truly) democratically run enterprise wouldn't satisfy the needs of its constituents?


Europe proves you wrong.


Use the Post Office model. When profitable, it contributes to the general fund. See my other comment here.

Political hobbling and fuckery related to post office operations done to marginalize otherwise exemplary performance aside, the model has merit.


The post office has a govenrment-granted monopoly on first class mail service, and does pretty poorly when it competes for non-first-class mail logistics.


A necessary monopoly. Without it, service would not be universal.


DARPA...


Well, it's not like you couldn't make money by inventing an ideal cure, you just can't do so sustainably, but for better or worse sustainability has never been a particularly high priority for businesses.

I think patents make any kind of free market approach difficult if not impossible, but it's not as if there's no monetary incentive to invent the 'best' cure.


I think there's a lot of survivorship bias in play here. Whatever company that makes the most money will grow the most relative to others.

The big companies will always be the most greedy one's but most companies may still have slightly different priorities. Companies that survive must be long term economically sustainable. Consequentially most companies that exist will likely prioritize economic sustainability because those are the one's that survive.

However, it might still be that it makes sense to start and work with temporary companies that are not long term sustainable if they do fix a problem?


I think it's OK too, and see those things as investments.

We all benefit from the higher availability of liquid dollars present in the majority of spenders. Demand backed by liquid dollars is a resource. Demand not backed is a cost.

It's cheaper to live overall. People can take risks, etc...

It's worth noting the Post Office does not operate on tax dollars. It's self funded, and could serve as a model for non profit public services. There are political reasons why the Post presents financial difficulty right now. They aren't rooted in any realities, just agendas seeking to marginalize it to favor for profit works.

Normally, the Post does turn some profit, which can go into the general budget. That didn't really effect the overall benefit and value to people.

This suggests we could do public works, non profit in the sense of some one or entity accumulating money somewhere, to pay down other debt, and do so in an equitable, low impact way.

Public works can be broken down into two types:

Infrastructure. These works provide new opportunity for everyone to benefit economically. The Interstate Highway Project, for example, returned many times it's initial investment. As a nation, those greater efficiencies allow us to compete better. All good, except when tolling them is discussed. That idea turns a clear benefit into a cost, and it hurts our ability to compete.

The other type is services. This is the Post Office model.

I often wonder how health care, basic banking, might be improved and actually pay us all nationally using the Post Office model.


What about a system that provides individuals with “medical endowments”? Ie in the event you’re diagnosed with a disease the government will pay out $x to cure you or $(x/720) per month for a management treatment. People would still have the ability to chose providers.

But yes, I still think healthcare needs to be out of the market, ultimately.


There's a huge mismatch between the interest of the investors (sell as much drugs as possible, for the highest possible price) and those of the consumers (be healthy without depending on external input).

The pharma industry should be working hard on planning its own obsolescence.

The same dynamic is at work in the food industry, which is responsible for the obesity epidemics.

Capitalism as it is practiced right now has catastrophic flaws. We need to change the rules of the game, yes, and not necessarily seek profit and growth at all costs.


> The pharma industry should be working hard on planning its own obsolescence.

In an ideal word. But as you show in your mismatch "serving shareholder value" is prohibitive to this. So having then as (blue chip) for profit bizes is making sure they will NOT ever be planning they own obsolescence.

> The same dynamic is at work in the food industry, which is responsible for the obesity epidemics.

...and high amount of pesticide residues, and destruction of the ecosystems, and heavy pollution on surface waters, and extreme disdain for animal wellbeing, and... (cries)

> Capitalism as it is practiced right now has catastrophic flaws. We need to change the rules of the game, yes, and not necessarily seek profit and growth at all costs.

To my understanding it should never be the economic model "to govern all markets", but AN economic model allowed in some markets while carefully bounded by rules and ensuring (1) best outcomes for we the people and (2) a leveled playing field.


    The earth is like an apple pie
    Let's eat it and let's die

    Do you want some more? It's delicious...

    Grow theee...
    Grow theee...
    Grow the economy!
    
More at https://news.ycombinator.com/item?id=16671373 and https://news.ycombinator.com/item?id=16718258


If the US were to make all drug R&D a public service they'd have to basically increase the current NIH budget from ~$30B to probably $150B

It may be nice in theory to have government manage drug R&D, but it is not practical. It's simply too expensive


.. or a fifth of the military budget.

"It's not practical of the US to maintain the most expensive military in the world, it's simply too expensive" said nobody in Congress ever.


Eisenhower's warning of the military-industrial complex is still very much valid, nearly 60 years later.

Ike then counseled American citizens to be vigilant in monitoring the military-industrial complex.

https://www.history.com/this-day-in-history/eisenhower-warns...


It is also worth noting that the original speech called it the military industrial congressional complex. Indeed very relevant.


> or a fifth of the military budget

And less than the projected increase in the deficit this year due to tax cuts and spending increases


Thats a false comparison. It's like saying "people spend $1,000 on iPhones. Why wouldn't they spend $1,000 on a pizza?"

Ability to pay and willingness to pay are very different concepts


> Thats a false comparison.

All your argument was that it's too expensive. Clearly it's not. If the manner in which the money is spent (or the feelings we'll have while sending it) is actually the limiting factor, you'll need to actually make that argument.


It's not too expensive - the US can easily afford $150B. We just have to decide that it's a priority and make it happen. Each year we some how find almost a trillion dollars for defense (more if you include "black budget") and no one blinks an eye.


