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Moloch and Medicine: Why Good Intentions Built a Broken System, and Why CGT Might Fix It All (Sort Of)

Hot takes on current incentive structures

Business As Usual Snl GIF by Saturday Night Live

Spicy takes incoming. | Gif: snl on Giphy

Editor’s Note Preamble:

Another long form piece for you - this time a spicy (but I’d argue very relevant) take from yours truly about the sordid state of incentives in biotech & pharma.

If you have any qualms, quips, quibbles about the below, I’d love to hear from you - email me or hit me up on LinkedIn.

Look, I’m not one to bite the hand that feeds - but there’s a lot that we could be doing better in biotech & pharma (I criticize because I care).

If you’re reading this, you’re probably directly involved in biotech/pharma or work for a company that services/supports those industries. So I’m going to be charitable and assume that there’s a part of you that does want to help people, and you feel like you’re doing that by developing next-generation, potentially curative medicines.

And I thus don’t have to convince you about how game changing cell & gene therapies are - despite some recent snafus.

But we’re unfortunately operating in a system that is fundamentally not designed to handle these potential one-and-done cures - this also shouldn’t be news to you (but if it is - surprise!).

And my learnings recently about Moloch* has made me pause and reflect on how incentive structures change as we optimize for different parameters:

Where healthcare once fully optimized for human health (or was it ever?), a decent portion of our healthcare system is now pointed squarely at financial ROI and growth at all cost, with human health outcome being sought after just enough to satisfy regulatory requirements.

Just consider why the FDA was founded in the first place.

*Wth is Moloch?

Always the helpful assistant, here’s Claude explaining this better than I can:

“Moloch refers to coordination failures where individual rational actors, following their incentives, collectively produce outcomes that everyone would prefer to avoid.

The key insight is that even when everyone knows the system is producing bad results, individuals are often trapped - deviating from the locally optimal strategy puts you at a disadvantage, even though universal deviation would benefit everyone.

It's not necessarily that the incentives were initially "good" and became corrupted, but rather that the structure creates a race to the bottom.

Classic examples:

• companies polluting the environment (clean companies get outcompeted)
• students taking performance-enhancing drugs (clean students fall behind)
• social media platforms optimizing for engagement over wellbeing (platforms prioritizing user welfare lose users to more addictive competitors)

The solution typically requires coordination mechanisms - regulation, collective agreements, or changing the game structure itself - rather than just hoping individuals will voluntarily choose the collectively beneficial option.“

Basically, everyone's trapped in a game where the rational move for individuals creates disaster for everyone - including the individuals.

See how this all just might tie into not just cell & gene therapy, but the whole medical incentive structure we have going on?

I want to point this all out because, despite the amazing progress we’ve made like:

a) now being able to to treat and cure many diseases once thought incurable or a death sentence, and

b) that we may end all disease soon (though we’re not all entirely on board with this)

There’s still a big, nagging question here:

What’s the point of curing all disease if it’s part of a broken system that doesn’t allow us all access?

I don’t have the answers - but maybe by writing a bit about this, maybe someone way way smarter than me and in higher places reads this and is inspired to take action.

If even one of you learns something new from reading this, call it mission accomplished.

Not like that. | Source: AP

I’ll also be referencing several times to Scott Alexander’s Meditations on Moloch which was a big inspiration for this piece (so you’ll see reference to this throughout the article).

Alexander’s essay is an absolute monster to get through, and is not mandatory reading to glean insights from the below content - but if you have the time and are interested in Moloch as a system dynamic, I’d strongly recommend giving it a read.

Alright - now onto the goods:

The God of Chronic Care

We already dived a bit into what Moloch is, but a quick recap for convenience - basically we’re talking about “systems that evolve to serve no one's interests, not even their creators”.

Unfortunately, it feels like healthcare in general, especially in the USA, have become perhaps the perfect embodiment of this Moloch trap in modern civilization.

I’d argue most people enter the healthcare industry with pure intentions - a mix of deep scientific curiousity and/or personal tragedy as a driving force for change.

But that’s on the individual level - as the system got bigger, more complicated, and became enmeshed in a capitalism paradigm, these good intentions have instead created a system that instead prioritizes chronic care and repeated dosing.

