Here is a comment I made to this post by Matthew Herper on his Medicine Show blog:
I wonder how much of it is due to the notion that seems to be accepted by society that it is distasteful and evil to want to try to profit from peoples’ sickness and misery. Things like Facebook or Google, etc., nobody’s life is depending on those and they’re cool and hip, so hey, its okay that those guys are billionaires. But how dare you think of profit when I’m sitting here dying from cancer! My life is at stake here and all you’re thinking of is your greedy profit motive! How evil you pharma companies and biotechs are!! Etc. Etc. I think a lot of people tend to think that way and collectively it could be a downward pressure on profitability. Maybe the scientists starting the biotech companies also (maybe subconsciously) think this way too and it causes them to be less ruthless in the business decisions they make (e.g. well, I could hold out longer for a better offer so I could keep more of the money myself, but by selling out now at a lower profit we can get the new medicine to the people who need it quicker. Etc. Etc.)
Finally, medicine is something that you really can’t choose to not use (like you can choose to use Facebook or Google or not). If you get sick and there is a medicine for what ails you, you will do everything in your power to get it. So because of this there could be incredible societal pressure to make sure medicines are as affordable as possible (thus minimizing profit). Anyway, the other posters’ ideas around longer time horizons, etc. are also likely part of the story, just wanted to add another idea
