A Future with Diseases Cured and Treatments for Free

The toll of disease is staggering.? About 150 million people in the U.S. suffer from at least one chronic illness.? Taking into account direct and indirect expenses, it costs us a whopping four trillion dollars per year to treat.? And then, of course, there is the suffering, the tragic loss of life and corresponding heartbreak. But imagine, for one moment, that cures for every disease were developed and that they were distributed for free.? ?

Wishful thinking?? Not so much.? Each disease contains a finite number of biological puzzle pieces.? Genetics often provides the edge pieces.? Scientists at universities and research institutions worldwide are industriously and ingeniously flipping over the other pieces and finding their places, increasingly aided by powerful software and investigative tools.?

Puzzles are an exercise in exponential activity:? the more of the puzzle that is filled in, the easier it is to identify the remaining pieces, and the pace of advancement quickens.? Many, many disease puzzles are well progressed and most others are at least started. ?Armed with targeted therapeutic tools, whether a pill, antibody, mRNA, gene therapy or a myriad of other modalities, we have the ability to interrupt disease in the right way once the full picture has been put together.? It is almost a mathematical certainty this progression will continue at increasingly rapid speeds and the cures will follow.

Drug development, however, requires venture investors or the biopharmaceutical industry to invest on the order of $1 billion per new therapy, and there remains a 90% plus chance of failure.? This cost is so high and the odds so long that there is no way to attract the capital and ingenuity without clearly sufficient rewards.? Those rewards are obtained through patent protection and the ability to price therapeutics once commercially available.? ?But ability to price means more expense and weren’t we talking about cures for free??

We are, at least mostly.? The U.S. has one of the most efficient and cost-effective generic drug markets.? Once a patent expires, in most cases 90% of the market is converted to generics within months.? This happens because pharmacies tend to make more money on generics and have the legislated right to make the switch unless a physician specifically requires the brand.? Most generics are available at pennies a pill – not free, but close.?

The abrupt economic end to drug brands, which have had billions invested behind, them stands in stark contrast to those such as Coke or Doritos.? Since no one has the regulated right to switch those brands to a generic, they can continue to produce profits for many decades.? The legislated doom of drug company economics post patent expiration highlights the need to profit meaningfully during the window that patent protection affords, but also the certainty of cost-effectiveness on the other side. ?This is a magic combination.

What if you could snap your fingers and the exponential cycle of innovation we are presently experiencing resulted in cures to all diseases?? It is not so far fetched and will seem less far fetched with the passing of each year.? ?After those cures are invented, in a geological snap of the fingers, those cures would then be available generically.? And then we have it: for the rest of eternity, all cures would be available for (almost) free. ?Prevalence of disease, cost of care, pain and suffering changed fundamentally forever.? This can happen, not all at once, but through a series of innovations followed by patent expirations.? But the first step to that utopian world is maintaining the right incentives for innovation.? Less innovation, fewer cures.? No innovation, no cures.?

Maintaining the right incentives will be tough.? One factor is the out of pocket expense of drugs which burdens seniors and drives political pressure for price containment.? This imbalanced situation is borne of the fact that drugs were historically a small component of healthcare cost and were not even reimbursed.? As more therapeutics became available, insurance for drugs became an add on option, with a different co-pay system than, for instance, inpatient visits.? Today, the payments patients make directly for their healthcare in addition to insurance premiums approximates $500 billion.? Of this amount, out of pocket spending for drugs is about twice that of inpatient hospital expenditures despite the fact that total prescription drug expenses are actually lower than inpatient hospital expenses.? The perception by seniors is therefore that drug spend is out of whack when that is not the case.? This perception will only grow if new innovations convert current inpatient hospital procedures to preventative drug therapies.? Which would we actually prefer, though, prevention or surgeries?

It is also the case that the pressure to balance budgets, for Congress and for healthcare payors of all sorts, will remain high.? After all, the idea of paying the high cost of innovation to those being presented with the bill seems inconvenient.? Never is the future value to society, when the drug brand has melted away with only generics remaining included in the calculation of what is reasonable to charge, only the short-term tradeoffs between treatment approaches and current budgetary constraints.? This is more the fault of a government that could be far seeing, than, for instance, an insurer which is confronted by its population of customers turning over every few years.

Given the current populist appeal of cheap access to life saving therapies, there is substantial risk to the incentives for innovation at a time that has so much promise.? In the end, the answer must be a common vision of the future and a collective excitement about making the investments necessary.? That is if we indeed want a world free of disease for (almost) free.

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