This is the Moloch dynamic at play.

To be clear - I’m not saying, without any nuance, that capitalism is bad, that the current healthcare system is bad, and we’re all screwed.

There’s still a lot to be proud of in terms of what we’ve accomplished as an industry and in pushing forward human health, longevity, and general wellbeing.

But the current system we have isn’t ideal - and on getting these life saving therapies to patients, we could certainly do a whole lot better.

This begs the question - how did we get here?

The Original Sin: When Healing Becomes a Business Model

Rome wasn’t built in a day, and neither was the modern healthcare/pharma business model.

Rather, it’s emerged from a series of individually rational decisions that, when combined, created a system optimized for the wrong outcomes.

Consider two hypothetical pharmaceutical companies:

Company A develops a cure1 that makes money once per patient.

Company B develops a chronic treatment that makes money for decades per patient.

When shareholders demand quarterly growth and competitors are breathing down your neck, which approach wins?

As Alexander notes: "In some competition optimizing for X, the opportunity arises to throw some other value under the bus for improved X. Those who take it prosper. Those who don't take it die out."

Here, X equals quarterly profits and short-term continuous growth. The "other value" being sacrificed is actual patient health and cure-seeking behavior.

Companies that prioritized cures get outcompeted by those that built subscription models for sickness.

This isn't because pharmaceutical executives are evil—it's because they're trapped in a system where the most ethical choice (pursuing curative treatments) is often the least economically viable one.

Even executives who entered the industry for good reasons (eg. helping people) find themselves managing portfolios where chronic treatments subsidize the risky, expensive work of developing actual cures.

Now, to be clear, I firmly believe that a universal cancer cure would create the world's most valuable company overnight - so if this is the case, how can I argue that biopharma is in a Moloch dynamic?

But that's precisely the exception that proves the rule.

Blockbuster cures for massive markets and terrifying, life-threatening diseases can overcome the system's structural preference for chronic treatments.

The real casualties are the gene therapies for rare diseases, the novel precision treatments for small populations, the innovative approaches that work therapeutically but face challenges navigate reimbursement systems designed for chronic medications.

Many of these companies flounder at the commercial stage because the economics don't fit our existing healthcare infrastructure.

The Chronic Care Trap in Action

The mechanics of this trap play out across multiple levels:

At the pipeline level: Some promising compounds get shelved not because they don’t work or because of early negative signals, but because the return on investment doesn't justify development costs (here’s a recent example).

(But then on the other hand, you have medicines that ostensibly don’t work but get marketed anyway - what a world.)

At the regulatory level: Regulatory agencies don’t directly play into Moloch, but their conservative frameworks (favouring safety, which is a really good thing!) do inadvertently bias towards incremental improvements over paradigm shifts, which can lead to favouring chronic administration regimens.

At the healthcare practitioner level: Even in single-payer systems like what we have up in Canada, perverse incentives emerge.

Doctors are mainly paid by patient volume, incentivizing quick visits and symptomatic treatments over time-intensive investigation of root causes (though this may be slowly changing).

Complex conditions with psychological or social components get inadequate attention because addressing them properly doesn't fit the economic model (despite overwhelming connections between both physical health and mental health and social situations to mental and thus physical health.)

Marginal improvements to existing treatments have established safety precedents and clear regulatory pathways. But curative therapies often represent entirely new paradigms that don't fit neatly into existing approval frameworks.

The regulatory conservatism that's supposed to protect patients ends up creating higher hurdles for potentially transformative treatments - not out of malice, but because 'we've never seen anything like this before' naturally triggers more caution than 'this is 15% better than the last statin.'

Though in their favour, the FDA is getting better and better at dealing with these newer paradigm shifting medicines - at least until the next paradigm shift comes along.

So each actor in this system is following their individual incentives rationally. The collective result is a system that has delivered amazing therapeutic breakthroughs - we're literally curing diseases that were death sentences just decades ago.

But it's also a system that's structurally better equipped to handle chronic treatments than one-and-done cures.

When curative therapies do make it through, they often end up priced in the 7-figures partly because the economics of the system just weren't built for 'cure once, pay once' models.

