"parasites that'll use it as money drain" sounds remarkably like shareholders.

The difference is that shareholders lose something (the value of their shares) when they drain a company of its assets. This might still be short-sighted, but there is at least a balancing force.

In public services, where making a loss is o.k. this is just included in the loss, and there is essentially nothing that encourages the 'parasite' to not drain the system.

Well, even that no longer seems to be assured. Plenty of ways to strip a company and make a profit in the short term, destroying the company in the long term.

E.g. Toys R Us. It was bought then saddled with debt by the new investors, and is now dead.

> The difference is that shareholders lose something (the value of their shares) when they drain a company of its assets.

Not if they sell before the shit hits the fan.

> The trick is to still find ways to apply pressure so that a service gets better and more efficient in time, instead of attracting parasites that'll use it as money drain.

A huge part of the problem is the public reaction to how for-profit research is supposed to work.

In theory a cure is highly valuable. People should be willing to pay as much for it as the alternative, meaning as much as it would cost for multiple years of ongoing treatment, plus the value of the inconvenience the cure avoids in participating in the ongoing treatment for all those years. A cure should be more profitable than a treatment because patients prefer it to continuous treatment and are therefore willing to pay more for it.

But a treatment that costs $500/week and continues for 40 years is business as usual. Someone offering a cure with a one-time price in excess of a million dollars is derided as a soulless profiteer taking advantage of the sick, insurers refuse to cover it and everyone starts calling for Congress to pass a law against it.

So the market develops treatments instead of cures.

Nay, sir.

Just because there exists a multi-million dollar over a lifetime treatment regime doesn't mean that it is okay to suddenly "own" an equivalent chunk of cash from everyone cured.

We invent treatments because we CAN'T find a cure. The treatment represents society's best effort to alleviate suffering.

We solve problems so that we don't have to suffer them as a society/species anymore.

Businesses exist until we figure out a way to live without them. Profit should never be the end all justification for doing something.

> Just because there exists a multi-million dollar over a lifetime treatment regime doesn't mean that it is okay to suddenly "own" an equivalent chunk of cash from everyone cured.

The chunk of cash is the only reason the company is doing the research to begin with.

If finding a cure was easy then it would have been found a thousand years ago -- as some of them were. The ones remaining are hard and require a lot of resources to solve. If you want someone to put that kind of money in against a high probability of failure, they have to be able to expect an even larger amount of money to come back to them if they succeed or they won't do it.

The alternative is government funding, but then you're spending pretty much the same money. The taxpayer now has to pay the tab for all the high risk/reward research that didn't pan out. And then you're subject to all the usual government issues with bureaucracy and cronyism and principal-agent problems because you've put a thick layer of abstraction between the researchers and the patient outcomes.

Government is already developing most of the drugs to my knowlege. Univerisites research drugs with public money. Universities then work with companies to commercialise it.

As far as I know the most productive research places like xerox-parc was pretty open ended. There was not clear profit driven goals.

We also see massive success with open source projects which suggests to me that there are other ways of organizing this research which we have done very little to explore.

Not strange since there is a mssive profit incentive by industry to lobby us against ever trying alternatives.

> Government is already developing most of the drugs to my knowlege. Univerisites research drugs with public money. Universities then work with companies to commercialise it.

That's a nice little scam they put together a while back. If the government funds the research then it shouldn't be patented -- the taxpayer already paid for it, they shouldn't have to pay for it a second time.

But the industry has better lobbyists than the public, so they get the taxpayer to fund the research, then wait to see if it pans out, then buy it for pennies on the dollar after they already have some evidence that it works. If it doesn't work, the taxpayer foots the bill and gets nothing. If it does work, the taxpayers have to pay even more money to use the fruits of the research they already paid for.

It's corruption plain and simple.

> We also see massive success with open source projects which suggests to me that there are other ways of organizing this research which we have done very little to explore.

Open source works, but it's mostly non-governmental.

The thing that worked really well historically was small research trials conducted by individual doctors as part of their practice and then replicated at larger scale if they panned out. That's all but impossible with the current FDA rules, somewhat for good reason (some of those experiments had a tangential relationship with ethics). But the current rules are just crushingly bureaucratic.

