Summary Victor Roy: Capitalizing a #Cure: How Finance Controls the Price and Value of #medicines (Youtube) youtu.be
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Dr. Victor Roy, a VA Scholar at Yale, explores the impact of financialization on health, pharmaceutical strategies, and potential policy solutions in healthcare.
Slides
Slide Presentation (10 slides)
Key Points
- Dr. Victor Roy's analysis of the financialization of health focuses on the impact of the financial sector on pharmaceutical strategies and practices.
- The case study of sofosbuvir-based medicines highlights the role of finance in biomedical innovation and drug pricing.
- The financialization of the pharmaceutical industry has led to a focus on maximizing shareholder value over long-term investments in research and development.
- Discussions around alternative pricing models and access strategies, such as negotiating prices and implementing "Netflix arrangements," are emerging in the public sector.
- The need to reevaluate the relationship between the public and private sectors in healthcare, challenge existing logics, and explore new economic thinking is emphasized.
- Policy solutions like the Inflation Reduction Act and Medicare drug price negotiations are considered to address challenges in pharmaceutical pricing and access to treatments.
- The potential impact of gene therapies, outcome-based agreements, and a single-payer model on treatment access, affordability, and research and development is discussed.
Summaries
18 word summary
Dr. Victor Roy, VA Scholar at Yale, discusses financialization of health, pharmaceutical strategies, and policy solutions in healthcare.
60 word summary
Dr. Victor Roy, a VA Scholar at Yale, examines the financialization of health and its effect on pharmaceutical strategies, with a focus on hepatitis C medication. He challenges assumptions about healthcare commodification and emphasizes the interplay between finance, pharmaceutical innovation, and public health. The discussion also explores potential policy solutions and the need for critical analysis in the healthcare industry.
132 word summary
Dr. Victor Roy, a VA Scholar at Yale, discusses the financialization of health and its impact on pharmaceutical strategies, focusing on hepatitis C medication. His analysis challenges assumptions about healthcare commodification and highlights the interplay between finance, pharmaceutical innovation, and public health. Examining sofosbuvir-based medicines, he reveals the impact of financial sector actors on drug prices and emphasizes the distinction between commodities and assets. The story delves into Gilead's financial success and the flow of capital through publicly traded companies. The conversation questions whether healthcare and pharmaceutical industries operate under different rules and discusses potential policy solutions, such as the Inflation Reduction Act and Medicare drug price negotiations. It concludes with considerations for research and development funding and emphasizes the need for critical analysis and innovative policy solutions in the healthcare industry.
304 word summary
Dr. Victor Roy, a VA Scholar in the National Clinician Scholars Program at Yale, discusses the financialization of health and its impact on pharmaceutical strategies and practices, with a focus on hepatitis C medication. His analysis challenges common assumptions about the commodification of healthcare and sheds light on the complex interplay between finance, pharmaceutical innovation, and public health.
Dr. Roy's examination of sofosbuvir-based medicines reveals the impact of financial sector actors and logics in shaping drug prices, challenging prevailing narratives about the role of finance in healthcare. He emphasizes the distinction between commodities and assets, with assets deriving value from ownership over future earning streams rather than exchange.
The story also delves into Gilead's position as a financially successful business seeking growth opportunities. The flow of capital through publicly traded companies is simplified to illustrate how they capture value through payments from governments and households, reinvesting or distributing capital to shareholders.
The conversation further explores the unique dynamics of the healthcare and pharmaceutical industries, questioning whether there is a different rule book for these sectors compared to other capitalist industries. The speaker emphasizes the need to reevaluate the relationship between the public and private sectors in healthcare, particularly in terms of risk and reward allocation.
Potential policy solutions, such as the Inflation Reduction Act and Medicare drug price negotiations, are discussed, highlighting their potential impact on access to treatments. The conversation concludes with questions about research and development for diseases with low patient populations, particularly in relation to the allocation of funds towards shareholder value versus R&D.
Overall, the conversation provides insights into the complex dynamics of pharmaceutical pricing, healthcare policy, and the potential impact of different models on treatment access and affordability. It emphasizes the need for critical analysis, alternative research methodologies, and innovative policy solutions to address challenges in the healthcare industry.