The Curative Disruption: Cell and Gene Therapy

This is where cell and gene therapies come in - treatments so dramatically superior that they can break out of the chronic care trap despite the economic incentives against them:

(Cancer treated with CAR-T isn’t a great example of a “chronic care trap” since most efforts are already geared towards cures as opposed to chronic administration - we touched on this above in the universal cancer cure example.

Though it’s pertinent to point out that in some situations, cancer is chronic.)

So we now have potentially curative, one-and-done therapies being deployed into a system not built for them - what happens now?

The System Adapts

The response from established big pharma is as usual - buying up these smaller, innovative biotechs that are blazing the CGT trail.

These aren’t overtly Moloch dynamics, but there’s still the risk that as the system adapts to handle curative therapies, it's doing so in ways that preserve existing economic structures rather than fundamentally transforming them.

I’m not saying that acquisitions are bad or shouldn’t happen - it's that we still have an underlying system built to incentivize chronic medication administration, and that that fundamental structure might subtly influence which curative approaches get prioritized, funded, and ultimately reach patients.

So the real question becomes whether a system adapting within its existing framework can truly support curative healthcare, or if those underlying incentives will continue to limit the full potential of treatments like cell & gene therapy.

Regarding system adaptions, we are seeing innovative pricing structures being implemented to cover the cost of advanced therapies, including:

  • Pay-for-performance models: Payments tied to treatment success rather than upfront costs

  • Extended payment plans: Spreading the cost of curative therapy across decades, like a medical mortgage

  • Warranty models: Partial refunds if treatments lose effectiveness over time

These address genuine access issues and make expensive cures more viable within existing healthcare economics.

The Regulatory Wild Card

The current US push for what is ostensibly another version of accelerated approvals (though not with the same name) adds another layer of complexity:

The Trump administration’s promised to cut regulations - ”for every regulation that we put in place, we have to get rid of 10” - which could represent either a coordination breakthrough* or a new Moloch trap; the same goes for the FDA’s new National Priority Voucher Pilot program.

*Wth is a “Coordination Breakthrough”?

Earlier we defined Moloch as a series of coordination failures, namely “where individual rational actors, following their incentives, collectively produce outcomes that everyone would prefer to avoid.”

So a “coordination breakthrough” in this case would be enough people working together, or agreeing to and adhering to a set of rules (eg. a collective agreement), that could then override the misaligned individual incentives to overhaul the entire system, ideally for the net benefit of all involved.

On one hand, slow approval processes and excess regulations create competitive disadvantages for innovative companies and delay access to life-saving treatments.

On the other hand, regulations often exist as coordination mechanisms—ways of preventing races to the bottom on safety standards. Carl June's proposal to copy China's two-tier system, where early trials require only institutional review board approval, could accelerate innovation - but it could also create pressure for increasingly lax oversight.

The baby KJ case - where a custom CRISPR therapy was developed in months under a streamlined regulatory pathway - is an example where these accelerated incentives were employed to positive ends.

But there are cases where these accelerated incentives go the wrong way - as is the case with the current Sarepta Elevidys debacle (and even Accelerated Approvals as a whole category).

The Trust Erosion Problem

Perhaps the most dangerous long-term consequence of healthcare's Moloch dynamics is the erosion of public trust in medical institutions.

When people perceive that the system is optimized for profit rather than health, they become susceptible to alternative explanations and treatments.

This creates a feedback loop of mistrust:

  • Reduced compliance with beneficial treatments

  • Increased susceptibility to medical misinformation

  • Delayed care-seeking behaviour

  • Overall worse population health outcomes

The rise of MAHA (Make America Healthy Again) represents both a response to this trust crisis and a potential coordination attempt.

By emphasizing preventative medicine, lifestyle interventions, and addressing social determinants of health, it could theoretically reduce dependence on the chronic care system.

But it also risks creating new Moloch traps.

The focus on "wellness" could spawn industries selling dubious supplements and treatments, and the emphasis on personal responsibility could be used to justify reducing support for those who need medical intervention most.