I think the US is still stuck in the Cold War mentality of making military spending an “untouchable” cut. Meanwhile country infrastructure is falling apart and our equality gap is unprecedented. Sounds a lot like the USSR.


It's not politically practical, but why would you expect that paying for the stuff we already pay for is too expensive?


I'll assume that downvotes mean I wasn't clear: the US is currently spending that much ($150B apparently, I haven't checked) on R&D for drugs. It's just doing it through different means, presumably by paying higher insurance premiums and healthcare costs that end up going to drug companies to fund their R&D. If instead we payed that cost through taxes, then there's no theoretical reason why it would have to cost any more. So why would it be too expensive, given that we already pay that much via a different route? Of course, it's not politically expedient and won't happen anytime soon.


The problem here is not business interests its the IP protections that keep the pressure from being applied by the marketplace.

I dont know enough to have an educated opinion on healthcare regulation or on social services...but its disengenuous to claim that medicine cant be managed as a business when its already so heavily regulated that it barely looks like a normal business.

I would agree that the current model is super messed up...but maybe managing it like a business without all the government intervention and IP laws is the better solution here... maybe not...i dont know...but you definitely cant support your conclusion from the current environment.


Great argument. Would you like to buy some ED medication I made by stuffing capsules with Drano? /s


No ones talking about drug approvals...im talking about IP protections after its approved... do you have any idea how corrupt and regulated that side of the business is? Even generic drug prices are artificially manipulated by the original IP owners. The amount of monopolistic laws in pharma driven by lobbying, etc are ridiculous...


Nah. This Goldman contention is far from proven. In general, the cure is going to be more attractive in the marketplace.


> So we agree medicine cannot be managed as a business, right?

No, we don't all agree with this. In a well-regulated and competitive market, businesses can opine about their fantasy product and scheme about how to extract maximum revenue from their customers all day, but if they push the envelope too far, a competitor will emerge and undercut them or offer a better product.

The issue is that the pharmaceutical industry isn't regulated in a manner that promotes competition. It's a heavily concentrated industry dominated by just a few multinational companies, most of which originated in the United States.

Like a growing number of industries in the US and elsewhere it is regulated in a manner which preserves the dominance of a few powerful firms and creates barriers to entry for competitors.

The behavior of these firms naturally shifts toward milking their customers as hard as they can because governments have granted them big moats. They pay the politicians, the politicians protect them, and we get another example of late stage capitalism, which isn't really capitalism at all.

Many Americans seem to harbor a curious cognitive dissonance: they don't trust their government, but they believe that more regulation of these already heavily regulated industries, devised by the government they mistrust, will fix the problem.


How can we tell if the loss if from inefficiencies, corruption and laziness? Case in point: Air India.


You need different metrics for that. Nobody has to fly Air India, but people don't have a choice over getting sick.


I'd argue that collectively the 'market' system is incredibly inefficient. Corruption needs policing/regulation just like in the 'private' sector. I'm not sure what you mean by 'laziness' in this context. Could you elaborate?


No, that's an extraordinary leap to make. Private medicine still manages to provide diagnostic services in a much better way than governments.


Could you both be correct?

Yes, managing healthcare 'like a business' with an emphasis of profit over results produces bad outcomes for patients.

But managing healthcare 'unlike a business' with no emphasis on results also produces bad outcomes for patients.

Managing healthcare for the benefit of healthcare workers also produces bad outcomes for patients.

Healthcare should be managed in terms of producing results. Metrics would be a good discussion, eg "good quality of life hours added to life" "hours in acute pain reduced" or similar.

Point is, we need something to measure, the primary measurement shouldn't be profit.


Why is that ok if a private actor can do it better and cheaper? Most cases for public services are not really based on any good justification. On the contrary accepting that they lose money from the get go will drive soviet style inflation of resources and bankruptcy in the long run. Its been tried.


https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...

Canadian here :). By that list, our per-capita healthcare costs are about half of what our neighbours to the south pay. I don't have it handy, but I've worked out the currency conversions and things before with various tax estimators, and in my province (Saskatchewan), we pay approximately the same overall income tax (Provincial + Federal) as someone making an equivalent salary in California (State + Federal). But included in that is all of our health care and some pharmaceutical coverage.


Did you include the HST? And gasoline taxes? And the ability to deduct mortgage interest and up to $18K in your 401k?

My own person experience was that taxes were much lower in the US than Canada.


No, no, and no, just straight up income tax before deductions. The mortgage interest deduction would be great, no doubt, for people with mortgages.

I also didn't include the monthly health insurance premiums, nor did I include the mandatory 3-week vacation pay, nor the 35-week maternity/paternity leave, etc etc. Nor tuition costs. I'd really love to see the numbers all across the board as a general "cost of living comparison" for sure.


It's been too long to be able to edit.

https://www.linkedin.com/pulse/20141010125950-31061941-what-... We do have a 401k-like system that has some neat perks:

- your contribution limit carries over, so if you have a tight year, you can contribute a bunch over the following couple of years

- you can temporarily withdraw from it tax-free to buy a house (it has to be replaced within 10 years or you'll owe income tax on it)


That hasn't happened in the United Kingdom with the NHS


Can you explain what exactly you mean by private and public? I'm honestly confused. The statements that you are making sound like they come out straight from an Ayn Rand high school essay....


All of these kinds of arguments at least with regards to medicine neglect to understand how drug discovery actually works. It's not like engineering where you can a-priori design your spec, then reliably build the product to meet that spec.