587 word summary
Dr. Victor Roy, a VA Scholar in the National Clinician Scholars Program at Yale, is the featured speaker in the Michael Davis lecture series, focusing on the financialization of health. His book, “Capitalizing A Cure,” delves into the impact of finance on pharmaceutical strategies and practices, particularly in the case of hepatitis C medication. Dr. Roy's analysis of finance and financialization revealed the impact of financial sector actors and logics in shaping drug prices, challenging common assumptions about the commodification of healthcare.
The story begins with a case study of sofosbuvir-based medicines, tracing their development process, policy struggles, and valuation dynamics. Dr. Roy utilized historical research methods and drew on analytical frames from science and technology studies, political economy, and economic sociology. The analysis also explored power dynamics beyond overt political influence, focusing on the creation of a common sense view that perpetuates financialized processes.
Pharmacet's journey in developing sofosbuvir-based medicines involved significant public funding and venture capital support, leading to a substantial valuation despite having no products or revenues. The anticipation of lucrative markets for hepatitis C treatments attracted a variety of financial actors, including venture capitalists and hedge funds. Dr. Roy emphasized the distinction between commodities and assets, with assets deriving value from ownership over future earning streams rather than exchange.
The story also delved into Gilead's position as a financially successful business seeking growth opportunities. The flow of capital through publicly traded companies was simplified to illustrate how they capture value through payments from governments and households, reinvesting or distributing capital to shareholders. The purpose of maximizing capital flow to shareholders has been a prevailing idea since the 1970s-80s, shaping corporate decision-making and resource allocation.
In conclusion, Dr. Roy's analysis sheds light on the complex interplay between finance, pharmaceutical innovation, and public health. By examining the case of sofosbuvir-based medicines, he reveals the far-reaching implications of financialization on drug pricing and valuation processes. This critical examination challenges prevailing narratives about the role of finance in healthcare and underscores the need for a deeper understanding of financialization's impact on public health and innovation.
The speaker discusses how pharmaceutical companies have accumulated large cash reserves over time, driven by Wall Street's expectations of high drug prices. This has led to companies like Gilead amassing over $30 billion in cash. The speaker also touches on the idea of speculative capital and the potential for companies to make more money by developing better treatments.
The conversation delves into the unique dynamics of the healthcare and pharmaceutical industries, questioning whether there is a different rule book for these sectors compared to other capitalist industries. The speaker emphasizes the need to reevaluate the relationship between the public and private sectors in healthcare, particularly in terms of risk and reward allocation.
The conversation then turns to potential policy solutions, such as the Inflation Reduction Act and Medicare drug price negotiations. The speaker acknowledges the complexity of implementing these policies but highlights the potential impact on access to treatments.
The conversation concludes with questions about research and development for diseases with low patient populations, particularly in relation to the allocation of funds towards shareholder value versus R&D. The speaker acknowledges the need for empirical analysis to determine how companies allocate their resources in such cases.
Overall, the conversation provides insights into the complex dynamics of pharmaceutical pricing, healthcare policy, and the potential impact of different models on treatment access and affordability. It emphasizes the need for critical analysis, alternative research methodologies, and innovative policy solutions to address challenges in the healthcare industry.
1748 word summary
The Michael Davis lecture series this year focuses on the financialization of health, examining the increasing involvement of the financial sector in the health system. Dr. Victor Roy, a VA Scholar in the National Clinician Scholars Program at Yale, is the featured speaker. With a background in family medicine, sociology, and public health, Dr. Roy co-founded GlobeMed, a network of students and communities addressing poverty and health inequality. His book, "Capitalizing A Cure," delves into the impact of finance on pharmaceutical strategies and practices, particularly in the case of hepatitis C medication. The book offers a critical analysis of the expanding role of the financial sector and its implications for patients, payers, and public health.
Dr. Roy's interest in studying finance and financialization stemmed from his experience with the HIV/AIDS access movement and the struggle over access to medicines. His focus shifted to hepatitis C treatment, leading him to analyze the role of finance in biomedical innovation. He draws parallels between the financial sector's current influence and Joseph Schumpeter's early 20th-century views on private finance as a driver of innovation.
