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Pharma Collective Uses Blockchain to Make Less Profitable Drugs Available to Those Who Suffer

By some estimates, pharmaceutical companies will only waste their time developing a drug if it can be patented and potentially deliver $40 billion in revenue over 20 years (during which the patent is protected). And by "development," we're not just talking about the invention part of a drug's lifecycle. Certain compounds might never get invented because the market for them is too small.

Healthcare

Non-Profit

NFT

Philanthropy

By David Berlind
Published:February 2, 2024

By some estimates, pharmaceutical companies will only waste their time developing a drug if it can be patented and potentially deliver $40 billion in revenue over 20 years (during which the patent is protected). And by "development," we're not just talking about the invention part of a drug's lifecycle. Certain compounds might never get invented because the market for them is too small.

But, there's also the situation where a particular medication is efficacious to a disease the inventor didn't intend. Suppose the market isn't big enough for this so-called "off-label" application of a drug already approved for a different use case. In that case, the inventor is disincentivized from financing the required trials for the drug's additional usage. Without such trials, insurance companies are unlikely to cover the cost of the off-label use, and people are left to suffer. In other words, profitability largely governs what cures are available to sick people and what cures are not.

Enter Pharma Collective.

As one of the organization's founding members, Israel Mirsky, explained to Blockchain Journal editor-in-chief David Berlind, Pharma Collective uses the blockchain idea of Decentralized Autonomous Organizations (DAO) to remove profitability as an obstacle to the availability of promising medications. In other words, Pharma Collective is looking to reverse Big Pharma's order of priorities by putting the issue of human health ahead of profitability. During the interview, Mirsky delves into drug shortages, repurposing generic drugs, creating an engine for drug development, and how artificial intelligence impacts the discovery of new compounds and what that means for how those compounds get funded for development.

See the video and full-text transcript of the interview below.

Key Takeaways
 

  • The pharmaceutical industry has misaligned incentives that prioritize profits over human health, leading to drug shortages and the neglect of specific health needs.
  • The pharmaceutical industry has misaligned incentives that prioritize profits over human health, leading to drug shortages and the neglect of specific health needs.
  • Decentralized autonomous organizations (DAOs) provide a new approach to incentivize actions that prioritize human health and enable collective decision-making.
  • The Pharma Collective is a nonprofit investing DAO focused on enabling human health by subsidizing drug production, repurposing generic drugs, and creating an engine for drug development.
  • Blockchain technology and DAOs can potentially revolutionize various industries by removing rent-seeking middlemen and democratizing decision-making.

 

Audio-Only Podcast

 


 

Full text transcript of David Berlind's Interview with Israel Mirsky, Co-founder and Director of the Pharma Collective

David Berlind: Today is January 29th, 2024, I'm David Berlind, and this is the Blockchain Journal podcast.

Joining me today is Israel Mirsky. He is the co-founder or founding member and a director of something called the Pharma Collective.

[The] Pharma Collective is what many people in the blockchain industry refer to as a DAO or decentralized autonomous organization. and we're going to learn a little bit more about what Pharma Collective is, what it does, and how it can serve as a model for other industries when it comes to applying blockchain to enterprise-grade applications. But first, I just want to point out that you'll see some QR codes throughout this video.

Those codes are for you to either visit the Blockchain Journal website or to find Israel online. We'll put up his QR codes at the end of this video that shows you where you can find him on his various social accounts and also where you can find more videos like this one from Blockchain Journal. So, thanks very much for joining us today, Israel. Great to have you.

Israel Mirsky: Great to be here. Thank you.

Berlind: Yeah. So let's start right off with the pharma collective. What is the Pharma Collective?

Mirsky: So the Pharma Collective is a non-profit investing DAO focused on helping to enable human health. So we live in a moment where there is a real crisis in pharmaceutical pricing in this country where there are drug shortages that affect everything from insulin to childhood chemotherapy drugs.

And where the incentives in the ecosystem are really misaligned in ways that are enabling and creating those conditions. So we need to create new ways to incentivize actors within that ecosystem, within that business, to do the things that are necessary for human health and not just the things that drive the most profits for the individual extremely large companies involved.

