Why Xyrem is so expensive

Why does Jazz charge so much for Xyrem?   Because they can.
Xyrem is patented for use as a narcolepsy drug and it has orphan drug status from the FDA.

That means that even though GHB is a generic drug, doctors can't prescribe it for narcolepsy patients unless they use Jazz' patented version.  And since it is a class C drug, doctors can't order it unless they disclose the patient's diagnosis.

In addition, Orphan Drug status means they can charge anything they want for it.  It's a program that was instituted to insure pharmas are financially compensated for providing a drug to just a small number of patients.  The drugs are required to be subsidized by insurance companies and the government too. So what has happened is a whole cottage industry of shameless companies have popped up taking advantage of desperately ill people.  Here's a good article.  
(update: here's an even better one. )

GHB is a generic chemical that is about as simple, and costs about as much to produce as alcohol.
99% of what Jazz charges for it is pure profit.

And in case you're interested- Xyrem works by raising your insulin sensitivity and lowering your insulin production.   You can accomplish the same thing using a special diet and exercise.