The story begins in June 2015 at a clinic in South LA, where only one patient out of 70 diagnosed with hepatitis C had access to the new curative treatment. Hepatitis C is a deadly virus that primarily affects structurally marginalized populations, leading to liver damage and potentially fatal outcomes. The introduction of sofosbuvir-based medicines brought hope for high cure rates but also sparked controversy due to their high prices. The prices set by Gilead Sciences, the manufacturer, led to political fights and struggles for coverage by state Medicaid agencies and Medicare.
The pricing justifications for these medications were different from typical arguments based on research and development costs. Instead, the high prices were defended by the perceived value of curative treatments to society. This argument raised questions about the relationship between pricing, biomedical innovation, and public health. Dr. Roy's analysis of finance and financialization revealed the impact of financial sector actors and logics in shaping drug prices, challenging common assumptions about the commodification of healthcare.
The case study of sofosbuvir-based medicines involved tracing their development process, policy struggles, and valuation dynamics. Dr. Roy utilized historical research methods and drew on analytical frames from science and technology studies, political economy, and economic sociology. He highlighted the role of assets and how knowledge is transformed into financial assets, as well as the configuration of value around maximizing shareholder value. The analysis also explored power dynamics beyond overt political influence, focusing on the creation of a common sense view that perpetuates financialized processes.
Pharmacet's journey in developing sofosbuvir-based medicines involved significant public funding and venture capital support, leading to a substantial valuation despite having no products or revenues. The anticipation of lucrative markets for hepatitis C treatments attracted a variety of financial actors, including venture capitalists and hedge funds. Dr. Roy emphasized the distinction between commodities and assets, with assets deriving value from ownership over future earning streams rather than exchange.
The story also delved into Gilead's position as a financially successful business seeking growth opportunities. The flow of capital through publicly traded companies was simplified to illustrate how they capture value through payments from governments and households, reinvesting or distributing capital to shareholders. The purpose of maximizing capital flow to shareholders has been a prevailing idea since the 1970s-80s, shaping corporate decision-making and resource allocation.
In conclusion, Dr. Roy's analysis sheds light on the complex interplay between finance, pharmaceutical innovation, and public health. By examining the case of sofosbuvir-based medicines, he reveals the far-reaching implications of financialization on drug pricing and valuation processes. This critical examination challenges prevailing narratives about the role of finance in healthcare and underscores the need for a deeper understanding of financialization's impact on public health and innovation.
Corporations focus on distributing capital to shareholders and increasing their share price, as this indicates potential for future growth. This is not just about profits, but about growth and profits, which is crucial in research and development. Companies distribute capital to shareholders through dividends and share buybacks, the latter of which has become a significant strategy in the pharmaceutical industry. In fact, pharmaceutical companies on the S&P 500 spent $87 billion more on buybacks and dividends than on research and development from 2012 to 2021.
Maximizing shareholder value can lead to short-term profit pursuits rather than long-term investments, driven by executive compensation tied to share ownership. Share buybacks have raised bipartisan concerns, especially during the pandemic when public money was used for buybacks. The imperative to deliver growth to shareholders at a rate of about 10% each year disincentivizes long-term risks in research and development. Large publicly traded companies become acquisition specialists to deliver growth to shareholders, as seen with Gilead Sciences acquiring Pharmaset for $11 billion in 2011.
After acquiring a hepatitis C drug, Gilead spent $33 billion on shareholder payouts, mostly through buybacks, and $11 billion on research and development. The company's executives, who are major shareholders, made over $1 billion in three years. This contrasts with a post-war era version of Merck, which focused on integrated research and development up to manufacturing. The financialization of the pharmaceutical industry has led to a strategy of value extraction, where maximizing access and public health is untethered from financial markets and strategies of growth, speculation, and extraction.