Berlind: Okay, I'm not very knowledgeable when it comes to the pharmaceutical industry, but I have done a fair amount of reading in the business press, and I'm going to try to kind of guess at what the problem here is, but I hope that maybe you'll elaborate a little bit more. So my understanding is that if there's a big enough market, enough people who are sick with some disease of some sort, then the drug manufacturers will invest the time, the money, in the effort to develop the drug because they see the potential. of profit there. However, for those ailments that are rare where research probably could unveil some sort of remedy, that work just doesn't take place because the different pharmaceutical companies don't see enough profit in the work. Is that essentially sort of framing the idea?

Mirsky: It's a little bit more complicated than that because the numbers are so large.

Berlind: Ok.

Mirsky: So basically, in the pharmaceutical world almost all the investment flows downhill from a handful of companies, right? And those companies, because of their size and because of the amount of growth that they need to show to the market need to make a really enormous amount of money from each new drug that they put through the approval process in order to justify their cost structures and that investment.

So in order to justify a new drug, the large pharmas basically need to see about at this point about $2 billion a year for 20 years of patent-protected income in order to invest in a development effort — that is taking a drug through the phase trials — that would be necessary to get it approved by the FDA. And as a result,, the nature of the drugs that they do this with is exclusively the most profitable drugs that they can identify, not necessarily the ones that would create the most impact on human health because those things are not the same. We'll talk about some other ways in which that's the case.

But, for example, just a couple of years ago, since a couple of years ago, the vast majority of the drugs that were being approved by the FDA that were being taken through these phase trials were for example oncology drugs that extended life by weeks to months or because of some of the other incentives that the FDA offers orphan disease drugs which these drug companies can get enormous sums from health systems for but really only touch a very small number of people and where there have been some incentives in place for getting those things through.

Berlind: What does that mean by orphaned like?

Mirsky: Orphan drug. It's basically a drug that hits a disease for which there is no existing treatment.

Berlind: I see. Okay.

Mirsky: So, in the middle though there are all of these human health needs that are being underserved by pharmaceuticals and all of these types of drug programs that don't get invested in or are invested in and then killed because they threaten some existing large-patent portfolio winner that a drug company has.

So they'll buy drugs that are promising and instead of investing in taking them through trials because they might be threatening. threatening, they'll just kill them because the investment isn't worth the squeeze compared to the money that they're already making and the money that they've already invested in those drugs versus the relative amount of time that they'd be on patent.

Berlind: So there's some risk there. They buy the drug, they take a closer look at it, they decide that there's some risk associated with another drug manufacturer's intellectual property and then they just abandon it because it's not what they ever...

Mirsky: More like, imagine you buy a drug that could... You have a 20-year patent life on a leading anti-depressant that you're making billions of dollars a year on, right? And there's a drug program that's looking for a buyer out on the marketplace that maybe has only ten years or seven years or six years worth of life on it, but it looks like it might be a better antidepressant than your winning drug, but it hasn't been through the phase trials, right, to make it approved by the FDA. Well, they may buy that drug and then kill the drug program, not take it through development, because it would be a threat to X number of years of their revenue on the existing winning drug.

Berlind: I get it. All right. So they don't want some drug that's only got ten years left to cannibalize their profits on something else that maybe has 15 years left.

Mirsky: And there were a million different examples of this kind of thing where, if you are looking at it from a purely business perspective, then they're sensible business decisions. But if you're thinking about them from a human health perspective, they're terrible. And probably the biggest space for this is generic drugs, because there are over 10,000, over 20,000, depending on how you count, generic drugs that are generally recognized as safe, that have been through all the phase trials by the FDA. And no one will touch them to do additional trials on them to demonstrate that they're good for other things because you can't make that kind of money.

So there's this huge, what you'd call low-hanging molecular fruit trove that's just underutilized by us as human beings because it doesn't fit with the existing incentives within that marketplace. And that's part of what we can address with the Pharma Collective.