At best in medicine you have a well understood disease mechanism (sometimes you don't even have that), where all the biological culprits are known and easily handled in an experimental context (that's rather rare at the outset of a medical project). Then you try to influence those players, but the process of finding those drugs looks a lot more like throwing darts at a board in the dark than it does like a coherent engineering task.

When you aim for the bullseye cure you often fall short and end up with a maintenance med. If you don't initially shoot for something that's likely to massively affect the disease's course, you're likely to miss the board entirely.

And all this assumes that the disease itself CAN be cured, which is not at all guaranteed. Biology is a wily beast, with insane, complicatedly interacting systems. In many ways, it's amazing we have as many cures as we do.

In other words, when finding drugs you don't really have a choice between cure/chronic use/total failure.


This. I'd go further and say that a system where innovation is driven by profit is good at perpetually managing problems but very bad at actually getting rid of them.


If you dig even further, you will find things like 'unhappy people consume more as they try to buy their way out of misery'. Now of course you don't directly sell unhappiness, but you can sell goods of which the consumption benefits the individual that consumes it, but deteriorates the world a little bit for everyone as a result. A car is a perfect example. Great benefit to the buyer, but through noise, pollution, taking up space etc. a bit of a nuisance to all others and making them more likely to also consume a car so as to at least participate in the benefits. This ends up in a situation where everyone gets locked into a net negative system where individual escape (dumping your own car) just makes you worse of as you just forego the individual benefit without any perceptual change in the collective negatives.


I find a motorcycle with lots of storage to be a nice compromise. Cheaper and more fun too.

Of course you do need to take a safety course and be aware of the dangers, but at least people acknowledge their danger. Cars somehow get a collective free pass despite their astronomical death tally.


"The 'ideal' drug from a business point of view not only not cures the patient long term, it offer a short term mitigation while increasing the risk on relapse and thus future recurring consumption of the treatment."

One doesn't need to be Sherlock Holmes to figure out that that's just like the narcotics business.


In a private healthcare system, where the government doesn't directly pay for its own citizens' healthcare issues, the government also lacks an incentive to keep its population healthy - which can go from allowing food companies to put as much sugar as they want not just in sweets, but in meat, sauces, and so on, to allowing companies to pollute the air as much as they want.

In a private healthcare system the insurers are also incentivized to pay for as few treatments as possible, hospitals are incentivized to make patients pay as much as possible for all the tests or unnecessary surgeries they make them have, and Big Pharma, as you said, is incentivized to make drugs that don't actually cure people and to price the drugs based on "value provided to the citizen". So if it's something like cancer, the value is a lot, even if the drug costs little to make.


This sounds cute, but isn't really true. In a competitive market, there is still an incentive to find cures. If company A has a treatment with the properties you describe on the market, and company B comes out with a cure, guess who's going to get all the business?


Not if both company A and B (correctly) assess that they will reap more profits by investing in chronic treatment even when a one-shot cure is possible.


No, because that's an unstable equilibrium. If you are company B, you know you can steal 100% of the business by finding a cure.


You can theorise all you want, but the world is rife with examples of what I said being true. As always, experiment must trump theory.


Certainly there are lots of cases of expensive long-term treatments being developed.

Do you have examples of situations where cures have been suppressed in favor of expensive long-term treatments? Especially in a competitive environment, where there were multiple players offering competing long-term treatments that were both aware of cures?

Preferably this would be something supported by leaked or court documents, but independent investigations would also be interesting. I understand this is a high burden of proof, but everything I've seen seems to indicate that this is an urban myth. I certainly couldn't find any specific cases in a cursory search.


Name literally one example of that being true. I'll wait.



In what way is sales and marketing spend related?


Only if cures are equally expensive to develop as ongoing treatments. If cures are substantially more expensive to develop, then the system never gets over the activation energy (or it takes an extremely long time).


This may be true, but I think it has more to do with people's willingness to pay more for treatments (over time), than for cures (one time expense). This is an unfortunate irrationality that I think is probably the source of this problem, to the extent that it exists.

All else equal, people should be willing to pay a bit more (in terms of lifetime cost) for a cure than a treatment (certainty, finality premium). If that is the case, then cures are always at least equally worth developing. If that's not the case however, then yes we do indeed run into a bad local minima.


> All else equal, people should be willing to pay a bit more (in terms of lifetime cost) for a cure than a treatment (certainty, finality premium).

This certainly isn't true in social games. If anything it's the opposite - players will commonly pay more in subscription fees than they would for a total one time unlock of everything, since the immediate short term payment is less.


I said should. The problem is that they aren't.


Like, if you invented a digital camera and successfully patented it.


This assumes A & B haven't both developed a cure and are holding it back until the other party releases their cure. Neither do because of the profits being made on the perpetual treatment, if either does then the other also releases a cure.


What if a competitor shows up and can demonstrate that their treatment is better, for example that it does not lead to relapses?


The barrier to entry is extremely high. There are regulatory hurdles, hurdles to being taken seriously, etc. You need authorization for human trials, you need to get published, you need to convince insurance companies to pay for your product.


The same as for the first drug manufacturer, I suppose. And if you really have a superior product, you should be able to take all the customers, assuming that the customers are smart enough.


Well, not increase the risk of relapse, since clinical trials usually have relapse or time to some sort of negative event as an endpoint to look for.

But to have patients need to take it in steadily increasing doses for life? Yes, that would describe most maintenance medications out there. And encourage patients to have the illusion that “oh, there’s a pill for that” as one of the factors.

