[nsagent]

The consumer costs are significantly lower for software. For example, the cost of ChatGPT is minuscule in comparison, while the R&D costs are still quite high.

The real difference between the two sectors is that for medicine, you have a captive audience. People are willing to give up their life savings for certain medical interventions. That same cannot be said for software.

[ericd]

The other real difference is that the addressable market for most drugs is quite small in terms of number of customers. The vast majority of people just don’t need a particular medicine, especially the life-saving variety. The more niche, the more you have to charge to make up for the large R&D costs.

There are, of course, also instances of gouging. But it’s not like these things should inherently cost $20/mo, or whatever, if you want to be able to pay biomedical researchers enough not to go do something else highly compensated like finance/consulting/whatever. Sadly, I had a lot of classmates in engineering school who went that route instead. We urgently need more nuclear reactors, but one of the smartest guys I know, a nuclear engineer, is doing healthcare private equity.

A lot of saas is more like $200+/mo for businesses, and chatgpt might be $20/mo for consumers, but there are companies paying $1m/mo or more for that api.