Comment by stego-tech
5 hours ago
I feel kinda bad for the writer, because it's a good question: no, curing patients is not a good business model, just like public transit is not a good business model.
What a lot of folks neglect are N+1-order effects, because those are harder to quantify and fail to reach the predetermined decision some executive or board or shareholder has already made. Is curing patients a bad business model? Sure, for the biotech company it is, but those cured patients are far more likely to go on living longer, healthier lives, and in turn contribute additional value to society - which will impact others in ways that may also create additional value. That doesn't even get into the jobs and value created through the R&D process, testing, manufacturing, logistics of delivery, ongoing monitoring, etc. As long as the value created is more than the cost of the treatment, then it's a net-gain for the economy even if it's a net loss for that singular business.
If all you're judging is the first-order impacts on a single business, you're missing the forest for the trees.
> ~public~ transit is not a good business model.
~public~ transit can be a good business model if it's setup correctly. The majority of Japan's 100 train companies are setup such that they own both trains and complementary interests. Office buildings, shopping centers, super markets, apartments. The better their trains are the better their other businesses do by delivering people to them. The better their other businesses are the more people want to use their trains.
https://ir.tokyu.co.jp/ja/ir/news/auto_20251111595684/pdfFil...
I think you and the person you are responding to are saying the same thing?
I don't think they literally meant public transit can't be profitable in any scenario, they meant that it takes a conscious choice to put money into transit with the intention of reaching some second benefit, which is a pretty good comparison to this topic too.
The public transit by itself is a money loser compared to alternatives, but by having it in place you get other benefits that make it worth it overall.
Rail was a dominant industry in the USA when railroad companies were able to exploit their unique control over property during westward expansion.
This reminds me of the way ski resorts work in the US. One company builds the ski resort (losing) but also develops all the real estate around it (winning). It only works if it's a resort worth living near.
Or casinos, which are the reverse. Build hotels, entertainment etc (losing) to support traffic to your casino (winning)
It's fair to note that Japan's private rail networks have often been joint public/private investments, but I don't think that negates your point.
I think public transit is something the public should invest in, profitable or not, as a service to ourselves (the public). But it can also be done profitably in certain circumstances.
Yup. North American public transit is frequently a terrible business model because North American land use is designed to push everyone’s daily destinations further and further apart, making all transportation more expensive, and making transit uncompetitive with anything else.
While public transit is a good business model, corrupt public transit is an even better business model. The amount of public funds that some US public transit funnels away is astounding.
If a person dies from a disorder in their 20s, they'll never buy your heart medication in their 70s. Today's patient is tomorrow's patient.
The longer someone lives, the more potential value they can contribute to a society. The opportunity cost is something we've figured out from a medical perspective, but shareholders want returns today, not returns fifty years from now.
That is what we need to address.
The government says that people can stop contributing to society when they reach 67. Some governments completely block you from continuing working.
Some governments recognize that the longer people life, the more pensions / social security / healthcare resources need to be paid to that person.
its much cheaper for governments for people to just die when they retire, tax their wealth at 40% and then free up resources (housing or healthcare) for the next generation.
It’s odd because many other industries like wineries, nut orchards, etc. do all play the long term game successfully.
Even medical drugs take a while to develop but somehow the sales has to be “right now”.
>The longer someone lives, the more potential value they can contribute to a society.
This is questionable. Highly populous countries have worse living conditions than moderately populous ones, currently.
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The longer someone lives, the more potential value can be squeezed.
This is how they should think.
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They could use profit in 50 years, but it will possibly be someone else's profit.
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>The longer someone lives, the more potential value they can contribute to a society.
This is a function of how old the sick person is, as well as how severe their sickness and hence recovery will be. The data says, for the most part, healthcare is needed when one is close in age to exhausting their body’s capability anyway.
Treat vs cure. You treat them so you can go on treating them. If you cure them, maybe you’ll treat them later and or maybe you won’t - but that’s outside the current bonus cycle / opportunity window.
The issue with that logic there is those basic drugs are mostly generic now. That money is less, and goes to the PBM and generic manufacturers in India.
The FDA needs to declare death a disease that patentable drugs can be developed against. All of a sudden the flood gates get opened to encouraging drug research on anything that keeps people alive longer.
I quite like this concept. Did you come up with it?
> If all you're judging is the first-order impacts on a single business, you're missing the forest for the trees.
Sounds like typical American C-Suite thinking. From what I can see, maybe Chinese companies see further, and that may just be because the government is so powerful, over there, and the government is known for taking the long view.
Saying that curing diseases is a bad business model is like saying discovering the world's largest gold mine would be a bad business because you'd eventually run out of gold. The underlying argument doesn't make sense.