>People should be willing to pay as much for it as the alternative

Maybe. But maybe there's also something wrong with expecting that much. Somehow Sidney Farber didn't decide that he was going to charge the families of kids with ALL the actuarial value of the remainder of their lives.

It can be frustrating to see the public, out of ignorance, grossly misjudge the relative contributions to health of, say, a vaccine developer relative to a self-promoting surgeon. But there is something new and rather strange with this way of seeing medicine as a "capture the value"-type enterprise.

> Maybe. But maybe there's also something wrong with expecting that much. Somehow Sidney Farber didn't decide that he was going to charge the families of kids with ALL the actuarial value of the remainder of their lives.

The problem is this. Suppose the total value of a cure is two billion dollars but it takes a billion to do the research. You can say they should get, say, 1.2 billion instead of the entire two, but that isn't actually that much different, and if you make it 0.8 billion then the research doesn't happen. And it's really hard to calibrate that sort of thing -- you can't just look at the amount the research actually cost because that doesn't take into account the risk of failure, which you have to compensate for or you won't get the investment.

Which is also where the apparent inequity comes from, when a million dollars in research produces a billion dollars in profit. But that's usually because it was a thousand to one shot to begin with. If it wasn't, why has it taken this long for someone to take ownership of that huge pile of risk-free money, instead of the cure being discovered 30 years ago and already being out of patent?

>If it wasn't, why has it taken this long for someone to take ownership of that huge pile of risk-free money

Maybe because no one thought of it before?

The picture you're painting is fine if you're evaluating a handful of candidate molecules each with, you'd guess, a 5% chance of having the right PK profile or something.

But for major breakthroughs, there are "unknown unknowns" that make it impossible to estimate that likelihood. It's nice to think that, if you let the full value be captured, it would incentivize more people to pursue one-in-a-million "lottery ticket" cures, but it just doesn't work that way. They're not lottery tickets if they have incalculable odds.

For the most part, the difference between management and cures is in this latter category. I.e. we don't have a cure because we just don't know how to do it, not because we were too cheap to invest in the biochemical trench warfare to find the right molecule.

> They're not lottery tickets if they have incalculable odds.

The odds aren't incalculable. They might have wide error margins, but that's hardly the same thing.

> we don't have a cure because we just don't know how to do it, not because we were too cheap to invest in the biochemical trench warfare to find the right molecule.

You're thinking about this at the wrong level of abstraction. It isn't a matter of having some candidate molecules and we just need some monkeys on typewriters or a huge bank of supercomputers to test them all.

It's that if you want a cure for cancer, you have to pay scientists to look for it. Not knowing where to look is not the same as not knowing how to look. The fact that it's hard is the reason it's expensive.

> if you want a cure for cancer, you have to pay scientists to look for it.

We do that. It's a two-tier system where the public pays for the science and the companies fish ideas from the science to make into medicines.

>The fact that it's hard is the reason it's expensive.

No, the reason it is expensive is because we've signalled that we are willing to pay large amounts of money, essentially regardless of the actual benefit extended by the state of the art treatment. Even if the state of the science doesn't have much to offer in the way of a cure, you can count on the private sector to make drugs that push the envelope of what we are willing to pay.

But because the job that the private sector does is not the "rate limiting step" as it were, dumping more cash on them is just wasted money.

> No, the reason it is expensive is because we've signalled that we are willing to pay large amounts of money, essentially regardless of the actual benefit extended by the state of the art treatment.

Not the cost of medicine, the cost of medical research. If finding a cure for cancer wasn't expensive then either we've been doing something very wrong or we should have found it already.

And if it's expensive then the reward has to meet the expense in order to get someone to do it.

Which is all well and good if you have the money. Poorer countries have to “make do” with profit driven public services where the exchequer simply doesn’t have the money.

In fact I think this is the sad truth behind a lot of privatisation stories in the West... various government running out of cash but rather than admit poverty put on the rich mouth and claim its “better”