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I'm curious: what would be a per-unit price you would consider too high? Of course it has high R&D costs -- no one is suggesting otherwise. I'm not even sure wh

I'm curious: what would be a per-unit price you would consider too high? Of course it has high R&D costs -- no one is suggesting otherwise. I'm not even sure what your point is -- that it is monopoly pricing, but because they have a competitive advantage and because they can charge a high price for it?

sdinsn 6y ago
> what would be a per-unit price you would consider too high? If the price is too high, then no one will purchase it. Therefore, Gilead makes no money. Obviously, Gilead wants to make money. So they will decrease the price to attract customers, ultimately finding a ideal price that maximizes the balance between profit margin and customer volume. There is no such thing as 'too high' of a price, as long as you make the safe assumption that companies are in fact interested in making money.
- ajsharp 6y ago
  > If the price is too high, then no one will purchase it. Therefore, Gilead makes no money. This is great in theory but is entirely inapplicable and utter non-sense in practice in a health care context, and in this instance in particular. My original commend made mention of inelasticity of demand. When people's lives are at risk, there is no demand curve and equilibrium. The price is what the supplier says it is. It has nothing to do with what the market will bear, or whatever other macro 101 theoretical framework you're applying to this reality. It's different in almost every possible way than say, going to the grocery store and deciding if a box of cookies is too expensive for the value you're deriving, and whether this alternative or that alternative is a better value. Maybe you don't know much about how billing and payments in the health care system works, or the exorbitant costs for things that happen in a hospital setting that are completely untethered to what anyone would be willing to pay in a normal market. > Obviously, Gilead wants to make money. So they will decrease the price to attract customers, ultimately finding a ideal price that maximizes the balance between profit margin and customer volume. Again, this isn't a b-school case study. Your mental model doesn't apply here.

sdinsn 6y ago

> what would be a per-unit price you would consider too high? If the price is too high, then no one will purchase it. Therefore, Gilead makes no money. Obviously, Gilead wants to make money. So they will decrease the price to attract customers, ultimately finding a ideal price that maximizes the balance between profit margin and customer volume. There is no such thing as 'too high' of a price, as long as you make the safe assumption that companies are in fact interested in making money.

ajsharp 6y ago
> If the price is too high, then no one will purchase it. Therefore, Gilead makes no money. This is great in theory but is entirely inapplicable and utter non-sense in practice in a health care context, and in this instance in particular. My original commend made mention of inelasticity of demand. When people's lives are at risk, there is no demand curve and equilibrium. The price is what the supplier says it is. It has nothing to do with what the market will bear, or whatever other macro 101 theoretical framework you're applying to this reality. It's different in almost every possible way than say, going to the grocery store and deciding if a box of cookies is too expensive for the value you're deriving, and whether this alternative or that alternative is a better value. Maybe you don't know much about how billing and payments in the health care system works, or the exorbitant costs for things that happen in a hospital setting that are completely untethered to what anyone would be willing to pay in a normal market. > Obviously, Gilead wants to make money. So they will decrease the price to attract customers, ultimately finding a ideal price that maximizes the balance between profit margin and customer volume. Again, this isn't a b-school case study. Your mental model doesn't apply here.