While I was a pharmacist at a long term care pharmacy, it was not unusual to see patients on more than 20 meds. Some of the meds are to be taken more than once daily. “Pill burden” is the term we use to describe this.

What I’ve observed is there is a point of no return in any chronic condition where you can’t diet and exercise your way out of it and you’re relegated to higher and higher doses of diabetic or hypertensive meds. For life.


This is wishful thinking because you never know ahead of time what is going to work and certainly not the pharmacodynamics of your drug. Plus your reasonning is false, even with current chronic conditions like RA many companies are exploring different dosages of bio treatments to drive remission instead of lifetime treatment.


I read about this recently with respect to GMs invention of planned obsolence for cars. They managed to give cars to all Americans which lasted a good time. To continue sales they had to reduce quality and do frequent style changes.

I guess it was really just a reinvention of what the fashion industry had been doing for a long time. Get people to throw away perfectly good clothes and biluy new ones because it no longer matched fashion.

We really ought to rethink this madness. Companies are already able to make really durable products but there is no economic incentive to do so.

How can we change the incentives?

I am not sure if that is possible in a regular free market economy, as one kind depend on sort of perpetual growth


This only works if there are no better treatments or cures. If a competing treatment works better, or might be a better cure, it must be kept out of the market. Sums up the massive web of red tape that we call healthcare.


Conventional medecine has become a criminal institution that can only be stopped if patient cease listening to dumb doctors who prescribe things like chemo that obviously makes one sick. We should take more care of ourselves and study things like Ryke Geerd Hamer's New Medecine.


Forbid pharmaceutical companies from going public, and give more government support to pharmaceutical companies in terms of liability from trials, etc. If the drug companies behaved more honorably, we could add more protections in case of genuine errors. But they are incentivized to maximize profit for their shareholders. Get rid of those incentives, and instead staff them with well-paid scientists or efficiently run private companies that are beholdened to the country.


So, the ideal drug from a business point of view is heroin?


Or oxycodone.


Also* this 'ideal' drug has a difficult time being covered by healthcare. At all possible this drug should not cure the patient, be taken for a lifetime, not be healthcare covered [if possible], needed daily, easily marketable, be IP protected [for as long as possible] AND have the ability to survive even with generics on the market : viagra, propecia, etc.


That's the ideal in a world without any competition from other products.

We don't live in that world so what you describe doesn't actually happen.

We have more cures being developed now than ever before and it's very lucrative for the companies doing it.


Well, we certainly have exponentially more consumption of treatments for depression, allergies, obesity, pain, attention disorders, ... . That these are very lucrative for the companies supplying them (under a state-covered monopoly agreement) is also correct. Whether those constitute 'cures' is highly debatable.


We now have a cure for HCV, relapsing blood cancers, genetic forms of blindness, blood clotting disorders (in a year or two). I can give you more examples if you have trouble finding them.

And yes, the companies are giving a monopoly on one drug which allows competitors to create others similar to it. And the patent only gives about a decade of monopoly, after which the price drops to ~10% of what it was.


Won't a cure beat mitigation in the marketplace every time? It's like selling shorter-life batteries so peolpe have to replace more frequently. Is that better business?


This is only if you treat healthcare as an economic good, it should be considered a social benefit rather than a cash cow.


> it offer a short term mitigation while increasing the risk on relapse and thus future recurring consumption

Alcohol? Coffee? Sugar?


>This realization goes beyond medicine, and is key to understanding why we live in an 'economy' that produces masses of landfill junk while our technology and manufacturing processes keep on improving.

This is the crux of the problem. The current system optimizes for things that are not improving people's lives. It optimizes for waste, unsustainable consumption of resources, wasteful competition rather than cooperation, self-prepetuating inequalities at small and large scale, hyper-optimized psychological manipulation (i.e. advertising) for raw amount of useless shit being sold, etc.

We didn't reach the pinnacle of perfection in systems of wealth distribution with 18th century capitalism. We can do better. We can do a lot better.


Evil beyond evil


Suboxone fits this exactly.


Well said.


From a _capitalism_ point of view.


> The 'ideal' drug from a business point of view not only not cures the patient long term...

There is another one. Vaccines. Or any preventive medicines that does not actually require people to be sick.

You just need to inject massive amount of fear of diseases (Statistics is your friend here) into the populace to create a nice, ever increasing demand of your produce...


I rather enjoy never having gotten smallpox or polio.


What part of my comment are you responding to?


The part about fear of diseases, for example. We've always feared diseases, and the fear was due to having seen babies or young people die of diseases that have now almost disappeared, such as measles.

People that think they know better, however, have lost this fear and are responsible of the failure to establish herd immunity, and of the occasional deaths of immunodepressed or just unlucky people due to preventable diseases.


You seem to be responding to something I didn't say.

I only said that demand for any preventive measures against X, can be artificially inflated by injecting fear of X into the populace.

Since vaccines are a preventive measure, this is applicable to vaccines as well.


> There is another one. Vaccines.

Vaccines are absolute shit from a business perspective. They're expensive to develop, generally cheap to produce, and their administration is a single or limited event point. Sure you've got breadth but you've got no depth, once an individual is vaccinated they're done, or maybe they'll need an other round years from now.

Big pharma companies absolutely hate vaccines, having people pay for repeated treatment is way more business-beneficial.

And as other commenters have noted, herd immunity is a well-studied concept, and vaccines have very much proved their worth multiple times over.