Berlind: Okay, now the Pharma Collective is a DAO, a decentralized autonomous organization. And before we get into exactly how the Pharma Collective solves for that particular problem that you're just describing, there are members of our audience who probably don't even know what a DAO is. So could you just describe the basics of a DAO first?

Mirsky: Sure. So, essentially a decentralized autonomous organization. At its simplest, it's a group chat with a wallet attached to it.

So where, essentially, you have some community organization features, and then the community can, as a group, decide what to invest in using that shared wallet.

So they come together, they put money in the kitty, and then as a group, they decide how that money is dispersed. That's the simplest example of a DAO. And on top of that, there can be many other DAO features and DAOs are sort of styling themselves and slowly, I think, beginning to become a new kind of organization like corporate-ish organization in that it's a group of people coming together with shared goals in order to accomplish something and using financial means not like a... not a volunteer organization.

And many of the earliest and most successful DAOs were investing clubs of one kind or another. There are certainly other types of things that exist now that are DAOs, but the investing club is a pretty well-understood version of a decentralized autonomous organization.

Berlind: Is it safe to assume that somebody who joins a DAO, like the Pharma Collective, and throws "money into the kitty" as you say, that they're looking to maximize their return on that investment?

Mirsky: Historically, yes. So in your ordinary investing, DAO, that would be the case. Because what we're trying to accomplish here is really about human health as opposed to being about purely a profit motive, we're a nonprofit, at least as it's currently envisioned, no profits will flow back to organization members, to DAO members.

What will instead happen is that the collective goal of that group will be driven forward. So whether that's helping to produce insulin or that's helping to repurpose drugs or helping to get various psychedelics approved for use in human beings, those are all goals that the group as a whole can undertake. And the other thing to keep in mind about this is there's a way for this to be very self-sustaining once we get going.

So there's a model for nonprofits to subsidize and make an impact as a group that we've seen trodden before. So, the Cystic Fibrosis Foundation worked with Gilead to develop a drug for Cystic Fibrosis a few years ago, and they were successful. And the nonprofit ultimately was able to receive about $10 billion as I've heard it in the final accounting from Gilead for the investment that they made.

If we accomplish even a small percentage of that, the amount of impact that we'll be able to have on global health is going to be really, really significant in some of the ways that I'll talk about in a few minutes when we talk about the nuts and bolts of what the Pharma Collective will do.

Berlind: What is the incentive for somebody to join something where they're not expecting to maximize their return on investment? I mean, are we looking at a category of people who this is just a very personal thing to do and so there's enough of them? You can get some money flowing to get behind some some sort of drug development.

Mirsky: I think in this case that's the truth so we've all been impacted by the state of our current health system . It's not working for a lot of people. So I think this is a case where Your collective action where people donating to a non-profit that ultimately is not looking for them to donate forever but is looking to create a self-sustaining approach to solving problems that are very intimately personal for them, not being able to get insulin, their kids not being able to get chemotherapy drugs.

Problems that are impacting millions of Americans as soon as they hear that there's a way to address this as a group, people get very excited about it. So I think that's the opportunity here. I think in other places, there are models for doing this that are a little more hybrid. So think like a B Corp or a public benefit corporation, where there's a profit motive and a social motive. And we've evaluated and continue to evaluate whether or not there are ways to work with B Corps in order to accomplish some of these goals.

Berlind: Okay, so if we think about the people for whom this is personal, do you need a certain critical mass of those people?

Well, let me back up. Is the collective divided into categories of remedies or specific...

For example, you mentioned insulin. Maybe there's a whole bunch of people who can't get insulin, and they see this is an avenue. So you have enough of those people who jump into the insulin part of the collective, then they can potentially get some insulin flowing for their family member or something like... How does...?

Mirsky: So the way to think about that is yes, everybody has their own pet projects and needs, right?

Berlind: Sure.

Mirsky: And so... and the kitty is only so large at any given time. So we have to decide which proposals get funded and which proposals don't get funded. And ultimately that's the job of the DAO to help to do.

So, if you want the money from this collective treasury to flow in the direction of the areas that are most relevant for you, your job is to be as involved as possible to spread that message as far as possible and to get as many other people like you to be part of the group so that as a group you can impact that goal.