It does make sense if you turn it around
"Having permanent patient by treating only symptoms is better than curing them right away"
Basically living (comfortably, or at all) as a subscription service
That you can imagine an even better business model than X, does NOT mean X is a bad business model!
No, this is the basic naive argument I'm responding to. It's nice to have long-term recurring revenue, but customers have a very strong preference for a cure, which means the owners of cures will outcompete the owners of subscription treatments. And then to say those cure-owners are in a "bad business", again, is like saying you'd go "aw shucks" if you happened on an enormous seam of gold.
That assumes equal ability to manage a long-revenue-stream treatment that keeps people alive enough not to die but doesn't help them enough to stop taking it. Doable for somethings. Not so much against cancer.
And it assumes none of your competitors spot the cure that you suppressed or simply didn't look for and eat your lunch by taking all those patients away from you.
If you "accidentally" came up with a single-course cure for something like Crohn's or RA while trying to create a every-three-months recurring treatment instead, would you honestly shelve it? No.
You could make an argument that the incentives discourages certain types of research, but that's assuming a certain level of foreknowledge about how to treat or cure a lot of these things that I don't think we have right now.
Aren't there ethical committees to avoid that? Health is not a normal business.
Goldman Sachs modus operandi is leaning too far on the parasitic side of the spectrum
The argument only makes sense under certain assumptions: you can't protect the IP from being copied (leading to competition and eroding economic rents), or the government will place a price ceiling (price controls).
Otherwise, the demand will be highly inelastic, so you cannot really invent a better business model. The pricing power you would wield as the monopoly provider of life & death would be tremendous.
It would be fruitful to put the example in the article under closer scrutiny.
This was kind of true for Spain: they imported so much silver that they had inflation causing massive economic destabilization.
When the supply runs dry, demand will naturally increase. Hoarders will be golden at that stage.
"I've seen gluts not followed by shortages, but I've never seen a shortage not followed by a glut."
-- Nassim Taleb
> If all you're judging is the first-order impacts on a single business, you're missing the forest for the trees.
The problem is our society is set up to give a lot of power and influence to businesses that are precisely interested in their own tree and not interested in the forest at all.
> As long as the value created is more than the cost of the treatment, then it's a net-gain for the economy even if it's a net loss for that singular business.
This is precisely the type of work that is best funded through government: Work that can be net positive for the populace but doesn’t have a viable business model attached.
There’s another layer to consider even with government-driven efforts: Resources are never infinite. The number of potential R&D opportunities exceeds available research dollars and even human personnel many times over. There comes a point when you need to allocate finite resources to the efforts that provide better cost to benefit ratios. I don’t think it’s helpful to go full hardcore utilitarian, but the reality can be that the cost of coming up with a cure for a rare genetic condition that impacts only a small number of people might be better spent on research toward a drug which incrementally reduces heart disease, for example.
Finding permanent cures for rare conditions is a heart-warming idea, but in reality it’s a lot harder and more expensive than most people assume. Likewise, when people become enamored with these ideas of finding permanent cures for rare genetic ideas they can be missing the big picture that it may not be one of the better uses of that money even if you took raw capitalism and investment dollars out of the picture. There are so many more opportunities for widespread health improvement in the boring conditions and even lifestyle diseases than in hypothetically curing the rare genetic conditions. It may not feel as heart-warming to talk about things like reducing obesity, but we’re witnessing an incredible society-wide health improvement with GLP-1 drugs that is orders of magnitude more benefit across society than something like curing a rare genetic disease.
With that logic curing someone of a deadly disease at 10 is good for society because they have much to contribute, but curing someone at 80 is bad for society because their best contributions are behind - and they are a net resource drain. That’s not a good path to head down. (Cure a doctor he generates value, don’t cure a prisoner he drains value).
With public transit, value capture is possible if you have the right business model. Public transit is ultimately real estate development.
However, I prefer that the value capture is by the public rather than a private corporation.
Public Transit was very much thrown in there as an example of the kinds of societal-good projects that often are "bad" business models or run at a loss (Japan being a very notable exception, kinda). Thing is, anyone even casually looking at n+1-order effects sees that the value created isn't for the transit system itself, but all the components that make it function (jobs, logistics, and materials for trains, rails, signals, ports, tunnels, etc) and all the effects of easing people movement (more money to spend, more job opportunities, cleaner air, safer streets, etc). Real estate is one such effect, provided communities recognize the benefit of real estate near stations and not let naysayers constrict development around them (like you see in much of America, for some reason).
if there was a way to support this say in taxes, it would make good business sense.
