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> A quick Google search shows that they paid $11 billion for the company that sells the drug(Sovaldi), and earned $1.3 billion off of it[1] in 2016

Well, we are only 1 quarter into 2016, and you are only looking at Sovaldi (when sofosbuvir is also a component of Harvoni)?

Q1 2016 is:

- $1.3B in sales of Sovaldi

- $3.0B in sales of Harvoni

So, that's $4.3B in sales in Q1, a poor man's approximation of multiplying by 4 is $17.2B in sales for 2016 at a gross margin of 87.2%. The profit on drugs that include sofosbuvir as a component in 2016 will probably be over the $11B purchase price.

I probably misread it then.

That starts to get into the realm of being unambiguously unfair. At the very least, they probably should've paid more money for it so that the people who developed the drug could've gotten their share.

Maybe it was just a risky purchase that turned out unexpectedly successful. I've never evaluated a $10+ billion deal, but I imagine I'd be scared of it falling through if I asked for too much.

Or... $11B was a terrible price to pay, and their desire to recoup their shitty investment still shouldn't be allowed to bankrupt people who just want to live.

It's also incredibly obtuse to call $84k a "30% premium" on raising a child. There are so many people who don't (because they can't) spend close to $245k, more that can barely pull it off, and even more that shouldn't have pharma rates kept artificially inflated on their backs.

> and their desire to recoup their shitty investment still shouldn't be allowed to bankrupt people who just want to live.

The natural response to that is, "Well, okay then - we won't be investing in lifesaving medication development because we'll have to deal with constant cries of 'You're bankrupting people who just want to live!'" We already see this with antibiotics.

Now, boner pills, on the other hand - that's a smart investment. No one will complain if people can't afford boner pills.

Ultimately if we want companies to do research but not be able to charge prices, then the government should be involved. It's like the case with Turing pharma. Everyone's upset at him for buying a (very old) drug for a very rare condition and raising the prices. Yet... why was he able to buy the drug in the first place? Look there, don't blame the person that found a golden penny.

> then the government should be involved.

The government is involved. Most of these drugs would not exist were it not for the NIH.

> It's also incredibly obtuse to call $84k a "30% premium" on raising a child. There are so many people who don't (because they can't) spend close to $245k[.]

Lots of people can't afford gas at $4/gallon, and need to buy gas to get to work. But does that mean the fair price for gas is $2 or $1? Does that mean it's reprehensible to impose a carbon tax that would make gas even more unaffordable for poor people? And when oil was $4/gallon, oil companies were making money hand-over-first. Should we have forced those companies to sell oil at $2 instead?

The answer to these questions is, of course, "no." Making oil artificially cheap would badly distort peoples' incentives, undermine economic efficiency, and harm the environment. Making sure that poor people can still get around is of course an important concern, but one we can solve through the appropriate welfare systems.

Ignoring any other aspect of your comment, I would highly suggest you to do a bit more research on Hepatitis C before suggesting it only concerns "druggies" and those who "have sex with weirdos carrying diseases." In fact, a large portion of those currently impacted (and especially those who would now be in an acute condition where this drug would most likely be literally life-saving) contracted the disease through hospital blood transfusions before 1992 [1] when there was not a proper diagnostic test [2]. As such, it is a condition that very much cuts across the population and income levels.

[1] "Before 1992, when widespread screening of the blood supply began in the United States, Hepatitis C was also commonly spread through blood transfusions and organ transplants." - http://www.cdc.gov/hepatitis/hcv/cfaq.htm

[2] Though even that might be disputable per http://www.theguardian.com/society/2007/may/26/health.politi....

That does seem like a public health concern. Normally you'd recover damages from a class action lawsuit or similar, but it sounds like it was common practice at the time so nobody was acting negligent. That's just a sad state of affairs.

Gilead - or maybe even Congress/local states in cooperation with Gilead - could get a lot of goodwill by offering the cure for free in a one-time deal to people who:

* Developed Hepatitis C before 1992.

* Had a blood transfusion that likely contributed to the illness

* Can't afford to pay for the cure otherwise. To start with, let's say that you make less than $60k/year to qualify.

* Don't have insurance that would cover it

It seems about as justifiable as when the government steps in to help after a natural disaster.