Global Competition and Innovation

The international dimension adds another layer of complexity. Countries are competing to attract biotech investment and talent, creating what could be either a beneficial "race to the top" in innovation or a destructive "race to the bottom" in safety standards.

Consider the USA-China biotech race. The key factors in this competition include:

  • Regulatory speed and flexibility: How quickly agencies approve clinical trials and treatments

  • Investment climate: Access to capital and favourable tax treatment

  • Talent pipeline: Universities and research institutions that can feed into private companies

  • Clinical infrastructure: Hospitals and medical centers capable of conducting high-quality trials

Rather than a race to the bottom, this seems to represent healthy competition—countries improving their innovation ecosystems to attract valuable industries.

The concern is whether pressure for speed compromises thoroughness in safety evaluation.

Potential Escape Routes

Alexander's framework suggests that Moloch traps can be escaped through coordination mechanisms, which we discussed earlier - ways of aligning individual incentives with collective good.

In healthcare, several potential coordination strategies are emerging:

Technology-enabled coordination: AI and machine learning could dramatically reduce the cost of drug discovery and development, potentially making curative approaches economically viable even for smaller markets.

Alternative funding models: Government and philanthropic funding (also crowdfunding!) for curative research could bypass the profit motive entirely, similar to how basic research is currently funded.

Regulatory coordination: International agreements on safety standards and approval processes could prevent destructive competition while maintaining innovation incentives.

Social coordination: Cultural shifts toward preventative medicine and lifestyle intervention could reduce the market for chronic treatments.

Market structure changes: Breaking up certain big pharmas or implementing different intellectual property regimes could change the competitive dynamics that create perverse incentives.

The Fundamental Question

But here's the deeper challenge that Alexander's framework illuminates: every coordination mechanism is itself susceptible to Moloch dynamics. 

Regulatory agencies can be captured by the industries they regulate.

Alternative funding models can be influenced by political considerations.

Cultural movements can be co-opted by commercial interests.

The question isn't whether we can design a perfect system - it's whether we can create coordination mechanisms robust enough to consistently favour health outcomes over other metrics.

This requires constant vigilance and adaptation as new technologies and economic pressures emerge.

Cell and gene therapies represent our best current hope for breaking out of the chronic care trap. Their curative potential is so dramatic that it can overcome the economic incentives against them.

But as the system adapts - through acquisitions, pricing models, and regulatory changes - we'll discover whether this represents a genuine escape from Moloch or just a temporary disruption before new traps emerge.

The Stakes

The stakes couldn't be higher - technological advancement tends to make Moloch traps more dangerous over time.

In healthcare, this could mean (this gets a little Black Mirror-y so bear with me):

  • AI-designed treatments optimized for profit rather than health

  • Genetic technologies used to create more sophisticated forms of dependence

  • Personalized medicine that's precisely calibrated to extract maximum value from each patient

  • Global competition that compromises safety standards in the race for innovation

The alternative - genuinely curative medicine that prioritizes human flourishing over economic extraction - requires coordination mechanisms we haven't yet built.

The difference between a dystopian medical future and a future where healthcare is accessible and abundant for all (not just in developed countries) lies in our ability to recognize Moloch when we see him, and to build coordination mechanisms strong enough to keep him at bay.

As Alexander concludes his essay:

"Only another god can kill Moloch. We have one on our side, but he needs our help."

In healthcare, that god might be the sheer power of curative medicine to overwhelm perverse incentives.

But it will need our help - through thoughtful regulation, innovative funding, and constant vigilance against the emergence of new traps.

The question is whether we're wise enough to nurture genuine healing while the window of opportunity remains open.

This piece draws extensively from Scott Alexander's "Meditations on Moloch" and recent developments and upheavals across the cell and gene therapy landscape.

The challenge Alexander’s essay on Moloch describes - building systems that serve human values rather than abstract metrics - remains one of the defining problems of our technological age.

Thanks for reading! -Anis

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1  Not to say that all CGTs are cures, as some have durable responses that can last years (and potentially a lifetime) but we haven’t gotten enough loooong term data on this yet to definitely say “cure” - though it’s ongoing. So if you see me refer to “cure” in regards to CGT, remember this nuance.