Berlind: I see.

Mirsky: And... yeah.

Berlind: So, the different people who are contributing... If you can find enough people, if there's a chat group out there, a Facebook group or something, where there's tons of people who all kind of see a common problem, common cause in the drug development industry, they might all kind of get together, "Hey, this is a pretty good option, let's all get in there. Let's all contribute some amount of money." And then they also have some influence over the governance of how the money from the collective is spent and maybe allocated to that particular drug development.

Mirsky: That's correct. So for example, last year, I think it was last year, there were some really major shortages of children's Advil and Tylenol. Acetaminophen and Ibuprofen. And if this had been up and running at that point, parents could have gotten together very readily, contribute a few bucks, and fixed the shortage problem in this country.

A big part of the reason that that occurs is because the margins for pharmaceutical generic production tend to be quite thin.

And so, companies have to make bets about where they're going to spend their time and effort in order to successfully produce the necessary drugs. You do something like this, and you essentially de-risk that process because the the DAO can basically give a loan to the producing company to produce the drug, and they know they have a market for it, and the risk is really limited to both parties.

You've basically de-risked the transaction of producing those generic drugs for that market within that environment in a sustainable way, because you're not just... you're not donating. You're not saying like, "Oh, here's a donation for producing my Advil or my acetaminophen. You're acting a little bit like a bank but definitely, like an investing organization that removes risk from the equation of generics manufacturing.

Berlind: Why would the company that normally produces that not already be doing it if there's a sufficient market for it? If there's this many people who are willing to contribute to a DAO, wouldn't some producer of generic ibuprofen see that and say, "Okay, there's something here." Why would they actually have to go get a loan from a DAO? Why can't they get a loan from a bank?" or somebody else? Why does this have to exist through blockchain and a Dow versus any other traditional finance structure?

Mirsky: I mean – I think it probably could... Probably could get a loan from a bank, but it might be a lot more difficult to justify that loan. And we can probably give better terms than the bank loan could, because...

Berlind: I see. Oh, so there's a market...

Mirsky: Yeah.

Berlind: There's enough parents who are worried about this, and they're committed. Whereas a bank could care less.

Mirsky: Exactly. It's just like, hey, what's the interest rate you're going to give me on this loan? Well, we don't care. It's a self-sustaining effort. We want to make some small level of profit in order to continue growing the momentum of the effort. But ultimately, if it's important enough, that doesn't really matter. Right? like what what really matters to us is the human health goal that's associated right, and that's what really sets this apart.

Berlind: Right.

Mirsky: That's why it's it's valuable for us to have a mission that is human-health focused as opposed to purely profit-focused because when you focus purely on profit, you end up in the places where we've ended up.

Berlind: Right.

Mirsky: Your values are misaligned with your needs.

Berlind: And of course, the banks gonna not only look at the interest rate they can make but they're gonna look at the actual business profit, what it is that's being developed, and they're going to make some decisions about the viability of just that product in the market.

Mirsky: Or try to, if they're even sophisticated enough to do so. So let's talk about some of the other things that we can do here, right?

Berlind: Ok.

Mirsky: Because production subsidization is the lowest hanging fruit, and the first thing that we're definitely going to do.

But above that, there's a whole universe of other things that we can do. So, let's talk about repurposing for a minute. So my co-founder, Genarro D’Urso [Ph.D.], he has a company called Genetic Networks out of Florida.

They focus on drug discovery using yeasts. So he started the company with a Nobel Prize winner, and some of that Nobel Prize winner's subsequent work, focuses on this idea called modular biology. Essentially, you can use yeasts to screen drugs for efficacy in human beings, right? It's very effective high-fidelity technique. Now, during the pandemic — very quickly after it became clear that this was going to be a global pandemic — Genetic Networks screened seven drugs using their technology identified seven drugs that were very likely to be efficacious for reducing hospitalization in COVID.

And subsequently, they were able to show that two of those drugs in combination actually did reduce hospitalization by over 53%. Could have had a massive effect on the global pandemic, right?

Berlind: Sure.

