When Helping People Isn’t “Sustainable”

Count on America’s venal financial class to engage unironic self parody.  According to a recent CNBC report, Goldman Sachs, one of the largest financial institutions in the world, asked whether the use of cutting-edge genetic therapy to cure patients is a “sustainable business model”:

“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,” analyst Salveen Richter wrote in the note to clients Tuesday. “While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow.”

Richter cited Gilead Sciences’ treatments for hepatitis C, which achieved cure rates of more than 90 percent. The company’s U.S. sales for these hepatitis C treatments peaked at $12.5 billion in 2015, but have been falling ever since. Goldman estimates the U.S. sales for these treatments will be less than $4 billion this year, according to a table in the report.

“GILD is a case in point, where the success of its hepatitis C franchise has gradually exhausted the available pool of treatable patients,” the analyst wrote. “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 … Where an incident pool remains stable (eg, in cancer) the potential for a cure poses less risk to the sustainability of a franchise.”

So a firm with over $42 billion in revenue and $916 billion in total assets is nonetheless concerned about not making enough money curing a virulent disease that affects 71 million people worldwide and kills 400,000 annually.  The same folks who tout the free market and private charity as solutions to the world’s problems betray their true sentiments when they express or support ideas like this.

The timing of this news couldn’t be better: as I covered in a previous post, an international coalition of health ministries, medical foundations, and nonprofits from Switzerland to Malaysia is seeking out an effective treatment for hepatitis C that is many orders of magnitude cheaper than that offered by Gilead and other U.S. drugmakers. If only more of the world’s capital was going to efforts like these, as opposed to trying to rake in profit from people’s misery.

And spare me the usual refrain about how firms need these markups to cover the high cost of research and development; why not take the financial hit for the sake of charity — which can well be afforded given the ample funds lying around — or cover the cost by cutting exorbitant salaries, bonuses, and dividends? Am I missing something here?


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