> administration is a single or limited event point.

What about flu vaccines? Even govt runs ads urging people to get their flu shots, even though they have been shown to be useless.


Flu vaccines aren't useless, but they also aren't 100% effective. The CDC reckoned they reduce the risk by about 40-60%.

Flu is a variable pathogen, which means that it evolves to look different from an immune perspective over time. It follows clustered patterns, where the flu strain will look pretty similar (and vaccines will be more effective), then it "jumps" to a new cluster every few years or so (and the vaccines will likely be less effective). There's a whole bunch of work goes into predicting what flu strains make most sense to use for the vaccine in a given flu season.


> CDC reckoned they reduce the risk by about 40-60%.

curious, Do you have a link to this by any chance?

According to this

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3693492/

After looking at "328 households with 1441 members, including 839 children," for an entire year (2011) these authors determined that there was a difference of 4/10ths of one percentage point between those who received flu vaccine and those who didn't.

The infection risk was 8.5% in the vaccinated and 8.9% in the unvaccinated.

According to this CDC study https://academic.oup.com/cid/article/64/5/544/2758477

"We observed decreasing vaccine effectiveness with increasing time. Maximum vaccine effectiveness was observed shortly after vaccination, followed by a decline..... Vaccine effectiveness remained greater than zero for at least six months for influenza A(H1N1) and influenza B and at least five months for influenza A(H3N2) viruses."

They say "greater than zero" , far cry from 40- 60% :D

Cannot post more replies atm, but for people saying 5% is still something.

> Going from 8.9% to 8.5% is a 5% reduction in flu cases. If this translates to 5% fewer sick days during the flu-period and a 5% reduction in doctor visits that are due to flu symptoms (some people go to the doctor for everything), that can absolutely be a reason for the government to want people to get their flu shots.

This line of reasoning assumes that there are only positive effects from vaccines. There are many many side effects of flu vaccines.

Just to quote one,

http://journals.plos.org/plosone/article?id=10.1371/journal....

"Hospitalizations were slightly more common among subjects who were vaccinated than among the others"

"hospitalizations for pneumonia and influenza, that were 47% more likely among subjects who received the tetravalent vaccine as compared with those who were not vaccinated."


That's a 0.4/8.9 reduction, about 5%. However, flu vaccine isn't useful to the general population. In many countries is usually administered to people that are most likely to develop complications such as pulmonitis.


> However, flu vaccine isn't useful to the general population.

CDC makes no such distinctions in USA.

https://www.cdc.gov/vaccines/hcp/vis/vis-statements/flu.html

Any references to your claims?


Italian only, but see item 11 of http://www.salute.gov.it/portale/p5_1_2.jsp?id=103 - should be easy for Google to translate it.

Though I should have written "isn't _equally_ useful to everyone in the general population".


To quote your quote of my response:

----

> > Going from 8.9% to 8.5% is a 5% reduction in flu cases. If this translates to 5% fewer sick days during the flu-period and a 5% reduction in doctor visits that are due to flu symptoms (some people go to the doctor for everything), that can absolutely be a reason for the government to want people to get their flu shots.

> This line of reasoning assumes that there are only positive effects from vaccines. There are many many side effects of flu vaccines.

----

This is why I also said:

>So assuming that the flu vaccine is harmless and the cost is not too great, it can make sense to get it even if the effectiveness rate is low.


oh sorry. missed that line from your response.


As far as I remember flu vaccines work by looking at the origins of the yearly epidemic (in the east, typically china etc.), predicting which strains will become the dominant ones and then starting to cultivate neutered forms of those (in eggs) on a mass scale to have the vaccines ready by the time the epidemic hits 'the west'. Some years the predictions of the strain are wrong and the vaccines less useful as most people will get another strain.


They do strain selection twice a year (once for northern, once for southern hemisphere). The years where they get it wrong are usually the years where the strain jumps between different clusters.

It's really interesting stuff. Take a look at https://www.whocc.infectiousdisease.cam.ac.uk/antigenic-cart... for a bit of an overview on that stuff.


Yeah, I didn't look particularly critically at it, but this is where I got the figure from: https://www.cdc.gov/flu/about/qa/vaccineeffect.htm


That is for 2011. The effectiveness of the vaccine is different every year. Some years it gets close to 80% (from memory and probably wrong), some years it is only 10%. The average across all years tends to be 40%.


Do you have references to numbers your are quoting? I searched for 60-80% number quoted by GP but found nothing even close.


https://www.cdc.gov/flu/professionals/vaccination/effectiven...

Where my numbers disagree with the above (nearly all!) I stand corrected.


Going from 8.9% to 8.5% is a 5% reduction in flu cases. If this translates to 5% fewer sick days during the flu-period and a 5% reduction in doctor visits that are due to flu symptoms (some people go to the doctor for everything), that can absolutely be a reason for the government to want people to get their flu shots.

Personally I have never had a flu shot and am not inclined to start doing so, but I know people who have and according to them, if they do get the flu it affects them less in the years they get their shots vs. when they don't. So assuming that the flu vaccine is harmless and the cost is not too great, it can make sense to get it even if the effectiveness rate is low.


I almost wonder, in my more cynical moments, if "flu shots" are people just paying to get poked with a couple of cc's of saline, for all the effectiveness it seems to provide.


Don't confuse the flu with the common cold as many people do. The flu vaccine does nothing for the common cold.

Even at their worst the flu vaccine makes the flu less deadly when you get it.