Mirsky: When they took these opportunities to pharmaceutical companies, they couldn't get anyone interested in doing the phase trials to demonstrate whether or not this was actually true to test these drugs for efficacy. Why? Because they were generics. They were not investigated because no one could make enough money from producing them. And as a result, we suffered through far more deaths than we otherwise would have had to do, right?

That infuriated my partner and really catalyzed the repurposing-focused mission part of this. So there are, as I said, over 10,000 generic drugs that are generally recognized as safe, many of which are good for other things than what they were originally studied for, but no one will touch them.

So we need an entity and a means of investing in those drugs in ways that make sense for human health.

Berlind: So we'll take the low-hanging fruit first was just, "Hey, there's a market that's living and there's enough of a market for something, and nobody's recognizing it. The banks don't want to fund it so this can help get...

Mirsky: We've got shortages...

Berlind: Yeah.

Mirsky: We've got a way to address the shortages. Let's deal with that." That's the simplest thing. But the level above that...

Berlind: Is the research.

Mirsky: Is really impactful for human health, right? It's like... so if... Because generic drugs have already been through all three phases of FDA trials, if you want to prove that they're good for something else, you don't have to do phases one and two. You can just do a phase three trial.

You can say all right I think that this drug is good for heart disease, right? Based on the fact that it's being used, off-label for heart disease all over the place, right? But no one will pay for it within the health system because it isn't proven, or what have you, right? Just as...

Berlind: Insurance companies, for example.

Mirsky: Insurance companies won't take it.

Berlind: Insurance companies won't pay for the medication because it hasn't been approved for that particular...

Mirsky: Because it's off-label. Ketamine is actually a perfect example of this, right? So ketamine is being widely used off-label for treatment-resistant depression, to the point where there's clinics across the country,  people in my family included, who have been positively impacted by ketamine, which is a generic drug for treatment-resistant depression and for postpartum, like magic, right? But the insurance companies will not cover it because there is not enough – no one has done the work to get it through the phase three trials for treatment-resistant departments.

Berlind: Just need a phase three trial, and you're done.

Mirsky: And there are some efforts to do that. So if you do that, if you do it and you do it in a particular form, you can get something called a 505(b)(2) patent from the FDA, which is not a 20-year patent that's exclusive for any use of the drug.

It's just a temporary patent that gets you three to seven years for that form and that condition. And with that patent, you can make tens to hundreds of millions of dollars producing that treatment for that issue, but you can't make billions, right?

With this comes the opportunity for a repurposing model that is publicly responsible. Because we can take a drug that is a generic drug that we know is safe for use in humans. We can get it approved by running a phase three trial on it for a couple [of] million dollars. Your average phase three trial is $2 to $20 million, and if you're really smart about it and you use telehealth and some of the things that we developed during the pandemic to do things like administer the medication, you can really drop a lot of those costs.

Half of all trial costs are site costs. So just bringing people physically to a place and when you cut that out, you can really reduce the amount of cost for doing this.

You run that trial, and you get that temporary patent, and then you reinvest those profits in doing it over and over and over again. We can create an engine for drug development in the public interest that does not exist in the current ecosystem.

Berlind: It's not even drug development. It's just drug testing, quite frankly.

Mirsky: So in this world, we refer to finding the substance as "discovery" and we refer to taking it through phase trials, like one, two, and three, and then production as "development." That's sort of the way that language is used.

Berlind: The vocabulary.

Mirsky: Yeah, the vocabulary of the terms of art, right? So a lot of people talk about de-sci in this space.

We really think of ourselves as de-dev and de-sci as being sort of that primary substance identification thing. And what we're doing is really about stuff to market.

Berlind: So I imagine that this is going to get even crazier because one of the things that I heard about recently, I believe it was on NPR, was that artificial intelligence...

Mirsky: Yes.

Berlind: ...Can like very quickly – some of the better artificial intelligence can very quickly identify some of these mixtures that are likely to solve a problem, or even molecular, you know... I don't know anything about, about the field, the science, but literally discover that artificial intelligence can discover the probability of some new molecular combination that had never been attempted before and its efficacy against some particular disease, so much faster and so much more cheaply than anything else that's in existence today.

