Robin Cook - Death Benefit

“. . . and Paul, who had more than five years’ experience at the Department of Defense.” Edmund drummed his fingers on the desk.

“Okay. The work we did last night-all night, in fact-was to estimate how a shift to the right of the bell curves we previously created on the timing of the redemption of the life insurance policies LifeDeals holds would affect cash flow. We’ll have the formal report in a day or two but we can give you a preliminary one today. I have to say, we were surprised.”

Henry paused and took a sip from a glass of water.

“We were surprised how quickly even the slightest shift of the bell curves would affect the company’s financial situation. It would create a period of time in which the payment of premiums would need to be continued to maintain policy values with limited income. This effect is predicted because of the steepness of the bell curves’ slopes. As we know, once the policies start to be cashed out by LifeDeals, income can be expected to rise very rapidly, which is why we had strongly recommended that you maximize your purchase of life settlement policies in relation to capitalization. Everyone clear on this?”

Russell nodded vigorously. There was nothing new here.

“Okay, good. Next we looked at the life-span statistics of individuals lucky enough under current procurement and distribution protocols to get a new organ, be it a lung, a heart, a liver, a kidney, or a pancreas, depending on which degenerative disease is involved. We found that getting an organ alters these people’s life expectancies to a marked degree. Understand that we already factored in standard organ replacement rates in the preliminary data that we all approved, and it was at that time a small variable. But the new circumstances, the potential new circumstances, I should say, caused us to drill down into those statistics further and find different research that previously wasn’t relevant.”

Henry paused again to take a drink. Edmund was fit to burst.

“There are newer statistics which show how well new organs work for patients over a long period. The older figures implied that organ recipients still had the propensity, whatever it was, to affect the new organ and often adversely. But to a greater extent than we initially would have expected, new organs, or at least a large percentage of them, do very well over many years provided it’s a good match. Of course newer antirejection drugs have helped as well. In many or most cases, ten to fifteen years of life expectancy can be added to patients’ lives. In lay terms, it appears that you can put a new radiator in a beat-up car engine, and it doesn’t matter so much how you drive. The radiator’s going to hold up.

“We applied these newly developed statistics to the bell curves of LifeDeals’ policyholders and there’s no way around it-the implications are pretty catastrophic for cash flow if a percentage of policyholders get new organs. The higher the percentage, of course, the more catastrophic the effect.”

“What percentage?” Edmund barked.

“Well, the problem seems to be that the cash flow issue starts almost immediately with just a small shift to the right. Just a few percentage points.”

“What do you mean by ‘a few’? Five? Ten?”

“Er, five’s not good, ten would be, as I said, catastrophic.”

“So we’d need five to ten percent of diabetics to get a new pancreas,” said Edmund. “What are the chances of that happening?”

There was silence.

“These are not rich people. They won’t be able to afford it. It’s fucking pie in the sky.”

“Not necessarily,” Tom Graham said, speaking up for the first time, his voice surprisingly deep. “What you said about people not being able to afford it. Look at the statistics. There might well be thirty-five million people with diabetes in this country. It costs something like a hundred and fifty billion dollars a year to treat them. You think insurance companies won’t want to jump on this opportunity? How about state programs that have to carry the cost of these people for decades? Not to mention Medicare, Medicaid. Even far-right politicians are going to find a way around their qualms about stem cells because who won’t want to help get twenty, thirty million Americans healthy? It’s a magic bullet. If it works, it cures people. And once the organ is accepted, it costs nothing . Pancreas doesn’t work? We’ll grow you a new one and you’re welcome. People have been searching for decades for a way to reduce healthcare costs. Regenerative medicine is going to be the answer.”

This was worse than Edmund had dared think. He was a salesman; he knew that even if not every diabetic got a new pancreas, the idea of buying diabetics’ life insurance policies in a climate in which people could receive a new organ was suddenly looking very outdated, like investing in steam engines after the Model T Ford was produced.

“This is all laid out in the final report?” Russell asked.

“It will be,” Henry said. “It’s summarized in the report we’ll be giving you today.”

“Of course, this is all confidential.”

“Of course.”

“But it’s all dependent upon the date induced stem cell organs will be available,” Edmund said. “It’s not happening next week. At least I assume it isn’t. What is it-two years? Five years? Have you looked into that?”

“Perhaps Ginny here might speak a few words in that regard,” Henry said. Sitting next to Tom Graham, a tall woman with long black hair nodded to Henry. She shared Tom’s fashion sense and was wearing a T-shirt with a bright image of a robot on the front.

“I read the journals I could find online and tried to figure out some kind of timeline, but the articles in this arena aren’t very speculative. It’s a new technology so there are no statistics to predict such a big leap in something like regenerative medicine,” Ginny said.

Ginny proceeded to talk about the rapid developments already accomplished for stem cell maturation into specific cell lines by researchers around the world. “The next step would be to turn these cells into organs or organ-like apparatuses by a process called organogenesis. This work is going on in Russia, in China, in Germany, but it’s having the most success at Columbia University with Doctors Rothman and Yamamoto. Rumor has it that these two researchers have already formed whole organs, which have been transplanted back into the mice that donated the cells from which the organs were formed. Supposedly in the next month or so there’s going to be an article in Nature about it with all the supporting data. Apparently they have had such success that they’ve already requested clearance from the FDA to do it on a human. They’re waiting for FDA clearance for the next step,” said Ginny.

“And when might that happen?” asked Edmund.

“I did talk to one scientist friend last night,” Ginny said. “He told me no one knows, but the best guess is in the next couple of months.”

“As far as the business angle on this, the numbers strongly suggest that partial remedy would be provided in circumstances like this if the party holding the policies were to raise capital immediately as a hedge against this newly raised eventuality.” Henry was taking over in the hope of wrapping up the meeting. Edmund’s fuse was getting shorter by the minute, he could tell. Henry was now practically reading verbatim from a script.

“We already ran revenue models for you based on the idea of securitizing tranches of life insurance policies, and while it’s difficult to build into the models the prospect of degraded assets, in the final report there will be a recommendation that the securitization proceed immediately and that a significant portion of the funds obtained be set aside to satisfy premiums on those policies that will have to be carried longer than expected. As far as additional life settlements, it would make sense to buy only those life settlements involving individuals with clearly terminal illnesses like metastatic cancer . . . ALS . . . things like that.”