SecProbe.io

June 26, 2012

Via E -mail
Ian F. Smith
Executive V ice President ,
And Chief Financial Officer
Vertex Pharmaceuticals I ncorporated
130 Waverly Street
Cambridge, Massachusetts 02139

Re: Vertex Pharmaceuticals Incorporated
Form 10-K for  the Fiscal Year Ended December 31 , 201 1
Filed February 22, 201 2
Form 10 -Q for the Quarterly Period Ended March 31, 2012
Filed May 10, 2012
Form 8 -K dated April 26, 2012
Filed April 26, 2012
Form 8 -K dated February 2, 2012
Filed February 2, 2012
File No. 000-19319

Dear Mr. Smith:

We have limited our review  to only your financial statements and related disclosures and
do not intend to expand our review to other portions of your document .  In our  comment s, we ask
you to provide us with information so we may better understand your disclosure.

Please respond to this letter within 10 business days by providing the requested
information or by advising us when you will provide the requested response.   If you do not
believe  a comment appl ies to your facts and circumstances, please tell us why in your response.
Please furnish us a letter on EDGAR under the form type label CORRESP that keys your
response s to our comment s.

After reviewing the informati on provided, we may have additional comments and/or
request that you amend your filing s.

Form 8 -K filed February 2, 2012 and Form 8 -K filed April 26, 2012
Exhibit 99.1

1. In these exhibits you present entire statements of operations to reconcile your GAAP
earnings to non -GAAP earnings.   Please represent to us that you will no longer present
these tables in future Item 2.02 Form s 8-K or elsewhere.   Please see Question 102.10 of
our Compliance & Disclosure Interpretations for Non -GAAP Financial Measures

5
Ian F. Smith
Executive Vice President ,
And Chief Financial Officer
Vertex Pharmaceuticals Incorporated
June 26, 2012
Page 2

 (http://www.sec.gov/divisions/corpfin/guidance/nongaapinterp.htm  ).  Please also see
Instruction 2 to Item 2.02 of Form 8 -K which indicates that the provisions of Item
10(e)(1)(i) app ly to these public disclosures.

Form 10 -K for the Fiscal Year Ended December 31, 201 1
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Results Of Operations
Operating Costs and Expenses
Cost of product revenues, page 63

2. You state  herein t hat you expensed most of the manufacturing costs of INCIVEK sold in
2011 as research and development expenses in periods  prior to January 1, 2011 and
expect your cost of INCIVEK to increase as a percentage of net sales in future periods.
In your Form 10 -Q for the quarterly period ended March 31, 2012, you indicate that you
expensed most of the manufacturing costs of INCIVEK and KALYDECO sold in the first
quarter as research and development expenses in prior periods and expect your cost of
revenues to increase as a percentage of net sales in future periods.  Please tell us the
nature and amount of the manufacturing costs that you expensed as research and
development expenses for each of the following periods:
 prior to Jan uary 1, 2011 ;
 the year ended December 31, 2011; and
 the quarter ended March 31, 2012.

Reconcile these amounts to the “drug supply cost” in comment 4 below  and for any
differences, provide us your analysis supporting classification as research and
develop ment expense .  Also , for the year ended December 31, 2011 and the quarter
ended March 31, 2012, tell us the amount of third -party royalties included in cost of
product revenues  for each period .

3. It appears your cost of product revenues (including third party royalty expense on net
sales) was only 6.7% of net product revenues for year 2011 and 6.9% for the quarter
ended  March 31, 2012 .  Please tell us, by product (i.e. INCIVEK, KALYDECO) the
amount of estimated revenues represented by inventory on hand at  December 31, 2011
and March 31, 2012 for which manufacturing  costs were expensed in prior periods as
research and development expenses.  Tell us when you expect to finish selling these
inventories.

5
Ian F. Smith
Executive Vice President ,
And Chief Financial Officer
Vertex Pharmaceuticals Incorporated
June 26, 2012
Page 3

 Critical Accounting Policies And Estimates

Revenue  Recognition
Product Revenues, Net , page 71

4. Although you discuss certain the aspects of health care reform legislation that affect the
company (page 23), you do not quantify its historical impact on your financial statements
for year 2011, particularly as  to “rebates” expensed, nor do you disclose an estimate or
range of estimates for the impact for year 2012.   In this regard, please provide us
proposed revised disclosure for year 2011 and for the quarterly period ended March 31,
2012 to be included in fu ture periodic reports, indicating the amount of the reduction to
revenues for the increased Medicaid rebate and for additional rebates associated with the
Medicare Part D “donut hole”.   Also, include in your proposed revised disclosure the
amount of the b randed prescription drug fee, if any, you recorded in your statement of
earnings in 2011, in which line item it is classified therein and highlight that this fee is
not tax deductible.  Finally, if you believe that the expected effects of health care refor m
legislation in 2012 and beyond will be materially different than the 2011 trends, include
the expected effects in the proposed revised disclosure.

Research and Development Expenses, page 76

5. It appears from the Table (page 65) that you expensed, as R&D  Expenses, “ drug supply
costs” of $8.0 million, $34.1million, $65.9 million and $21. 6 million in the quarter ended
March 31, 2012 and the years 2011, 2010 and 2009 respectively. You further state that
“Our total development expenses have been affected by t he variable level of drug supply
costs, which include costs of raw materials and work in process that are incurred before
we begin capitalizing inventories for a drug candidate and costs of manufacturing
services that we provided our collaborators through our third -party manufacturing
network.”  Please tell us, citing specific authoritative literature, the basis for classifying
“drug supply costs”  as R&D expenses .  Quantify and address in your analysis each type
or category of cost.

We urge all persons wh o are responsible for the accuracy and adequacy of the disclosure
in the filing s to be certain that the filing s include the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management  are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 In responding to our comment s, please provide a written statement from the company
acknowledging t hat:
 the company is responsible for the adequacy and accuracy of the disclosure in the filing s;

5
Ian F. Smith
Executive Vice President ,
And Chief Financial Officer
Vertex Pharmaceuticals Incorporated
June 26, 2012
Page 4

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing s; and
 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

Please contact James Peklenk, Staff Accountant, at (202) 551 -3661 or Lisa Vanjoske,
Assistant Chief Accountant, at (202) 551 -3614  if you have any questions regarding the
comment s.  In this regard, do not hesitate to contact me at (202) 551 -3679.

Sincerely,

/s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief Accountant