Mirsky: It's so exciting.

Berlind: Yeah.

Mirsky: It's a really exciting moment in that space, and actually, the combination of that technology I was talking about before from Genetic Networks, that raw data combined with artificial intelligence is a really powerful combination together. Because of course, living biological systems are incredibly complex, right? So, part of the challenge with artificial intelligence is that the level of complexity can be so high that unless you have a truly enormous amount of data about the genetic response of various genes to given pharmaceutical compounds. It's... you don't have the right kind of data to make the right kind of inference about what's actually happening.

But we do see a huge opportunity coming up in that space. The problem is going to continue being the case that, even when we identify good opportunities, unless they're patentable in the way that they will result in the kind of what we just discussed, $40 billion worth of revenue, and, you know, as that continues to go up as inflation increases, they're not going to be researched. So we need publicly responsible investing organizations that have goals that aren't just that in order to bring the type of human health impact that we want to see from artificial intelligence to the marketplace and to the people.

Berlind: Okay, we talked all the way through this and we talked about the low-hanging fruit, maybe, I don't know, is there any more...

Mirsky: High-hanging fruit?

Berlind: Fruit above the...

Mirsky: Yeah, yeah. So, the high-hanging fruit. The high-hanging fruit is competitive on patent drugs. So if you... you're going to subsidize the production, you're going to repurpose generics, and then once you have a sufficient... Let's say we are successful with two or three different programs or several different programs at the multi-hundred-million dollar level, right? Or we get a really big donation from the wealthy individual who's seeing the impact that we're having right at that point...

Berlind: Or who has a relative...

Mirsky: Or who has a relative, right? They want to get something researched.

Berlind: They'll do anything.

Mirsky: They'll do anything, right? So, at that point, You can do development from phase one through phase three.

So, you know, there's...I have a lot of suspicions about the reasons that some of these drugs cost so much to get through phase trials. Some of it might be regulatory capture, but some of it is probably just that it serves these companies to have high expenses in some of these spaces because it allows them to help to justify the cost that they ultimately charge on the other side.

Berlind: Right.

Mirsky: But if you can take a drug from absolutely off-patent to on-patent that serves a lot of people, then now we're talking about billions of dollars, and we're talking about billions of dollars into a non-profit focused on human health, not profit, right?

Berlind: And you talked about the math earlier. You said that it was like, I want to say, two billion dollars a year for twenty years or something like that. That's where you get the $40 billion, but that number is just going to keep going up over...

Mirsky: Absolutely.

Berlind: We're in a moment in time...

Mirsky: And it's a huge chunk of our spending as a society on pharmaceuticals.

Berlind: Yeah.

Mirsky: And the vast majority of the spend is on patent drugs, not on generics.

So it's $95.5 or something crazy like that, even though the prescription, in terms of the amount of drugs that we take, that's completely flipped.

Berlind: So for our audience, when we talk about a DAO, we talk about... So, I think we understand the basic structure here. Can you help them to understand where blockchain plays a role? Like in your DAO?

Mirsky: Sure. So, blockchain essentially allows us to democratize the voting around how the treasury is deployed.

So it's actually a two-stage process where we have, because we're not expecting our members to be able to vet the proposals that are coming through effectively, right? Your average person can't decide between a scam and a real proposal, but we have... we started this company, this nonprofit, with some really sophisticated scientists and researchers. So we have volunteers who can function in an advisory role to review the proposals that come through and identify the ones that are real across a bunch of dimensions in terms of financial viability and whether or not the companies involved are reputable, et cetera.

So those that are real come through for an up-down vote by the rest of the DAO group. And that's where your insulin community versus your childhood chemotherapy community versus your other community...

Berlind: Ketamine.

Mirsky: Your Ketamine community or what have you, that's where that comes into play. And they decide, "OK, which one are we gonna do next? How are we deploying the treasury now?"

Mirsky: So the treasury's the money that's going in. It's probably going in, and then there's a token that's associated with the DAO. It's a governance token...