Where have they been shown to be useless?



I find the way that response has been worded to be misleading. Labeling an effectiveness of around 5% as 4/10ths of a percentage demonstrates a desire to mislead the reader.

Most people will shake off a flu infection easily. The elderly or people with other medical problem may not, so I find it a weak argument to say they are useless based on that study.

The second study quoted is pretty much what I would expect based on my knowledge of influenza virus. It evolves quickly, which is why being exposed to it once year doesn't build up your immunity to the evolved strain going around a year later

To say they are useless is just wrong.


Vaccines provide, a nice, predictable, ever increasing demand. It is even possible to create arbitrary demand in the case of preventive measures such as these.

Profit from any normal drug is dependent on chance that a certain number of people will fall sick of the corresponding disease. The company cannot also count on outbreaks since it will have no clue when, where and for which disease the outbreak will occur. The expire date for drugs means that the companies will not be able to stockpile these drugs in hopes that there will be an outbreak some point in future..


Vaccines also only get administered once, or a small number of times, per patient. It's hard for them to be as profitable as a drug which is "take this 3 times a day with meals, for the rest of your life, or you die".


Vaccines are one of medicine's great discoveries that free humanity. The only reason people aren't terrified of disease and think they can get away with lying about vaccination is that we've driven it into the corners.

Unpreventable diseases are quite capable of creating their own fear, like the AIDS epidemic.


I am sorry, but what part of my comment are you responding to?


I don't agree. Herd immunization is a solid concept. Besides, AFAIK most vaccines do not just work short-term while increasing the likelihood of future vaccination need.


Antivaccers here? I expected better, but I see you have been rightful down voted.


Do you get flu vaccine every year?


Strawman.

I get vaccines for serious diseases when visiting foreign countries. Yellow fever, hepatitis, tetanus amongst others. So far I have manged to avoid becoming autistic.

I am in good health so have no real reason to get a flu shot. (One year my work offered me one and I took it).


> preventive medicines that does not actually require people to be sick.

> I am in good health so have no real reason to get a flu shot.

Aren't you saying the exact same thing that you called "antivaccer".

CDC doesn't recommed flu to people who are not * in good health* , its a population wide recommendation. You being in good health is not relevant to GP's point of recommending vaccines to people who are not sick( which you seem to agree with).


Which part of my comment is "Anti-vaccine"?


Sure it is. Gilead made 100 billion dollars curring Hep-C with seed research investments that were probably much less than 1 billion.

So as long as this strong differential and potential for profit exists, drug companies feel competitive pressure to produce better treatments, irrespective of the fact that "milking" the pathology would yield them trillions collectively. It's effectively a "tragedy of the commons" of sorts: a single company trying to capture more of the market ruins profits for everybody else by finding a cure; behold, the magic of the free market.

They can only escape it by entering non-compete agreements and collectively agreeing not to inovate, a substantial claim that requires substantial evidence.


Notably, the headline here oversells the actual content.

Goldman is rightly pointing out that gene therapy cures require heavy research but don't provide long term revenue streams.

It doesn't claim that they shouldn't be pursued, or that people should be kept sick. It doesn't even say gene therapy companies offering cures are bad investments! Rather, it points out that they offer high returns over limited durations, and will have to constantly hunt new treatments and target popular diseases. All of which, I note, describes Gilead perfectly.

I think you and Goldman are both right, while the headline writer is misunderstanding the actual memo.


In fact, this is a really common thing we see in the market/government dichotomy: the market doesn't, and shouldn't, have a stomach for long term, high risk plays that could possibly benefit all of society. That's not the point. The government handles those levels of investments on a much longer time scale, allowing the market to exploit the technological platforms made by our government. We see this pattern with the space race, the internet etc.: government does the big heavy lifting in the 20-40 year time frame, then VC and the market comes along and "digests" those changes for the marketplace.

Here is an excellent book that describes this relationship in far greater detail: https://www.amazon.com/Doing-Capitalism-Innovation-Economy-S...


Thanks very much for this - I'm excited for the book, since I've believed the general outline of this concept for a while now.

Despite all the outrage over this memo, all I can really think is "yes, what a great argument for state-sponsored medical R&D." Questioning the profitability of a market doesn't determine the profitability of that market, and if something socially-valuable turns out not to be market-friendly, that's an obvious case for state intervention.

(If someone made me Emperor, I'd probably pick a deregulated, free-market approach but increase state research spending by an order of magnitude.)


It would still require that the company that develops the cure could make more profit off it than it would make with chronic treatments.

So if you went purely for profit, you could only develop a cure if:

- you could price it higher than the price of the chronic therapy over the full lifetime of a patient.

or

- you could sell it to more patients than you could have sold the chronic treatment. A lot more, because every patient will only buy the cure once.

So even then the incentives would probably lead do driving the price of drugs up significantly. You'd also still have no incentive to actually eradicate a disease.


The third case is:

- you control only a fraction of the ongoing-treatment market, and the windfall you could get as a monopolist in the short-lived cure market is worth losing out on that steady cash flow


On the one hand you have a company who's business model depends on milking patients on chronic treatments. On the other hand you have a company that is able to develop a permanent cures for that disease. Guess which company is a threat to which company (hint: if there are no longer sick patients to milk you no longer have a business model).


Drug development is really hard - the odds are stacked against you.

Any successful drug with half a business case will be launched - no company can afford to be picky about cure vs. chronic treatment - there just aren't that many successful drug discoveries to enable it.


