Goldman Sachs to Investors: “Curing Patients Is Bad for Business”

26th April 2018 / Global

By TruePublica Editor: There are many things that annoy the general public from time to time with mundane irritations such as constipation, people who eat with their mouth open and tailgaters, but sometimes you come across a story that makes you really want to punch someone in the face until their ears fall off. Enter Goldman Sachs!

The now famous Rolling Stone magazine article in 2009 by Matt Taibbi unforgettably referred to Goldman Sachs, the world’s most powerful investment bank, as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Here is the very essence of what Taibbi was talking about.

According to an article by Tae Kim on CNBC, 11th April, Goldman Sachs issued a report (by Ms Salveen Richter) to investors, suggesting that drug developers might want to think a bit harder about manufacturing drugs that …. well ….. worked too well. Richter’s report, entitled “The Genome Revolution,” asks the question; “Is curing patients a sustainable business model?”

No, seriously, this is not some sort of sick joke (excusing the pun).

“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.”

So what does this mean for average Joe Public? Well, if a pharmaceutical company develops a new drug that cures people rapidly, then patients will not need to take the drug on an ongoing basis. What that does is limit the amount of money a company can make from it and in the eyes of Goldman Sachs – this is definitely a bad thing.

When the analyst asks: “Is curing patients a sustainable business model?” – what is being asked is – is it worth saving lives if there’s not that much money in it.

The “problem” appears to be in this article is if the disorder that a drug is developed for is a transmittable disease. The Goldman Sachs report cites the example of Gilead Sciences, which gained approval for its hepatitis C treatment Sovaldi in 2013, followed by Harvoni less than a year later.

The introduction of these two drugs was truly impressive for several reasons. First, they provided a near-certain cure for hepatitis C in 12 weeks. That is an amazing result! This is especially so when considering that in 2015 there were 1.75 million new cases globally in that one year alone.

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Second, and this is the important bit, they were among the first of a series of drugs to be priced at truly exorbitant levels. When Harvoni was introduced, a 12-week course in the U.S. cost $94,500.

Interestingly, in India, the same 12-week course of treatment costs only $900. One assumes that the company was still making a profit on its sales in India making the argument that the drug company in question is profiteering from a personal health crisis to levels that exceed rampant egregiousness.

Was this outrageous pricing good enough for Goldman Sachs? Apparently not.

In the aforementioned report, the author, Ms. Richter makes the point that U.S. sales for this particular hepatitis C treatment peaked at $12.5 billion in 2015 and much to her alarm has been declining ever since. Goldman estimates the U.S. sales for these treatments will be less than $4 billion this year. Ms. Richter proceeds to lament this financial dilemma.

She writes: “Gilead is a case in point, where the success of its hepatitis C franchise has gradually exhausted the available pool of treatable patients. In the case of infectious diseases such as hepatitis C, curing existing patients also decreases the number of carriers able to transmit the virus to new patients, thus the incident pool also declines.”

“Gilead’s rapid rise and fall of its hepatitis C franchise highlights one of the dynamics of an effective drug that permanently cures a disease, resulting in a gradual exhaustion of the prevalent pool of patients. Diseases such as common cancers, where the ‘incident pool remains stable’ are less risky for business.”

This raises a couple of good questions does it not? So will a company that wants to develop a real cure for an infectious disease have trouble getting financing in future if its ‘pool of treatable patients’ could decline because the drug in question actually works? And, does that mean that the focus should not actually be on fully curing the patient in the first place?

So, if you imagined that a company has a new cancer drug that can cure in plus 90% of its patients with a single dose the last thing you want to know as a patient is that if it’s not profitable enough to sell, you won’t be treated.

Would these pharmaceutical companies start to downgrade the effectiveness of patented drugs to keep their patients using it for an (unnecessary) extended period?

MedPage Today reports that this is indeed a distinct possibility based on fact. Well, if you insist on making a drug that cures with one dose, we would recommend charging a king’s ransom for it. Could we propose that you charge $1 million for a course of treatment? Do you think such a figure is exaggerated? Early this year, Spark Therapeutics introduced its new drug (Luxturna) for a rare form of blindness. It promises a cure with a single dose. The price tag is $425,000 per eye. That means $850,000 for a cure.

And it gets worse. In 2012, a company called uniQure N.V. marketed Glybera (tiparvovec) for the treatment of lipoprotein lipase deficiency at a price of $1.6 million per treatment. After one patient in the entire world was treated, no one seemed excited about prescribing the overpriced drug, and the company did not renew its marketing license.”

Milton Packer who wrote that MedPage article postulates a vision that makes for uncomfortable reading:

What do these examples teach us? We have not reached the limits of scientific innovation. But we have reached the limits of common sense and common decency. When the most important investment banking enterprise in the world wonders whether it is a good idea to support companies that want to develop cures, we truly have reached rock bottom.

Packer makes a really important point for all of us. As the population ages, it is becoming increasingly more expensive to financially cope but now it appears that unless there are big money returns, there’s not that much of an incentive to help – even though that help is quite possibly available. Long-term use and dependency is the key for these investors, then when the profit line declines, its time to talk about shortening life.

Matt Taibbi’s description of Goldman Sachs as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money” is more than just accurate – it defines the business model of modern-day humanity, ethics and morality, especially in America.