Mirsky: We're actually... We plan to do governance NFTs...

Berlind: Oh. Ok.

Mirsky: Because one of our  –at least at the moment , one of our – fundraising approaches that we're exploring is collaborations with artists.

So you could get a real digital artist whose art has value by virtue of their previous work doing a collaborative collection with us where your entrance NFT is their thing, right, is their piece of digital art. And we split the proceeds and it's basically partly a donation from them to us and partly a collaborative marketing effort.

Berlind: I see. So just people understand the mechanics mechanics, you have some US dollars, you have to go to an exchange maybe, trade that in for the token that we're talking about.

Mirsky: Yeah, essentially...

Berlind: Yeah.

Mirsky: Essentially yes. You probably need at least USDC, although some of these platforms now will enable you to purchase more directly with USD via ... like a Square-based on-ramp.

Berlind: I see.

Mirsky: But, we're trying to make that as painless as possible going forward.

Berlind: And are you on our particular blockchain?

Mirsky: I am not able to disclose that at this time.

Berlind: Oh, okay. So we're not up and running yet.

Mirsky: So we're running in terms of we're taking donations, our white papers [are] done, we're actively working with companies that would be the first few proposals associated with funding, and we're very actively working against fundraising with high net-worth individuals...

Berlind: I see.

Mirsky: Because that would be very helpful within this environment to rapidly get up and running. But in terms of the voting logic, that is not yet complete. And as you would imagine, there are several L1s and L2s who...

Like, look, this starts to do what we're talking about doing here, and it changes the whole conversation around blockchain.

Berlind: Sure.

Mirsky: Because the discussion of "Oh, this is only good for money laundering", or "This is like the technology is not mature enough to have a real impact on the world."

Well, we start producing insulin, we start producing childhood chemotherapy drugs. And it's because a DAO is helping to direct these kinds of funds against human health goals?  And we build a drumbeat of those stories, we're repurposing medications, that completely changes the discussion.

Berlind: Sure, because right now, blockchain has a pretty good PR problem, right?

Mirsky: Right, exactly.

Berlind: Not helped by crypto or anything like that, or Sam Bankman-Fried.

So let's... you know, we understand blockchain, we understand the DAO, we understand the application here and the cause, it's very... it seems very noble, not quite off the ground yet. So where can people find more about this?

Mirsky: Go to a pharmacollective.io. We also have a PharmaCollective on Twitter and Instagram, but just go to the website, sign up for the mailing list. We will keep you apprised of all the developments, and we are very actively working with some L2s to make a lot of progress quickly, as you can imagine those grant programs are very interesting from the perspective of getting something like this off the ground.

Berlind: So you're looking for maybe some investment from the L2s and the L1s that have funds?

Mirsky: Yeah, the L2s and the L1s that have that have large treasuries, because, really we're gonna start making a significant impact. You need some money to get started, but once it's running – because this is a self-sustaining engine here – we don't necessarily need to keep taking on additional dollars, but we kickstart this and it's gonna start moving pretty quickly.

Berlind: You mentioned, we talked about the PR problem that we're dealing with.

Mirsky: Yeah.

Berlind: I just wrote an article, a whole article about that, by the way, "Lawmakers and Business Person's Guide To The Non-Crypto Applications of Blockchain" and talked a little bit about the PR problem that blockchain has and how it's so tightly associated with crypto and all the bad news about crypto.

Mirsky: Yep. Yep. Yep.

Berlind: It's just kind of like... So what other industries? I mentioned that we're gonna talk about this in, you know, what other, this is an interesting model and you know, everybody can understand it. I think everybody's got to, as you pointed out, we all have somebody in our family who is suffering from something, and we feel like there could be more done to address it and more in the way of drugs. And boy, oh boy, I think a lot of people would be upset to learn, "Oh, wait a minute, there's actually a better drug that could be done, but it's been killed because of the profit situation" or something like that.  That's... You just feel robbed when you hear that, whether you're a family member or the patient themselves. So, where else does this sort of dynamic exist where you think DAOs could apply?

Mirsky: You know, I think any place where the incentives are really dramatically against the smaller midsize players.

