There’s a catch-22 in much of healthcare, and one which has birthed more than its share of conspiracy theories. Essentially, curing chronic diseases like diabetes is less profitable than treating its complications. According to conspiracy theorists, the multi-billion dollar industry that includes insulin, medical devices, glucose monitors, and oral agents makes too much money for pharmaceutical companies to ever want to provide a cure even if they developed one.
While many argue that it doesn’t make sense that a company would stay silent about a cure (too many researchers know someone with the disease, and such a drug would have lucrative licensing agreements), the point still stands that ongoing treatments for chronic disease tend to be less profitable for companies than the expensive complications that occur when those ongoing treatments are skipped.
As the New York Times reports, “Insurers, for example, will often refuse to pay $150 for a diabetic to see a podiatrist, who can help prevent foot ailments associated with the disease. Nearly all of them, though, cover amputations, which typically cost more than $30,000.”
With such a system currently in place, it would not be surprising to research into treatment stagnate. However, groups like T1D are determined to keep that from happening. Organized like a private equity fund, they’re committed to making “high-impact early-stage investments to accelerate commercial development of life-changing therapies for people living with T1D [Type 1 diabetes].”
Taking the private equity model as a charity model has been enormously successful so far. Not only have they attracted money from business and finance investors who wouldn’t typically invest in a charity, but by adopting for-profit private equity processes like investor quarterly calls and regular updates they have added transparency and sense of accountability into the mix.
One of T1D’s biggest goals is to be able to move faster than most charitable foundations do in order to speed up the development of treatments. They have so far raised $55 million, and plan to invest all of its money in four years.
“The fund makes very quick decisions from start to finish,” said Ellen Leake, vice chairwoman of the foundation’s international board, to the New York Times.
Being what is essentially a charitable private equity fund also has other benefits, in that they are able to take the risk and invest in companies that might not necessarily be quickly profitable, but which have the potential to develop viable treatments. And in the world of diabetes research, such funding is a good idea all around.