The Dark Side of Medical Innovation: Why Curing Disease Isn't Profitable
A brief dive into how pharmaceutical companies prioritize profits over cures and why our healthcare system might be fundamentally broken
In an ideal world, pharmaceutical companies would race to develop cures for diseases, celebrated as heroes of modern medicine. However, the reality presents a troubling paradox: curing diseases can actually harm a company's bottom line.
The Gilead Example: Success Becomes a Problem
Consider Gilead Sciences' groundbreaking hepatitis C treatment. With cure rates exceeding 90%, it represented a remarkable medical achievement . However, this success highlighted a fundamental problem in pharmaceutical business models: as more patients were cured, the customer base rapidly shrank. Gilead's revenue from hepatitis C treatments plummeted from a peak of $12.5 billion to less than $4 billion as the pool of patients needing treatment diminished.
The Goldman Sachs Reality Check
A notorious Goldman Sachs report bluntly questioned whether curing patients was a sustainable business model. The analysis highlighted an uncomfortable truth: one-shot cures, while beneficial for humanity, pose significant challenges to long-term profit generation .
Industry-Wide Patterns
The pharmaceutical industry has adapted to this reality in several ways:
Chronic Treatment Focus: Companies prioritize developing treatments for ongoing conditions rather than cures
Pay-for-Delay Tactics: Paying generic manufacturers to delay market entry of cheaper alternatives
"Me-Too" Drugs: Creating slight modifications of existing drugs rather than pioneering new cures
The Profit Imperative
Public pharmaceutical companies face a binding obligation to maximize shareholder returns. This fiduciary duty often leads to decisions that prioritize steady revenue streams over breakthrough cures . With drug development costs averaging $2.6 billion and taking 10+ years, companies must ensure sustainable profits to justify their investments.
The Price We Pay
The implications are stark. When Daraprim changed hands through corporate acquisitions, its price skyrocketed from $17.50 to $750 per pill - a 40-fold increase . While public outcry forced a price reduction, this example illustrates how profit maximization can overshadow patient welfare.
Marketing Over Innovation
Perhaps most telling is that pharmaceutical companies typically spend more on marketing than on developing new drugs . This prioritization reveals where true corporate interests lie - in selling existing treatments rather than innovating new cures.
The Path Forward?
We find ourselves at a crossroads. While pharmaceutical companies deserve fair compensation for their innovations and investments, the current system appears fundamentally misaligned with public health interests. Until we develop new models that better balance profit incentives with medical advancement, we may continue to see treatments prioritized over cures.
What are your thoughts on this complex issue? Have you experienced the effects of pharmaceutical pricing firsthand? Share your perspectives in the comments below.
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DeAngelis C. D. (2016). Big Pharma Profits and the Public Loses. The Milbank quarterly, 94(1), 30–33. https://doi.org/10.1111/1468-0009.12171
Ledley, F. D., McCoy, S. S., Vaughan, G., & Cleary, E. G. (2020). Profitability of Large Pharmaceutical Companies Compared With Other Large Public Companies. JAMA, 323(9), 834–843. https://doi.org/10.1001/jama.2020.0442
https://rooseveltinstitute.org/press-releases/the-high-cost-of-shareholder-power-in-big-pharma/