It would still require that the company that develops the cure could make more profit off it than it would make with chronic treatments.

No it doesn't. Why? Because there are multiple companies.

If company X is making $10B per year on a poor treatment, there is still an incentive for another company to create a cure, even if it only makes them $1B.


No, there's an incentive for another company to make a treatment and only make $9B(/y).


You make a case for shorter patents, that would encourage rapid innovation and and short term profit.


They solve this by working on diseases whose diagnostic criteria are vague enough that they can never be fully cured. Or at least no physician will ever tell someone they're "cured." Diabetes, hypertension, heart disease, autoimmune...


Is it just me or does anyone else think that "tragedy of the commons" is overused as an explanation?

While I'm at it. Also overused (not as an explanation) but just as an expression is, "onboarding".

Also, "Dunning-Kruger effect"

Sorry for veering off-topic but I was triggered.

I imagine a HN Bingo app game where each player is randomly assigned HN-y phrases and expressions from a fixed database at the start of the day. As the day progresses the app monitors comments of posts on the front page for matches. First to get a line is the winner!

Incidentally I agree with the commenter @cornholio, curing the unwell is incentive enough as there is plenty of profit to made and to live means to suffer from ill health at some point in one's life. As you were…


That HN Bingo is a great idea for a browser plugin that adds a board to the HN page and fills it automatically as you browse


The health industry has no reason to cure patients. On the contrary, they have reasons to create new patients.

And it's across the board. I tell myself exactly that when I look at my toothbrush.

A toothbrush lasts about ~3 weeks before needing replacing. I'm sure someone in the industry will tell me that it's because it's made of unobtainium unicorn hair specially designed to make my teeth whiter and all that.

I also have a another plastic brush to clean my shotguns of all things (I do a lot of clay pigeon shooting) -- the construction is identical to a toothbrush, just perhaps a tad bigger. Doesn't have the fancy colored handle.

Now the brush I'm currently using I've been using for 3 years and the brush is still pretty much pristine, after being used to generously scrub bits of sharp, grim metal once or twice a week.

Hmmm... How does that work? Better unicorns? Well, think about it, everyone is changing toothbrush on a monthly basis, that is a huge revenue. Even reducing the lifetime of a toothbrush by 5% would increase the number of brushes sold by a huge amount.

All the while, it creates fantastic amount of plastic waste. Fancy packaging and 100% plastic, possibly not even all recyclable.


> I also have a another plastic brush to clean my shotguns of all things (I do a lot of clay pigeon shooting) -- the construction is identical to a toothbrush, just perhaps a tad bigger.

Is it, though? Are the bristles made of the same material, for example? I'm guessing that bristles tough enough to scrub metal would not be the best things to use on your teeth and gums.


Unless you like the taste of copper.


Your toothbrush needs replacing every 3 weeks?


I had never heard that before either. I've been using the same one for like a year now, which is definitely too long now that I think about it, but 3 weeks?


The toothbrush is meant to remove a growing living substance, namely bacteria. The shotgun cleaner is meant to removal particles.

After a period of time the toothbrush too will become a colony of bacteria. It will then add to the existing problem or at least offer no benefit. This is why you should change them so often.

The shotgun cleaner is not used to remove bacteria primarily and will not suffer the same issue provided the particles/grime can be removed from it.


That's the standard reply. However, people with dentures don't change them every 3 weeks. There are perfectly sane way to disinfect/clean these sort of things on a long term basis. You could imagine leaving your brush in a cleaning solution.

Here they purposely make the brushes useless mechanically as the bristles deform to a point they are no longer usable.



This is where traditional Chinese medicine got it right : they have a culture of trying to keep people healthy. You are supposed to go to the doctor to not become sick.

It's maintenance. Not that I think it's better, but economically, you suddenly have the same goal as your clients. And that more sane.


Too bad the medicine part of TCM is junk science


Well it's essentially eat right, drink water, get some rest, etc. Not the mumbo jumbo you see in Hollywood movie.

I can't think of any scientific experiment that would conclude: burn out, eat junk and drink mostly beer.


Insistence that we should ignore the "mumbo jumbo" feels like a No True Scottsman to me. It's not as if this isn't a real thing, there's a specialist pharmacy near me selling exactly this type of snake oil to a local Chinese community, much as there's a local Polish shop selling a remarkable variety of different sausages. Except I bet the sausages actually work.


Well it's essentially eat right, drink water, get some rest, etc.

This is just healthy living. I don’t think we should ascribe it to Traditional Chinese Medicine.


You'd be surprise how much common sense people pay to hear in some different form and name. Yin/yang, ayurveda, etc. We love creating symbolism for things grandma said to their children for 1000 years.

Beside, most reason to go to the doctor go away if you have a healthy life style.


Everything developed before science is suspected to be bunk.

Everything developed after science is suspected to be bunk until the experiment has been replicated.


I think nobody suspected getting enough sleep was bunk before we did a study on 1000 people.


1000 years of grandmas passing down oral history is a great source of experiment ideas, but the one about only hiring/funding people that can publish a positive result in a high-impact journal needs to get tested ASAP.

Getting rid of the useless cruft lingering around from the past is just as useful as advancing the frontiers of knowledge.

When people can stop waving crystals around and dipping their fingers in oil, they can finally get better results from pushing the big green button on an inscrutably opaque black box that goes "ding".~


Yes but that's not incompatible. Life is not an all of nothing proposal.


