> If one company has expensive treatments for a disease, and another company has a cure for it (at any price), which company is going to make more money? The one who has the cure, I'd say.
That's not quite correct. The company with the cure will make more money going forward. But not necessarily overall, and the difference there is important.
Let's say you're a venture investor in biotech, and you're thinking about whether to fund the development of an HIV cure or a better HIV treatment. Both will completely replace the existing market in HIV drugs. When you do the net present value calculation for the treatment however, you'll see that you have some probability of people staying on it basically forever. That means that over time, you can extract more money from it, which means of course that you ought to be willing to invest more money in developing it.
It is through this completely rational, non-evil mechanism that treatments may receive more funding than cures. Nobody here is suppressing anything, it's just that one of them will receive more funding than the other because it has a greater potential ROI.
They definitely don't have equal value. The potential revenue stream for the treatment is much higher than the cure. You have to subtract the probability that someone else finds a cure from that revenue stream, amortized and discounted over its lifetime.
So, it may be that sometimes that causes it to make sense to search for a cure (if there is a particularly promising pathway that someone else is likely to explore, for instance), but all else being equal, it probably makes more sense to fund treatments.
The initial cost of developing any new drug is extremely high. We're talking hundreds of millions to billions. That's just to break even. That means if you have a cure for a disease that 100k people have, you have to charge them each $10k just to break even.
That is insane. The numbers of course scale directly with the number of patients, too. If only 10k people in the world have the disease, you need to charge them each 100k, just to break even (the average cost of developing a new drug is actually 2.5 billion, but for these purposes let's say you get lucky and it's 'only' 1 billion).
If you want to actually make a profit, you'll need to charge even more than that.
In that case, do charity organizations that collect money to cure specific diseases or cancers actually make a difference, since their donations are supposed to go to research for cures?
I'd say that they do make a difference relative to doing nothing. It's a way of funding cures that's independent of profit, same with government funding. As far as I can tell, the only solutions to this problem are government funding and private funding of cures.
A market based solution might be allowing pharma companies to charge extremely exorbitant prices for their cures, sufficient to recoup the foregone profits of treatment. But i'm not sure how well that would go down.
That's not quite correct. The company with the cure will make more money going forward. But not necessarily overall, and the difference there is important.
Let's say you're a venture investor in biotech, and you're thinking about whether to fund the development of an HIV cure or a better HIV treatment. Both will completely replace the existing market in HIV drugs. When you do the net present value calculation for the treatment however, you'll see that you have some probability of people staying on it basically forever. That means that over time, you can extract more money from it, which means of course that you ought to be willing to invest more money in developing it.
It is through this completely rational, non-evil mechanism that treatments may receive more funding than cures. Nobody here is suppressing anything, it's just that one of them will receive more funding than the other because it has a greater potential ROI.