Rethinking Business Model for Drug Discovery, Post-COVID

ABSTRACT

Motivation The COVED pandemic underscores the need for fair access to health care. The unequal access to needed but patented, expensive medicines will exacerbate existing disparities among disadvantaged populations. For example, cancer gene therapy costs range from $373,000 for a single dose of CAR-T therapy Yescarta to $2.1 million for Zolgensma. Premise In this paper, we propose a peer-to-peer business model for drug discovery that democratizes the drug discovery process and reduces drug prices by cutting the intermediaries between biomedical researchers and future patients. Note that in this market microstructure, the underrepresented group can take advantage of medical advances by selling their data for research. Approach: We devise a market microstructure in which a group of project managers, who are usually "star" scientists or CEOs of biotech firms, will select individuals at disease risks and researchers, raise funds by selling non-fungible tokens (NFTs) based on their future patents, and control risks by the rating system, due diligence, and financial engineering. Employing a signaling game-theoretic mechanism, our analysis not only elucidates how the stakeholders strategically interact in this market using deception, adverse selection, and moral hazards, but also how to tame their interactions to improve the overall performance. In particular, we suggest and rigorously evaluate an embodiment built on a scalable implementation of NFTs. Results: Using extensive simulations, we show that in the NFT megafund, both senior and junior tranche investors get their principals fully repaid 99.9 percent of the time. Conclusion: This market micro-structure can help reduce health disparity in the following three ways. First, by participating in the drug discovery process, the underrepresented population can accelerate drug discovery for diseases unique to themselves. Historically, such diseases are understudied due to a lack of funding and resources. Second, cutting out the middleman can significantly reduce drug-development costs, which will increase access to medicine. Finally, retail investors can also benefit from investing in drug discovery because the risk associated with the NFT is managed down to the level of debt. Consistency As a disruptive technology, blockchain has created a lot of challenges and uncertainties for the economy and society alike. This research provides a framework to realize the potential of blockchain and non-fungible tokens to democratize the drug discovery process and reduce health disparity, while controlling their risks using rating system, due diligence, and financial engineering, which is consistent with the purpose of this journal.