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While slowly moving forward towards the next
presidential election in 2020, Democratic contestants start making
their bids and it looks like they want more Socialism. Besides all
sorts of hot topics like abortion or border security, one burning
long-term issue is health care. The debate shows that a good part of
the political left still wants to nationalize the entire industrie
and finally bless the entire US-population with cheap and reliable
coverage. But as I strongly believe, health care doesn‘t need a
fix, because over the course of the next 20 years it will fix itself.
In this article, I will explain you why.
Cancer treatment incoming
Just a few days ago,
an Israeli medical research team announced that it has finally
found a cure for cancer and it will be on the market in one year.
Even though this was kind of coming in light of genetic research and
trillions of public and private money going into R&D to find said
cure, it still is exciting, since it marks a significant milestone in
medical history – and perhaps even the history of mankind given the
impact of cancer or the coming absence of it.
The treatment itself
is said to be applicable for most cancer types and comes with a high
probability of success. On top, it doesn‘t even have significant
side-effects like chemotherapy, which is really good news for those
who know about the side-effects of successful chemo treatments. The
share of deaths caused by cancer is
still above 20 per cent. A number will soon be near zero and the
former patients will be not just alive but also well.
A look at other diseases and their treatment
So far, no
information has come out about the price tag for this new cure. My
hunch would be that at the beginning it will cost about as much as
current treatments cost. That would be in
the area of some 150,000$ or as comparison, one house, one
Porsche GT3 or one child plus college tuition.
But looking at other
recent cures for mankinds‘ plagues like Hepatitis C, where the
initial drug cost close
to 100,000$ in the United States, it may not take too long until
the costs for the treatment of cancer will go down significantly. The
reason for this is that not long after the first safe and reliable
cure for Hepatitis C turned up, competitors entered the market with
other substances and offered them for
a quarter of the price the first drug.
This step from first
to several cures for Hepatitis C took less than half a decade. This
for a disease that can easily match other nasty diseases from
virusses like HIV to cancer in its consequences for people who suffer
of it and society as a whole.
Hepatitis C is not
the only disease where there has been a recent break-through.
Hemophilia
would be another case for which there is now a reliable cure and
there are surely other so far incurable diseases that have found or
will soon found their match in modern medical research. Even Type
2 Dabetes is surprisingly far near the top of this list.
Genetics, data driven research and big money
As surely everyone
knows, the knowledge about genetics and the capabilities to alter
genetic information makes up the core of todays R&D activities in
the medical area. It‘s most important element is genome sequencing,
which is why it is also the most important factor in the speed of
further medical research. Accordingly it is the price of sequencing,
which gives us the best clue of what will be possible next and when
that will be.
And ideal benchmark
to compare the price pattern of sequencing for research is to look at
how the price for the sequencing of the first human DNA developed.
The first one was rather expensive. It
cost around $3bn which was in 2003 - or 15 years ago. Today, you
can get your DNA analyzed for only 1,000$ and if you believe what
they say in the industry, the same service will soon be only 100$ per
set.
Although „soon“
can mean a lot, it surely won‘t take another decade until we get
there. With such a cheap method to get to the core of the human
biological essence, the trajectory for medical research as a whole
will change massively.
„Soon“, the
critical path for finding new ways of curing acquired or genetic
diseases will not anymore be a matter of brilliant ideas by doctors,
molecular biologists, pharmacists or Professor Coincidence, but there
will be billions of datasets from humans, other animals and plants
available. These only need to be skimmed through in order to find a
matching cure for a disease.
Logically, that will
turn the fate of medical research into a matter of calculation power
as it already is the financial industry and too many other sectors of
our economy.
With cheap DNA
sequencing in place, people
giving away their spittle for free or as part of living
in a country with an absolute ruler, plus enough computers
worldwide and still enough money to be made thanks to funcioning
patent markets (at least in the Western hemisphere), there is no
doubt that investors will keep on pumping money into commercial
medical R&D to milk the cow until the final pill kills it off. On
top of all that, countries too have an interest in further research,
especially the ones with expensive public health care sytems.
How much will the costs go down and when?
All these elements
that make up the global field of medical research combined, and with
past break-throughs in mind, it really isn‘t far fetched to assume
that in around 20 years, the entire cake will be eaten. Besides
massively extended life-spans, the main consequence will be that the
costs go down – gradually, of course and not in a rush.
Patents on medicine
usually are
active for 20 years, which means competitors have to find new
chemical forms of a substance or find an entirely new cure within
this period in order to get their own product on the market. Only
after this protected patent period is over, generic products can
enter the market. In case this does not happens, the prices will go
down by around 80 per cent after these 20 years and with that to a
level on which everyone can afford it.
Important is that
this duration is only the extreme case. Normal is that drugs get
their competition much faster as you can see for example in the
Hepatitis C case.
There are other
relevant factors that will help pushing prices down like medical
tourism. As soon as a potent cure enters the market, countries with
potent pharmaceutical industrie but weak patent laws like India
start developing their own generic treatment. Cheap flights and the
outlook to the alternative of dying or having to sell your house to
be cured from cancer will lead to a steadily growing number of people
who get their treatment on the other side of the planet.
With every
high-profile disease for which there is a cure found, the pressure
will mount on the health care industry. They will have to drop their
prices to a level that matches the treatment in India plus flight,
the trouble of going there and the residual risk that comes with
seeking for a treatment in a place like India.
If you now assume
one break-through cure every four years for one of the
ten so far most expensive diseases to treat and for each soon
after the price drops by 50 percent given the global circumstances,
in 20 years from now the total health care industry will be down by
up to one trillion Dollar or almost one third given
its current market size of $3.7bn.
And in 40 years,
when all the expensive cures will have their cure, the US health-care
market will quite likely not even amount to $1bn anymore, since there
is a lot to catch-by in new treatments for diseases with lower
profiles on the way to curing the big ones.
So.. would it really still be worth setting up a new health care system?
With the described
perspective, one has not to wonder about alternatives to the current
US health-care system, but whether there will be a need for a new one
in the first place. After all, public institutions and social and
economic systems of such a grand scale need long-term planning as
they have long-term repercussions and the political as well as
administrational process usually takes years to get something done.
Effecticely, not too
long after such a new Democratic health-care system is set up, most
of the
12 most common causes for death in the US will be a thing of the
past with the exception of the ones with non-medical reasons.
And as the political
process is loaded with corruption, incompetence, the side-effects
coming with a new health-care may be more severe than just leaving
the current system in its place, while just waiting another 20,
perhaps 30, years until political action on the issue is obsolete.
The bottom-line
therefore is that health-care as a hot political topic in the US is
basically dead – at least for everyone who can afford to look at
the issue in its perspective. Luckily, they are still the vast
maiority.
On the other hand of
course, these millions of saved lifes will cause new and massive
questions about the countries pension systems. But that is an
entirely different story.