They earn less money off of a cure than a palliative, but not everything the health care industry does is treating disease and the health care industry isn't one company. If one company owns the patent on a popular AIDS treatment, that would not at all stop a competitor from offering a cure if they had one. It's not company A's best interest, but it is in company B's.


I used the same toothbrush for a year. Is this bad? How do you know when to replace it?


- when you're sick

- when the bristles become less stiff (i.e. signs of wear)

- or every 3 months


When you're a business person or a researcher you want to find the big thing that's going to fund your retirement. When you're an engineer you make a career out of building thing after thing. I think this is similar to the difference between US companies and Chinese companies. In the US they want to develop a product and ride that wave for as long as possible, while in China they produce one item and quickly move on to producing the next one in a never ending cycle. This is also why US companies care so much about IP, they want to do something once and retire. One could even frame it as a form of entitlement ;-)

Having said that, I do want people who solve major problems to be reasonably compensated. I'm not sure what that looks like.


How do we interpret this heartless-sounding statement? In the absence of original source material, whatever interpretation you apply will inevitably be a projection of your pre-existing views on the matter. If you want to knee-jerk your way to the standard "Goldman Sachs is Evil" view, help yourself to the rest of the top-level comments in this thread. If you're still reading, I think I have a worthwhile point to offer:

Let's not forget, Goldman Sachs and its biotech brethren are businesses. All business involves long-term strategic planning, often behind closed doors, to answer the question of "what application of our existing money will make us the most money in the future?" When viewed through this lens, Goldman's statement can be polished up to "of all the biotech investment options we're weighing, investment in outright cures for infectious diseases is less profitable in the long-term because curing people has a nonlinear effect on the patient population." It's a simple statement of fact.

OP's summary, and I strongly encourage you to actually read it if you haven't, goes on to say that Goldman's research suggests long-term research and product investment would be best applied to medical conditions like cancer and aging, for which a cure for an individual doesn't result in a diminishing market.

This isn't nearly as evil-sounding as the article aims to make it sound. At worst, it highlights something we already know: market-based solutions tend to be flawed, and if we want investment in treatments for infectious diseases we need to turn to forces that are exempt from market forces (i.e. government research funding). At best, it's an indication that we can expect more investment to go into things like cancer and age-related diseases.


The Goldman Sachs analysts didn't ask an unreasonable question. What are absolutely dismal are the conditions that make it a reasonable question. And what makes them dismal people is that they are totally cool being part of the system that makes such questions reasonable.

> In the absence of original source material, whatever interpretation you apply will inevitably be a projection of your pre-existing views on the matter.

Literally all interpretation one does about anything is a "projection" of their pre-existing views on the matter.


> What are absolutely dismal are the conditions that make it a reasonable question

I'm a pretty free-market kinda guy, but all systems have flaws. Biotech and capitalism seem to have a fair few chasms between them, and this GS report illustrates one of them quite well. Capitalism is not a 'complete' theory, holes exist in it, as they do in all things. If anything, as the GP states, GS is pointing this one out. Suggestions for what to do about this 'hole in theory' are needed though; likely it's government funding (in a 'lighthouses' manner).


Even if focusing on currently uncurable conditions like cancer isn't a bad thing in itself, it means that a cure for cancer would be disastrous for the bottom line of biotech companies that follow this strategy. It's not just a different allocation of resources, it's an incentive to deprioritize cures in general. Any plan to maximize healthcare profit will result in perverse incentives, which is what those "knee-jerk Goldman Sachs is Evil" comments are largely criticizing. Obviously Goldman Sachs is stating the facts, but the assumption is that the choice with greater profitability is the correct one. That that assumption underlies medical research and development is the evil part.


Thomas Aquinas defines( over simplifying here) evil as an absence of good. Works well in this case.


Funny that capitalism and profit motive have such an evil reputation when, historically, bees were revered by several very civilized nations, such as Persia and Greece, for being a symbol of mutually beneficial interaction and how business should be done as a civilizing force.

There are inherent challenges in monetizing healthcare. It isn't better to expect it by default to be "free" as the solution to that. But I don't think that means we can't keep our eyes on the prize. Ultimately, healthcare should primarily improve health and welfare.

I once read a witty piece that I only poorly remember that used the expression the bottom line to make the point that while a business does need to be profitable, profit should be its lowest priority. Accomplishing something useful and beneficial should be the main goal. Money is a necessity to keep the doors open, but you shouldn't actually be in the business of milking your customers for every penny, especially if that means doing other questionable things to get there.

To my mind, that should go double for healthcare.


> very civilized nations, such as Persia and Greece

Eh, maybe back then, but today they would be seen as worse than ISIS. Pederasty and slavery are wholly intolerable. We've taken their good ideas and run with them, leaving the vast amount of horrible ones behind.

That said, you are totally correct. The modern corporation would be anathema to people from 150 years ago. Corporations were very tightly controlled by the state for a very long time due to the potential for vast profits to warp politics (also due to antisemitism, class-ism, and racism; the usual)


One of my favorite college professors gave me the expression "I am the primitive of my way."

Whatever else was going on in Persia and Greece, there are reasons they were considered shining beacons. I think one of those reasons was their concept of trade as a civilizing force, superior to, say, raiding your neighbors and just taking whatever you could get.

That concept of trade as a civilizing force seems somewhat lost these days and I think we are worse off for forgetting it.

I realize you are mostly agreeing with me. This would no doubt go better in person. Conversational tone is really hard to convey online.

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