Don't have insurance that would cover it

Gilead was doing that.[1] Hell, most drug companies give free drug for patients who are either uninsured or under-insured (their insurer won't pay for it).

[1]http://www.gilead.com/responsibility/us-patient-access

That raises two questions:

* The article is about someone underinsured who went to India. Why couldn't he get free drugs from Gilead instead of needing to jump through some hoops in India?

* Wouldn't insurance companies just decline to pay for every expensive treatment? Probably customers won't want to go through prolonged legal battles fighting them for $84000 if they can get the treatment for free.

Then again, $1.3 billion in a quarter is only something like 15,500 full-price treatments. The CDC site[1] says there are 3.5 million sufferers. Maybe they expect most people not to pay, so millionaires and some insured will pay.

[1] http://www.cdc.gov/hepatitis/hcv/cfaq.htm#cFAQ21

Absolutely. Possibly millions of people were exposed to HCV through the blood supply before 1992, and many still don't know they were infected. Since HCV may take 20-30 years to show symptoms, it is a potential public health time bomb. We luckily have a tool to defuse it.

For example, essentially every hemophiliac was infected with HCV due to dependence on clotting factor, many also with an HIV co-infection. 80% develop chronic liver disease.

Those populations aside, "youthful indiscretions" or even chronic addiction are not reasons for (potential) death sentences due to lack of effective treatment.

Even more interesting, the California Technology Assessment Forum (CTAF), which reviews the cost effectiveness of new technology, said the $95K price tag for Harvoni was cost effective.[1]

However, they also said that current budgets mean it would only be affordable at half the price.

[1]http://www.fiercepharma.com/pharma/ca-panel-gilead-s-harvoni...

I bet if they committed to spending $x billion, they could get it at half price just by asking. Probably even quarter or 1/8 price too.

Interesting that you mention that. Shortly after Gilead launched Harvoni, Abbvie (Abbott's spun out drug unit), launched their HCV drug (Viekira Pak).

Abbvie decided to compete on price and immediately locked in a couple very large insurance companies. Basically, they offered a discount and the insurance company/PBM (Express Scripts) agreed to lock out the Gilead drugs.

This caused Gilead to have a bit of a fit, so they offered a competitive discount and locked in the remaining insurers.

If you look at Gilead's financial statements, you'll see that the average discount went from somewhere around 20% (including mandatory gov't discounts), down to 46%. That means the average price for Harvoni dropped from $75K down to $50K. Almost half of list price.[1]

Interestingly, the average price in the US is now lower than the high end of EU prices.

And people say there is no competition in patented drugs!

[1]http://blogs.wsj.com/pharmalot/2015/02/04/what-the-shocking-...

Just out of curiosity, at what point would the cost of the drug not met your definition of fair?

I don't judge the price of the drug in isolation to be fair or unfair. A drug that costs $10 million could be fair in certain cases(if 1000 people had the disease, and it cost $1 billion to develop, then $10 million would be a bargain).

If their earnings within 2-3 years exceeded double what they paid for the drug, I consider this unfair pricing without much further thought. (Edit) After the correction from the other commenter, it looks closer to an 87% margin. So probably they should've paid more for the company to justify charging that much.

I'd say that a 20% ROI on the price of the development of the drug sounds reasonable. But the 11B was NOT the price of development; that would have been much lower. Assuming it was 1B (typical number thrown about), then a profit of 200M per year seems reasonable. Cost of manufacture of most drugs is negligible. Assuming they sell 100M pills/year, charging $10/pill (of $840/dose) seems quite fair.

How do you think Silicon Valley would work if the ROI on their unicorns was limited to 20%?

We are talking 20% ROI, year after year, for the duration of the patent (17 years). That's a 22x ROI. Most SV investors would drool themselves into a pool at the thought.

Sovaldi is a unicorn. Returns for VC firms who were early investors in Facebook were 200-100x. Sequoia and Kleiner-Perkins got 160x on Google's IPO. Sequoia's return on Linked-In was almost 30x.

I think you're just replying to the parent's curiosity, but the talk about fairness seems to hint at wanting the government to regulate how much profit private citizens are allowed to have. That to me seems scarier than anything they've done.

It does seem like they got a great deal.