Berlind: Is there another example of that besides the pharmaceutical industry? There must be something. I can't think of one off the top of my head, but I'm sure you think about this every day.

Mirsky: So, I do spend the vast majority of my time thinking about the healthcare implications of this.

Berlind: Yeah.

Mirsky: But you know I think I think we've seen a bunch of DAOs... So, if you want to collectively invest in something where there is like... you can't effectively compete against larger players as...

Berlind: Renewable energy development.

Mirsky: Renewable energy development, [is a ]great great example.

Berlind: Yeah.

Mirsky: So we need to be able to effectively purchase against a large player in the industry as a group of individual manufacturers. We need silicone or, we need panels, right? I think DAO organizations for small and mid-sized players that essentially function as Groupon for industry are a really interesting potential application.

Berlind: I mean we're really just talking about an alternative to channel for philanthropic efforts to take place than to, you know...

Mirsky: Well, in this case, it doesn't even necessarily have to be philanthropic, right?

It can just be about aggregating buying power and investing power in ways that are good for entities to work as a group where nobody has to be the leader in that way that it's historically been the case, right?

Berlind: Right.

Mirsky: So, let's say in that space, you've got a massive, massive solar player right who can as a result of their size can purchase panels for vastly less than any of the smaller players right?

But if you aggregated all the small installers together, they'd be as large or bigger than that player. So, how do you help those small installers get the prices that the big players are getting?

Berlind: Yeah you want to get a cooperative going.

Mirsky: Exactly you need some kind of cooperative. Well it historically whoever runs that cooperative has an undue amount of influence over the impact and too much information versus the other players. Well, the DAO sort of fixes that problem, right?

Berlind: Because nobody's in charge.

Mirsky: Nobody's in charge. It creates a voting mechanism where everybody's participating transparently in the decision about how to deploy that cash, right? So that group of manufacturers can get together and transparently negotiate together for the kinds of deals that the larger player is getting, right? I think that opportunity...

Berlind: I think about TradeLens, right?

Mirsky: Yeah.

Berlind: You probably heard of that. The whole thing went down [and] didn't work out because two companies were in control of the whole thing.

Mirsky: Exactly.

Berlind: It was a whole idea of forming a cooperative in the supply-chain industry, but the problem was, is that still two companies control the whole thing, you know, IBM and Maersk.

And so, therefore, a lot of other companies that might have otherwise participated were like, "Wait a minute, those two companies get an unfair amount of undue influence over the whole decision-making all the..." so no. You know, imagine if that had been a much more democratized process. Then you might have seen many more companies get involved.

Mirsky: And it still could, right? That's still an opportunity. I think blockchain and DAOs have only just begun to sort of penetrate the market. Like the great promise of blockchain has always been [to] remove [the] middleman, right?

Berlind: Yeah.

Mirsky: Remove rent-seeking middleman. And I think there's a version of that that is remove or reduce the power of like massive, massive...

Berlind: Yeah.

Mirsky: Industry-distorting player, right?

Berlind: I like that, remove rent-seeking middlemen. That's a really good metaphor to use when you're talking to people about the value proposition of blockchain.

Mirsky: Exactly, anytime you're looking at your industry, and you're thinking to yourself like, "Okay, where does blockchain apply?" Figure out who's extracting the most rent between you and your customer or you and your supplier. Along those chains, right? There's almost certainly an application for blockchain in there somewhere.

So where's the rent? That's where you'll see where the opportunity is for blockchain.

Berlind: Disintermediate the middleman.

Mirsky: Exactly, exactly.

Berlind: Well, Israel Mirsky, you're the co-founder and one of the founding members...

Mirsky: No, co-founder, co-founder.

Berlind: Yeah, co-founder and director of the Pharma Collective. We'll put up some contact information for the Pharma Collective and for you. Thank you very much for joining us on the Blockchain Journal podcast.

Mirsky: Wonderful to be here. Thank you so much for the time. Looking forward to more from all of your members.

Berlind: Thank you very much. You've been listening to the Blockchain Journal podcast. I'm your host, David Berlind.

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