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