New revelations from an investment bank show the danger private companies pose to our health

investment bank Goldman Sachs on hepatitis C
Sam Woolfe

A report by analysts at the investment bank Goldman Sachs questions if curing diseases is a “sustainable business model”. It says highly effective “one shot cures” might not be the best way to sustain “cash flow”.

The findings reveal the potential risks of private company involvement in healthcare.

Curing disease is bad for business

A recent Goldman Sachs report titled The Genome Revolution, advised clients what potential profit they can make by developing different treatments. The authors state that those which result in a ‘stable pool of patients’ are a better way to secure long-term profits. Analyst Salveen Richter wrote:

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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… While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow.

The report points to the example of Gilead Sciences, which has produced treatments for Hepatitis C. The company claims its treatments have cure rates of more than 90%. In 2015, the company made $12.5bn but profits fell sharply as people were cured, and no longer in need of treatment. Goldman Sachs estimates that Gilead Sciences will make under $4bn in 2018 from these treatments.

In light of this trend, GlaxoSmithKline has been selling off gene therapies that are able to cure rare diseases.

The marketization of healthcare

There are further examples of the detrimental effect of the market on healthcare. Preventive medicine, for example, is less profitable than treating the symptoms of a health problem over a lifetime. As a result, in the US the health system invests more in heart surgery than preventing heart disease by improving patients’ diets and fitness.

Brian Fisher, a GP and former chair of the Socialist Health Association, argues [paywall] that the marketization of healthcare is risky. Referring to the privatisation of the NHS, he says:

Marketisation means a system where relationships and behaviours are driven by competition and profit.

Health is not a commodity, patients are not customers, and choices about our care are not a form of shopping.

Dangers

The Goldman Sachs report, however, doesn’t advise companies not to develop ‘one shot cures’. It makes the observation that this may not be profitable in the long-term. And authors recommend that companies be innovative and diversify their treatments to ensure that their bottom line doesn’t suffer.

But the danger is that, if a company prioritises profits over people, then overall, fewer lives will be saved.

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Featured image via Wikimedia

This article was updated on 16 April 2017 to reflect the fact that Brian Fisher is the former chair of the Socialist Health Association. 

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