Crypto for healthcare? – POLITICS
With help from Derek Robertson
Modern healthcare has a problem: There are many diseases that need better treatment, but the pharmaceutical industry does not always have a financial incentive to develop a new drug, or even to test an old one on a new disease.
A company called Love Health has a very 2022-sounding solution: launch a DAO to fund and test experimental treatments.
On the surface, it makes a lot of sense: A DAO, or decentralized autonomous organization, is basically a blockchain crowdfunding mechanism where the funders also get to vote on what the group does. In this case, the “voters” are very likely patients and families who are frustrated by the lack of progress on their disease, and willing to throw their support behind new ideas that industry will not pursue.
Using a DAO to connect pharmaceutical companies and patients is increasing interest. Another company, Vibe Biouses a DAO to give rare disease patients more say in treatment research.
But beneath the surface… The project combines one of the most highly regulated industries in the world, healthcare, with a crypto-powered structure invented in part to avoid regulation.
What can go wrong?
Love Health is co-founded by Ryan Breslow, an entrepreneur known for positioning himself as an outsider battling elite venture capitalists (while achieving an $11 billion valuation for his first company, Bolt).
In August, Love Health announced a $7.8 million raise. The money came largely from investors with little expertise in healthcare, but the company already has some industry talent on board: Its chief medical officer, Kevin Horgan, has an impressive resume with leadership roles in immunology and oncology at AstraZeneca, Johnson & Johnson, GE, and Merck. The company initially hired a head of regulatory affairs, Stacy McIntosh, who has a background working for biotech and pharmaceutical companies, but then pivoted away from conducting clinical trials herself, so she is now in a more advisory role.
Love itself is not a DAO; it is a limited company. But it is helping to create the DAO and plans to be a member that will vote on the treatments the group wants to validate and provide funding for. Love says it will work with established companies to coordinate clinical trials. The DAO would have its own token, which would apparently accumulate and deliver value back to investors — though Breslow said there is no promise of upside.
The company plans to launch a community marketplace for foods, supplements and services that promote wellness. Once launched, the aim is to use the community’s brainpower to come up with potential research topics. Love Health may also use the results of the trials to bring health products to market, which can then be sold to the community.
Love’s appeal for organized groups of patients who already feel excluded from mainstream medicine is quite obvious. The company has launched a social channel on Discord to get crypto enthusiasts interested in the project.
It has a warning for people interested in throwing money into the DAO:
“Anyone involved in this should know that this is a very experimental undertaking,” Breslow said. “Any money they put into it, they should be prepared to lose.”
He is not new to financial technology. Breslow’s former company, Bolt, developed electronic payment technology. After a Twitter tirade in January, Breslow resigned as CEO of the company. Since then, the company has done so been sued by its biggest customer and laid off employees. New York Times also reported Bolt misled investors about the technology and scale.
Despite Bolt’s reputation, Horgan said he is impressed with Breslow. In Love Health, he sees an opportunity to get beyond the limitations of creating one drug for one indication. Some less understood conditions, such as chronic fatigue, he said, may require a combination of treatments.
“What’s needed is a business that frames the question differently,” he told POLITICO. There are plenty of generic drugs with well-understood safety profiles and effects, he pointed out, and diseases they have not yet been tested on. “The question is, have they been utilized to their maximum potential? And the answer to that is definitely not.”
For example, researchers have observed that metformin, a generic drug for diabetes, can reduce mortality among tuberculosis patients. To prove that this drug can help patients will require a clinical trial. The median cost of an FDA pivotal clinical trial was $19 million, according to a 2018 study. Pharmaceutical companies have no incentive to pay for that litigation, because they no longer own the intellectual property. So often these observations remain merely anecdotal.
Sometimes governments and non-profit organizations step in to pay for these clinical trials. In the case of metformin, the government of India is working with a non-profit organization called the Open Pharma Foundation to run trials. Horgan sees Love Health’s DAO as another possible source.
Who really wants to invest in tokens? Breslow told POLITICO that he wants people who care to be involved, but “it’s impossible to avoid speculators becoming a part of this as well.” In a way, it’s like a charity that funds drug trials, with an exciting potential for upside.
Love Health expects to launch its DAO in December. What will the supervisory authorities think? Love must register its token with FinCEN and comply with anti-money laundering regulations. But there are many open legal questions about the DAO. Lawyer at the Heritage Foundation recently proposed that members of a DAO may be personally liable for its obligations (some become LLCs or create offshore business structures avoid it).
And there is a larger question of ethics here—whether love encourages people to chase faint hopes, or whether individuals should foot the bill for science that a corporation can profit from. It is a question far beyond a new structure to solve.
It’s been a tough few months for the tech giants driving the development of the “metaverse” the eponymous Meta not least among them.
So where does that leave the overall project? Benedict Evansa newsletter writer and technology and business analyst with 20 years of industry experience, have some answers in a recent blog post titled “Ways to Think About a Metaverse.” The main takeaway: Yes, the concept of a “metaverse” can be frustratingly amorphous at the moment. But just as with technologies like mobile internet, no one is quite sure which elements of metaverse development will endure, or who the industry’s “winners” will be, so it’s worth sticking around and getting involved.
“Many people in tech and telecom thought mobile Internet would be big, but almost no one realized that everyone would use it, nor that it would become the new central paradigm of consumer technology, replacing PCs,” writes Evans. “You needed to see both to realize what would happen—that the technology would improve, and what it would change.”
We have no idea what that will look like for VR and AR technology yet – which is exactly why so many big companies and tech watchdogs, even aside from drivers like Meta, are watching the track like a hawk. — Derek Robertson
What’s next for cryptopolitics after the midterms?
POLITICO’s Sam Sutton has a report today for Pro subscribers, as the Republican takeover of the House is all but imminent — heading toward Rep. Patrick McHenry (RN.C.), who is likely to chair the House Financial Services Committee next year and is therefore at the center of hot. -button debates on how to regulate regular crypto, stablecoins and more.
Sam writes that “McHenry’s embrace of financial startups over the years has made him a favorite among venture capitalists and crypto exchange executives, who have backed the 17-year incumbent with campaign contributions and public support,” noting that crypto-friendly VC heavyweight Andreessen Horowitz has just hired one of his top aides to run his crypto policy shop.
What the warm and fuzzy approach might look like in practice: New rules for stablecoins, easier regulation for digital-first banking platforms, and generally a flurry of crazy policy action around crypto — “If someone knows how to operate, Blockchain Association CEO Kristin Smith told Sam, “That’s him.” — Derek Robertson
