By editor on January 28, 2018 — 3 mins read

There’s an article in Forbes or Fortune about a bunch of guys who are creating basically what seem like Ponzi schemes around drugs and buying orphan drugs. Is that right? The example was an Alzheimer’s drug that has a $4 billion market cap. We know that there’s a 99.99% failure on all Alzheimer’s drugs. Why is this drug any different? Why is that company worth more than — I don’t know — pick your favorite startup that’s actually doing something and generating revenue.

There’s no revenue, there’s no pipeline. There’s just the drug, and a story.

The regulatory framework has created the ability for a company like that to go public and financiers to capitalize on that.

We can’t have the way the system works today because it’s not exactly working for everybody.

The protectionism has to revert to something that’s slightly different. I don’t know what the answer is.

Otherwise, what will happen is, most of us will build quality systems, launch in Europe, figure out how to go to China, going into Southeast Asia, where we have direct relationships with all of the governments and they can fast track us…

What happens is, unfortunately, these developed markets, and the United States, get starved of the actual advancements that are actually happening on its soil. Which is tragic.

When we think about now funding these things, the most important decision we make, after the amount of capital against the idea, is, “Where do we go with it?” We think all the time now: we have great relationships with the Indian government, we have great relationships with the Vietnamese government, with Indonesia, Sri Lanka.

Because all of these developing countries are like, “We want to win. Get my population to be best of class. We’re ready to run. Get us to the start line.”

And we’re like, “Okay.”

The idea that we know what happens to anybody at the n of 100 or the n of 1,000 trial is a crock of horseshit. It’s not statistically significant anymore. I’m just going to put that out there.

We want to go through this farce of, “Don’t worry, it works on n of 100, let’s just go.” And it costs $1 billion to get a drug to trial. It’s crazy.

That has to change.

We have to have a regulatory framework that isn’t just based on Eric Lander’s genome.

I would like the ability for companies to literally be able to say here is a project, and I would like people who are of sound mind and body to be able to just opt in and decide what they want to do and let an entire regime allow that pathway to exist and then see what happens.

I think that there will be some cases where this stuff is puzzling and terrifying but I bet you you’re going to see overwhelmingly amazingly beautiful things of young energetic companies with great ideas who can get to the start line unimpeded.

We do that in technology, and great things happen. Are there bad consequences to Twitter and Facebook, etc? [Yes.] But the net effect is generally positive.

If we could find a way to ease the regulatory oversight where adults can basically go and choose to participate in systems and products and things that can actually meaningfully help them change the trajectory and the course of things that they are suffering from, and figure out then how to have a more lightweight approval once you have some statistically significant sample size.

Maybe you can only do it on 10 people, but you can do it with absolutely no oversight. Then you can do 20, 50, then 100, and 1,000, and 2,000, 5,000, 10,000. You show some genetic diversity of the whole thing, then you can go back and say, “I’m ready to go.”

You’d probably find ways to do it a lot cheaper. You don’t have to contract out to a bunch of contract research organizations and spend hundreds of thousands, or millions, of dollars and hire consultants to talk to the person at the FDA.

The entire system isn’t set up for success. (19:00)

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Editor's Note

These are Chamath Palihapitiya's words. They are probably some of the best thoughts on VC, business, and life, but were scattered around the Internet. They live now in this archive.