Biotech Values

[DewDiligence]

>I still cannot understand the fascination with drugs. At 10%-15% of the cost of the system…<

The reason people are focused on drug costs rather than healthcare costs in general is the disparity between fixed cost and variable cost.

For surgery, hospital stays, and ancillary services, anyone one can readily see that variable cost is high: labor is involved and everyone knows that people don’t work for free.

But drugs are different. People don’t picture the fixed cost of the colossal effort that goes into drug discovery and development; instead, they think of how little it costs to make one pill. It’s dumb, but it’s human nature.