The pharmaceutical industry sets prices based on current market prices with added value premiums. These high prices are justified by some in the health policy community as cost-effective treatments due to the significant benefits they provide society. However, this view becomes the common sense view in health policy and public health circles, making it challenging to create change. The pricing dynamics seen in hepatitis C may be replicated with sickle cell treatments, leading some to propose creating new financial products to pay for curative treatments.
There are examples of successful pricing models, such as the VA system negotiating prices for hepatitis C treatments, leading to universal access and the path to eliminating hepatitis C among veterans. Louisiana also implemented a "Netflix arrangement," paying a lump sum for unlimited access to treatments. There are discussions around creating a federal Netflix program to procure drugs for state Medicaid programs and other systems that can't afford current prices.
The public sector is exploring options for research and development, such as creating a federal agency for late-stage innovation with fair pricing and access provisions. California's Governor Newsom is investing in a public manufacturing strategy for insulin to bring down costs. These efforts aim to denaturalize the current phenomenon of biomedical innovation and access to medicines and imagine alternative ways of working.
The financialization of the pharmaceutical industry has implications beyond biomedical innovation, extending to health care delivery entities as financial assets. It raises questions about how value is configured around maximizing shareholder value and the ways in which ownership and control operate. Launch prices for new treatments have increased each year since 2008, prompting discussions on how the US healthcare system can afford to deliver miracles for many, not just a few.
In conclusion, the financialization of the pharmaceutical industry has led to a focus on maximizing shareholder value at the expense of long-term investments in research and development. This has implications for pricing models and access to treatments, prompting discussions on alternative approaches that prioritize public health and equitable access.
The speaker discusses how pharmaceutical companies have accumulated large cash reserves over time, driven by Wall Street's expectations of high drug prices. This has led to companies like Gilead amassing over $30 billion in cash. The speaker also touches on the idea of speculative capital and the potential for companies to make more money by developing better treatments. The discussion then shifts to the pricing of drugs and whether companies deviate from profit-maximizing monopoly pricing due to historical stacking. The speaker acknowledges the complexity of the situation, stating that companies anticipated maximal control over the market for a limited time, during which they could set high prices.
The conversation delves into the unique dynamics of the healthcare and pharmaceutical industries, questioning whether there is a different rule book for these sectors compared to other capitalist industries. The speaker emphasizes the need to reevaluate the relationship between the public and private sectors in healthcare, particularly in terms of risk and reward allocation. The discussion highlights the need to address the balance between public and private involvement in healthcare and whether the partnership is parasitic or symbiotic.
The conversation then turns to the scholarly and health policy communities' role in challenging existing logics and untethering certain ideologies. The speaker suggests exploring alternative research methodologies to study political economy, institutional dynamics, and historical factors in healthcare. There is an emphasis on questioning existing assumptions and engaging in new economic thinking to address healthcare challenges.
The discussion also touches on potential policy solutions, such as the Inflation Reduction Act and Medicare drug price negotiations. The speaker acknowledges the complexity of implementing these policies but highlights the potential impact on access to treatments. The conversation also addresses the challenges of Medicaid and the fragmented negotiating power across states, suggesting that a unified approach, similar to the Netflix model, could be beneficial.
The conversation then explores the future implications of gene therapies and curative treatments, particularly in relation to cost and public relations. The speaker anticipates that gene therapies will be far more expensive than existing treatments and raises concerns about the role of race in pricing and access. The discussion also touches on outcome-based agreements and potential approaches to incentivize the development of curative treatments.
The conversation then shifts to the potential impact of a single-payer model on coverage and treatment access. The speaker draws from past examples, such as the hep C case in Europe, to highlight potential delays in access but broader coverage under a single-payer system. The discussion also addresses concerns about changing incentives for research and development under a single-payer model.
The conversation concludes with questions about research and development for diseases with low patient populations, particularly in relation to the allocation of funds towards shareholder value versus R&D. The speaker acknowledges the need for empirical analysis to determine how companies allocate their resources in such cases.
Overall, the conversation provides insights into the complex dynamics of pharmaceutical pricing, healthcare policy, and the potential impact of different models on treatment access and affordability. It emphasizes the need for critical analysis, alternative research methodologies, and innovative policy solutions to address challenges in the healthcare industry.