But the devil is in the details of implementing that.
yeah but the pharma comapnies are only in the business of selling drugs so they would need to diversify into retirement homes or somnething to profit from actually curing people
Or some kind of organization, some kind of union of all people, could pool their money and invest in such a thing.
That sounds like theft!
/s
I mean, that's one way to look at it I suppose, and it's why you see Healthcare Insurers and Private Equity diversify into elder care for a captive audience.
In reality though, I was not-so-subtly trying to suggest that if something is necessary for the public good (curing diseases) but a bad business model, then perhaps Capitalism itself is the wrong vehicle for that segment of industry and a different option - be it an incentive structure, government-owned pharmaceutical research, or managed economy - is needed.
Society fundamentally needs things that are simply bad business - sheltering everyone (lowers long-term housing revenue), feeding everyone (lowers long-term food revenue), healing everyone (lowers long-term healthcare revenue), educating everyone (lowers the value of degrees/credentials). If our economic model prohibits or discourages achieving optimal resource usage and human outcomes, then it's our obligation to explore and identify alternatives that may improve those outcomes respectively.
> In reality though, I was not-so-subtly trying to suggest that if something is necessary for the public good (curing diseases) but a bad business model, then perhaps Capitalism itself is the wrong vehicle for that segment of industry and a different option - be it an incentive structure, government-owned pharmaceutical research, or managed economy - is needed.
I believe the great innovation of capitalism is markets, and the next era of economic and social progress will be driven by mixed capital/social good markets.
For example, what if you tied the tax rate for an industry to a combination of broad social goods (say, homelessness) and industry-specific goods (say the incidence rate of cancer for cancer drug companies), such that if we’re in a the middle of a homelessness crisis and many people have cancer, the tax rate might be 50%, vs if there is virtually no homelessness and we’ve cured cancer, maybe it’s 10%. Obviously there are other market approaches but eventually they would be converted to capital markets, so something like the above makes sense to me as a start.
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I think it's the opposite. I think people are very aware of those effects, and that's actually why they ask the question in the first place.
They ask it "is this good business" not just because they care about the answer itself but because they want to start a debate on how society should promote the invention of cures.
Like I think most people in most industries are passionate people that really want to do good, but they do need to eat too.
Do you believe the current medical research is held back by the price limitations and if we just infuse more money, we'll find cure for many more diseases ?
Even if we consider that, we'll reach the same position as today because if only rich can afford medicine, the market will price that in and it's customer who can barely afford the medicine will shift from middle class to upper middle class and so on.
Public transit is a good business model if you don't have to compete with government subsdized roads and you don't have government limits on what you can charge. Good luck finding anyplace without those.
> Public transit is a good business model if you don't have to compete with government subsdized roads and you don't have government limits on what you can charge
Without subsidized roads, its easy for deep pockets to offer exorbitant prices for land and monopolize the roads. Anyone not planning to charge high prices for usage will be held off by high acquisition prices at "market" rates.
There's only so much land and roads possible to a given location, privatized roads is like giving default monopoly. It will turn out just like the isp situation, only worse.
> I feel kinda bad for the writer, because it's a good question: no, curing patients is not a good business model, just like public transit is not a good business model.
Betteridge's law of headlines: "Any headline that ends in a question mark can be answered by the word no."
Energy123's law of headlines: Any headline that ends in a question mark will have an associated comments section mentioning Betteridge's law, despite that law having being empirically falsified.
Selcuk's Law of Generalisations: Any mention of an adage will have an associated comment claiming that it can be falsified by giving at least one counter-example.
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Public transit is a great business model, what are you talking about? The only time it seems to be a bad business model is when governments take it over and run it. Transit relies on recurring customers paying you basically every day, or subscribing. It has a reliable, stable revenue stream which is relatively inelastic, which are generally precursors for a good business model
>> If all you're judging is the first-order impacts on a single business, you're missing the forest for the trees.
This is one of those things that sounds clever but is total nonsense. Communism sounds nice too. The key problems are: a) incentives and b) ability to see the trees instead of pretending to see a forest because you are blind to the details.
>just like public transit is not a good business model.
Uber has almost a 200B market cap for offering private transit. There is a working business model for transit.
Not sure if this is just a misunderstanding but Uber is not "public transit" (a term of art), which is what GP is talking about. Uber is just not relevant to the point GP was making.
Uber's business model is to be a loss leader to hamper competition, then jack up rider rates and lower drive rates. This is technically a 'working' business model, but hardly one that benefits the people.
Uber more generally exists not as a service provider but as an international legislative bulldozer: everywhere will be reduced to the misery of the land of the free. They exist only to fuck up worker protections in every form they take.