I don’t often tread into the world of Pharma, but the story of Martin Shkreli is too unreal to not talk about it. Especially since today it came to a head with Martin Shkreli being arrested on charges of Fraud.
For those not familiar with Martin, he was blasted by social media and the regular media (you can guess which one came first) after his company Turing Pharmaceuticals AG raised the price of an anti-parasite tablet more than 50-fold. That’s taking the drug Daraprim from $13.50 a tablet to $750.
After the outcry he later said he’d cut the price of the drug as much as 50% to hospitals. He also said that there were lots of programs for people to get the drug if they weren’t financially able. That didn’t appease most people who still saw Martin as taking advantage of the health care system and vulnerable patients who needed the drug to survive. Some even called him “the most hated man in America.”
The story doesn’t end there. At the Forbes Healthcare Summit Martin Shkreli admitted that he messed up when he raised the Daraprim drug price over 5,000% overnight. “I would have raised prices higher,” Shkreli vowed on Thursday, after being asked how he would re-do the past three months. “That’s my duty.” So, he reneged on his promise to lower the price of the drug and wishes he’d raised the price higher.
As if that weren’t enough, Martin Shkreli was planning to do the same with another Leukemia drug owned by the almost dead company KaloBios. Martin bought up shares of the company and brought $3 million of investment to save the company. It seems he was looking to do the same thing with KaloBios as he’d done with Turing Pharmaceuticals AG.
You can imagine the outcry over Martin doubling down on his approach to raising the price of pharma drugs. However, many are claiming that karma caught up with Martin Shkreli (and lots of other claims including him “paying” for ripping Taylor Swift and other odd and hilarious comments) as he was just arrested on fraud charges. The charges are unrelated to the stories above, but instead go back to his time as manager for the hedge fund MSMB Capital Managment and Chief Executive of biopharmaceutical company Retrophin Inc. On news of the arrest, KaloBios stock feel 50% before trading was halted, losing Martin over $25 million.
It’s hard to ignore a story like this. It’s just kind of unbelievable and the public outcry to what Martin has done. He sees himself as the public enemy and for many he is just that. While I think what Martin is doing is despicable, I personally don’t think there’s that much value in vilifying his actions if we don’t ask the tough questions that his actions raise. I’m no pharma expert, but I can’t image that Martin is the only one employing these practices. Was he just the one that got caught and the one that caught the public eye?
Here’s some questions that I think Martin’s story raises that are worth discussing:
What do we do about pharma companies that have a monopoly on a niche drug? Should their be price controls on them?
What price is fair for them to charge to make a return on their admittedly risky investment? Is there a calculus that makes sense for the patients who depend on the drug and the drug maker who needs to make a profit off their investment?
Is it ok to overcharge for a current drug in order to reinvest that money to develop new drugs? Will the overcharge actually be used to develop new drugs and not just line the pockets of the investors? Maybe they reinvest in research for a few cycles of new drugs, but at what point does the excess stop being reinvested?
Martin calls this the “dirty truth” of pharma. They’re in it to make money. Let’s start a conversation about this dirty truth then and find reasonable solutions for patients and pharma companies. Maybe there’s some good that could come from Martin’s actions.
Update: If you’d like a good laugh, read this piece by Andy Borowitz called “Lawyer for Martin Shkreli Hikes Fees Five Thousand Per Cent.” Brilliant!