This is a fantastic writeup. There isn't a lot of great info online about the business of pharma but this is a great intro that hits on a lot of key concepts.

This is a fantastic writeup. There isn't a lot of great info online about the business of pharma but this is a great intro that hits on a lot of key concepts. If you play around with a model like this you see how important biology is. the risk that something that works in mice but fails in humans is the biggest reason drugs are so expensive to develop. Front loading this risk / lowering the cost to "derisk" this risk is one of the most important things to focus on One other concept that's incredibly important but not discussed is "unmet need", i.e. How underserved are patients by standard of care. For a fatal rare disease, unmet need is high; for a disease with drugs that already work pretty well the unmet need is low. Unmet need + clinical benefit (how much does your drug make patients better) determines clinical value, which is roughly correlated with price you can charge. Price isn't directly determined by cost-benefit calculations in the US, but it's harder for payers to deny a drug if it would save lives, while payers can easily sideline for ex another slightly better yet more expensive insulin Some people view the phenomenon of higher prices for higher benefit as exploiting sick patients; I don't think that's entirely fair although in cases like Martin shkrei it is. I've always thought of it as aligning drug makers incentives with the sickest patients -- you only have a viable product if you are providing immense clinical benefit to very sick patients. So r&d is very focused on diseases with severe unmet need. These days roughly half of drugs are developed for patients with severe rare disease or late stage cancer, as most other diseases aren't financially viable