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posted by janrinok on Sunday April 15 2018, @06:48AM   Printer-friendly
from the enough-to-make-you-sick dept.

One-shot cures for diseases are not great for business—more specifically, they’re bad for longterm profits—Goldman Sachs analysts noted in an April 10 report for biotech clients, first reported by CNBC.

The investment banks’ report, titled “The Genome Revolution,” asks clients the touchy question: “Is curing patients a sustainable business model?” The answer may be “no,” according to follow-up information provided.

[...] The potential to deliver “one shot cures” is one of the most attractive aspects of gene therapy, genetically engineered cell therapy, and gene editing. However, such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies... While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow.

[...] Ars reached out to Goldman Sachs, which confirmed the content of the report but declined to comment.


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  • (Score: 5, Interesting) by TheRaven on Sunday April 15 2018, @09:23AM (4 children)

    by TheRaven (270) on Sunday April 15 2018, @09:23AM (#667214) Journal
    I posted a more detailed analysis of this on the Green Site, but here's the short version:

    The cost of bringing a new drug to market is estimated to be about $2.5bn. This includes development costs and FDA approval for all of the failed attempts until you get the one that works and you can start making money.

    The drug in the analysis can be manufactured for $300 per course of treatment (including some profit - that's the price that they're setting for third-party generic manufacturers for sale to third-world countries) but costs $30-80K per course of treatment when you're also covering R&D costs.

    Taking these two things into account, their estimated profit for the decade following 2007 (when the drug was discovered), including the years prior to its FDA approval in 2013, is around $25bn, on an initial investment of $2.5bn.

    Cures (where none exist already), unlike treatments, get fast-track approval from the FDA and so they started making a profit years earlier than they would have done otherwise. The average approval time for the FDA is 12 years, the fast track too less than 6. Given that they made enough profit in the first year to cover the total R&D costs, that's a good 5-6 years when they weren't carrying a $2.5bn liability and were instead carrying a profit forward. That makes a huge difference to a corporate balance sheet.

    Once you develop a cure, you get a complete monopoly until the patent expires. For Sofosbuvir, this is 17 years. It's possible that the disease will be eradicated in that time, but no on else is going to try bringing a competing product to market. A treatment can't compete with a cure, so there's no point developing one. A cure won't get regulatory fast-track approval if there's an existing cure, so any competitor is looking at a 12-year lead time. When the patent expires, any competing drug has to compete with generic (i.e. dirt cheap) copies of the first cure and so has to be able to pay back the R&D budget entirely before your patent expires.

    If you do develop a treatment and someone else develops a cure, then your treatment becomes worthless almost overnight, unless it is very effective and it's cheaper for people to take it until the patent expires on the cure and then take the cure when it's cheap (very unlikely).

    All of the numbers in TFA imply that there's big money to be made in researching cures.

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  • (Score: 1, Informative) by Anonymous Coward on Sunday April 15 2018, @09:28AM (1 child)

    by Anonymous Coward on Sunday April 15 2018, @09:28AM (#667215)

    > The cost of bringing a new drug to market is estimated to be about $2.5bn. This includes development costs and FDA approval for all of the failed attempts until you get the one that works and you can start making money.

    Regulation for new drugs has been pushed by the incumbent to stomp out competition and drive prices up, though. If big pharma wanted less regulation, they would get it. Public health? This article proves they can't care less. Just avoid having the pill killing you at once after 30 secs, which is bad PR.

    • (Score: 2) by qzm on Monday April 16 2018, @01:42AM

      by qzm (3260) on Monday April 16 2018, @01:42AM (#667453)

      And yes, thats EXACTLY what they do, and a cornerstone of the medical system.

      Not just that, but the 2.5 Bn figure just happens to INCLUDE the massive overheads and profits of the drug companies as well - so no, it is not even close to a real cost figure.
      it is, like most everything in that industry, part of the lie.

  • (Score: 1, Insightful) by Anonymous Coward on Sunday April 15 2018, @12:19PM (1 child)

    by Anonymous Coward on Sunday April 15 2018, @12:19PM (#667243)

    Here's what we need:

    1. Researchers find underlying gene changes that can cure disorders.
    2. Patient with genetic disorder interacts with one doctor maximum. Computer analysis/AI tailors a gene sequence(s) to the patient, since many different mutations can cause the same or very similar disorder.
    3. Digital sequence assembled by the computer is turned into a personalized biological. Hopefully, one gene editing.system will fit all gene therapies.
    4. Slight adjustments to treatment regimen based on the disorder (eg. Is your bone marrow the source of the problem, eyeballs, brain, etc.?). Minimize this step as much as possible and aim to make the treatment self-administered with no needle.

    If the process is streamlined and the R&D is paid by goverment and universities instead of big pharma, this could end up being cheap. If pharma doesn't want it to exist, a silicon valley company like Google Calico will go for it. Health and life insurance companies would also love to have preventative + curative care available for cheap. Both would also love anti-aging (which necessarily includes curing cancer and other expensive diseases).

    • (Score: 2) by frojack on Sunday April 15 2018, @08:54PM

      by frojack (1554) on Sunday April 15 2018, @08:54PM (#667386) Journal

      1. Researchers find underlying gene changes that can cure disorders.
      2. Patient with genetic disorder interacts with one doctor maximum. Computer analysis/AI tailors a gene sequence(s) to the patient, since many different mutations can cause the same or very similar disorder.
      3. Digital sequence assembled by the computer is turned into a personalized biological. Hopefully, one gene editing.system will fit all gene therapies.
      4. Slight adjustments to treatment regimen based on the disorder (eg. Is your bone marrow the source of the problem, eyeballs, brain, etc.?). Minimize this step as much as possible and aim to make the treatment self-administered with no needle.

      Exactly.

      You need to invent an entirely new business model and research/development ecosystem for this kind of medicine to be cost effective.
      That will happen, over time.

      In the meantime, people are dying from very common diseases because our current models and ecosystems can't cure Alzheimer's and heart disease. We can barely treat these, let along cure them, and they are very common. There is simply no hope for the vast majority of those with extremely rare genetic diseases that require one-off medicines and treatments, until your entirely new environment evolves.

      Custom medicine requires a totally new infrastructure.

      --
      No, you are mistaken. I've always had this sig.