Martin Shkreli was once dubbed “the most hated man in America”.
Shkreli bought the rights to Daraprim in the United States. Daraprim is an invaluable weapon in the fight against malaria and an infection caused by HIV. He then raised the price 5,455% in 2015, from $13.50 to $750.00 per pill.
The backlash was enormous. Critics asked him if, in retrospect, he would have done anything differently.
“I probably would have raised the price higher.” Shkreli said with cold-eyes.
And why would he?
“I think health care prices are inelastic. I could have raised it higher and made more profits for our shareholders, which is my primary duty. And again. No one wants to say it, no one’s proud of it. But, you know, this is a capitalist society, a capitalist system and capitalist rules and my investors expect me to maximize profits, not to minimize them.”
Shkreli embodies the excesses of the pharmaceutical industry.
But was he right? Are we doomed to live in a capitalist system that puts shareholders over public health?
“Not necessarily”, says Gennaro D’Urso, co-founder of PharmaDAO.
“The Big Pharma model is very simple. They look for a new drug, buy it from a biotech for hundreds of millions, bring it to market, and sell it for billions.”
“Their model works great – for them. It’s not their model that’s broken; it’s us and our government.”
“Our current system enables Big Pharma and therefore, a different model is required.”
Gennaro, there is an imbalance between the profit motive and the imperative to save lives in Big Pharma. Same old story for most of us. Is this the only misaligned incentive in the system?
There are others. After 25 years of running a lab and publishing papers, I began to realize that the whole system doesn’t work in the public interest, or in the interest of scientists.
For one, the industry is taking advantage of what academic scientists are doing – finding new therapeutic targets. Due to a 2013 decision from the US Supreme Court, academics cannot patent any target they find – eroding academic incentives and ultimately having a negative impact on public health.
For another, Big Pharma is not focused on creating the largest impact on public health, they are only interested in developing the next multi-billion dollar drug. Anything that is likely to yield less is not pursued.
That’s a big part of the reason the FDA has approved so many cancer drugs in recent years. Drugs that extend life by weeks or months. Because that’s where the various payers are willing to spend the most money.
The cost of drug development has gone through the roof. It is getting harder to find new treatments for increasingly difficult diseases. How can we lower both costs?
One of the models I’m proposing involves repurposing drugs that are already on the market and off-patent. Typically, a patent on a new drug lasts 20 years from the date of filing.
When a patent expires, other companies gain permission to sell generic versions of that drug. And if you think that one drug has only one application, you’re very likely wrong. That drug could potentially treat many other diseases, and technologies are now becoming available to make this a reality.
But Big Pharma is not interested. There’s no longer a billion-dollar price tag on these drugs because they’re off-patent, so the work is rarely done. New models like PharmaDAO can get us there.
So instead of billions, we can make a drug for millions.
It almost sounds too simple. We are talking about life and death. Why aren’t we doing this already?
It’s the missing buyer. The biggest buyers of medicines – people don’t realize this – are the governments of the world.
Government controls our treasury. Big Pharma lobbies the government.
And this is where PharmaDAO comes in, which is, at its core, a treasury. But unlike the treasury of the government, its control rests directly with its members.
Before we unpack how it works, can you tell us how you came up with the idea for PharmaDAO?
The moment when things started to click was during the pandemic.
People were getting very sick. There was a lot of death. And I was working on a project to find therapeutics, and we were successful in identifying these drugs quickly!
At the time, we were working with major pharma companies and the government. All these groups were collaborating with us. But it was very slow, very bureaucratic, and very frustrating.
During that time, I met a friend of mine. He asked me what I was up to. And I said I was trying to save the world, trying to find these drugs for the pandemic. He chuckled, “Well, how’s that going?”
I said, “I’m going to the government to try to get some funding and start some clinical trials.”
“Why are you doing that? That’s absurd! You’ll never get anywhere.”
“Well, that’s pretty true, but where else can I go?”
“Why don’t you start a DAO?”
