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Comment by paulcole | Hacker News Reader

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

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.

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.

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