Smart Contracts
Using smart contracts gives the company managers the stability to scale up the enterprise, but not hold anyone to long term contracts that would tie their hands. Terms of a deal could state that the invested funds must stay put for the first six months or that R&D efforts exclude any studies based on genome sequencing (for whatever reason). Automated, smart contract also provide accountability, providing clear commitments to all the stakeholders and abiding by them.
For example, patient groups, which are increasingly important partners for the pharmaceutical industry, may demand that all the money invested by them is going only in R&D efforts related to a specific indication. Let’s say a major Diabetes Patient group want to make sure that their money is directly used for the development of a new drug against diabetes. In addition, the patient organizations provide Digital Identity with important advice from their perspective, potentially biospecimen or a pool of individuals that are willing to participate in clinical trials. The contract can then specify that any drug or companion diagnostic developed in this process is transparent, meaning not protected by patents, or that the price for the drug is limited to the lowest possible price to the public (where the company is still not making a net loss but remains profitable). Any combination of contracts can be envisioned.
Remember Martin Shkreli, the CEO of Turing Pharmaceuticals, who in 2015 infamously raised the price of the critical drug Daraprim (pyrimethamine) by more than 5000%? Consequently, he became the global lightning rod for growing outrage over soaring prescription drug prices, and several US Congressional probes have been launched since then on the pricing issues of drugs. Turing Pharmaceuticals was only one of several companies under fire for price increases on older drugs that lack competition. Other famous examples include Mylan, the maker of emergency allergy shot EpiPen, and Valeant Pharmaceuticals, both companies have been questioned by Congress and subjected to severe condemnation by the public. Because the CEO of Digital Identity cannot hide anything from the shareholders, a similar abuse of power is impossible, keeping a lid on soaring drug prices. It is understandable that a company wants to make a profit and we should remember that developing drugs is an incredibly high-risk business. For that reason, new, innovative drugs are typically priced higher under the argument that it’s an incentive for more R&D down the line. Making money is OK, but patients that are at the same time shareholders are unlikely to cause exorbitant drug prices.
In the end, there are many incentives for the patients to invest in the company and vice versa; interacting with patient organizations enables Digital Identity to learn about and understand unmet patient needs, as well as barriers to treatment success. As a result, the company becomes a place to build traction, proof, and validation, coming with all kinds of benefits. Working with committed patient groups will gain the company early adopters and loyal advocates. Market validation is one of the most powerful tools in the entrepreneurial world. Traditionally an expensive and lengthy process, validation is now faster, more scalable and available to anyone, everywhere. People who view the companies campaign and choose to contribute resources, IP, or biospecimen as early adopters are ones that believe in the success of the company in the long run. Early adopters, especially the ones that have shares of the company, are more likely to spread the word without asking for anything in return. They care about the venture’s brand and message and are likely to be loyal supporters and clients.