That was the moment. The light bulb went on. It was extraordinary. I’ve been on this journey for a while, and then blockchain came along. Putting these two things together, the repurposing of drugs and a DAO, seemed like a perfect marriage and a perfect utility case for blockchain.
For those of us who are not familiar, could you explain what a DAO is?
In their most abstract form, DAOs are organizations that are decentralized. There’s no centralized management or authority. And autonomous means they are run with minimal to no top-down manual management. DAOs are also almost always created with some form of blockchain technology, as it’s a great tool to implement a decentralized management system into a project.
Today, the word is used very loosely, but this main concept remains true for all the forms a DAO can take. Under a broad definition, even Bitcoin could be argued to be a DAO, as it was an autonomous, decentralized exchange system designed to combat the centralization of the banking industry.
We understand and value the philosophy that a DAO represents. Ultimately, we are building an autonomous, decentralized foundation with a treasury. Our members can vote to allocate funds to proposals, which ultimately determines the direction of the organization.
So we have a community governed treasury, and a way to repurpose drugs. What’s next?
PharmaDAO is a way to fund the development and production of the drugs we need.
The PharmaDAO community will invest in for-profit companies to create a self-sustaining solution through royalties from the produced drugs.
We have a DAO board of experts that evaluates the viability of a proposal. The board puts together proposals to deliver a product, but it’s the community that votes whether the product is produced. Think of the Covid-19 therapeutics I mentioned earlier.
When people say: yes, we need this product, they fund it. This is a very agile and honest approach for driving the production of needed medications.
We won’t partner with Big Pharma for this. These kinds of proposals wouldn’t interest them. They’re chasing the big margins. But smaller pharma companies would accept 20%, 30%, 40% margins.
The companies we work with can sell the drugs they develop with our funding through their normal distribution channels. But at a fair margin that we agree upon, and with revenue sharing models in place to support the treasury.
A global government, direct democracy, no lobbyists. Sounds like a peaceful revolution to me. Instead of criticizing or fighting our current system, you found an answer that integrates with it.
But you mentioned earlier that instead of billions, we can make a drug for millions. That is still a lot of money for people to donate.
Yes, it’s a great deal of money, but PharmaDAO is only there to support the initial production of the drug. Most of the expenses for its development will remain with the for-profit company. PharmaDAO will be an important enabler for the adoption and future success of a drug.
After an initial pilot production cycle, revenue sharing arrangements we put in place will ensure the sustainability of the PharmaDAO treasury as the market grows. Successful drugs can be enormous revenue generators.
To have legal standing in the US, the DAO is a 501(c)(3) foundation. We make it simple, keep it straight up and run it according to laws that already exist.
What’s your vision for the future of PharmaDAO and its impact on healthcare? How do you see it evolving?
The community’s mission is to support the creation of affordable medications for every person and for every disease.
The community aims to do this via a three part strategy.
First, investing in technologies that allow the rapid identification of drug repurposing opportunities for existing, especially generic, medications.
Second, by engaging for-profit companies using the PharmaDAO treasury to develop them and return royalties to PharmaDAO.
Third, by enabling the production of these drugs through small to medium-sized manufacturers.
Even small donations amplified within this distributed model can allow for this new alternative pharmaceutical model to thrive.
The beginning will be challenging, like any new project. What’s really exciting is that we have more and more people coming on board every day. They love the idea. Then, we need the help of people like you to help us spread the word. Eventually there will be a flywheel effect.
This is about putting in a few dollars a month and getting your family member or friend an affordable treatment for a disease that the industry is currently neglecting because there’s not a big enough price tag on it for Big Pharma.
This isn’t right. With some spare change, we can take care of each other. That’s what motivates me. And I know we can get it done.
Are you, dear reader, trying to save the world? Then why don’t you start a DAO? The Lisk Accelerator Program offers grants to entrepreneurs and developers building Web3 apps with the Lisk SDK.
Or join Gennaro and PharmaDAO today. Together we can get it done!