In its own uniquely perverse way, the stock market turns good news into bad once again.
Gilead’s Hepatitis C drugs – Sovaldi and Harvoni – had the most successful drug launches ever. And with good reason – unlike the “breakthrough” cancer drugs you read about, these drugs actually cure a serious and widespread disease. Although there is controversy over their high price, there is no question of their clinical benefit. Millions of people will be spared suffering and early death caused by hepatitis-induced liver failure.
So what’s Wall Street’s problem?
Sales are down because we are running out of hepatitis patients. Hepatitis is a communicable disease, so rates of transmission are also down, and fewer new cases are occurring. Hepatitis may well be on its way to being eliminated.
Only in the perverse world of free-market health economics is this bad news. Goldman Sachs apparently has a report out warning clients against investing in biotechs that develop curative therapies. They caution that this is not a sustainable business model. To call this warning short-sighted would be like calling moles visionaries:
- No business model is very sustainable. Only 12% of the 1955 roster of the Fortune 500 are still on the list today. The world changes faster than large successful companies do.
- Curing one disease is not a sustainable business model, but curing multiple diseases in succession most certainly is. Last time I checked, we weren’t running out of diseases.
- A drug that cures a disease will absolutely destroy competitors that merely manage it. Ribavirin/interferon therapy was the existing gold standard for hepatitis treatment. It controls the disease but does not cure it. That model turned out to be unsustainable as those drugs were rendered worthless by a curative therapy.
The notion that drug companies wouldn’t or shouldn’t pursue curative therapies is laughable. No one is going to pass up the blockbuster profits available from curative therapies and if they do they will be crushed by their competitors.
All that Goldman has really done is bolster the argument for socialized drug development. If investors are really this venal, this short-sighted, and frankly, this stupid, then it’s time to relieve them of their duties. If they won’t fund research into curative therapies, then they are of no value to society. It’s time for them to helicopter off to the Hamptons and let the NIH take over the direction of drug development.
Disclosure – I have held Gilead stock since 1999 when they acquired my employer, NeXstar Pharma.