In this era of divisive politics, infrastructure deficits, extra judicial police killings and budget crises, there appears to be little common ground to share in our public debate. The one exception appears to be our collective feelings towards Martin Shkreli, the hedge fund manager and pharmaceutical executive better known by his nickname, “Pharma Bro.”
Just about everyone agrees Shkreli is kind of a jerk. Hillary Clinton is on public record stating that his business practices were “outrageous,” and Donald Trump called him out as a “spoiled brat” at a recent rally. Unlike many of our current Presidential candidates, there are few apologists and supporters to stand against the flood of animosity Shkreli has inspired. What has inspired such a unified front against the young Wall Street exec? Well for starters, he raised the price of the pharmaceutical drug, Daraprim, to $750 a pill.
Shkreli’s astronomical price hike of Daraprim brings a spotlight onto a problem many politicians, including current presidential candidates, hope to fix. When word broke out in the fall of 2015 that the drug once priced at $13 per pill in- creased overnight by 5,556 percent, critics pointed fingers to the United States’ free market practices in pharmaceutical pricing.
In the United States, no federal regulation is in place that re- quires pharmaceutical companies to sell drugs at an affordable price. This market structure undoubtedly allows pharmaceutical companies like Turing to freely pursue unrestricted profits from people in need of drug treatment. In August, Shkreli wrote that hiking the price of Daraprim would bring in $375 million a year, all in profit. “Let’s all cross our fingers that the estimates are accurate,” Shkreli wrote.
Daraprim is the trade name for a 63 year-old drug, pyrimethamine. The drug is commonly used to treat Toxoplasmosis infection, a type of infection which HIV patients are particularly susceptible to. The patent on Daraprim had expired long before the drug was acquired by Turing. So you can breathe a sigh of relief, since this means that Turing does not have a complete monopoly over the drug.
Other pharmaceutical companies are free to produce generic versions of the drug and set their own sales price. However, the time and costs associated with reverse engineering a drug like Daraprim make it unfeasible for companies to provide less expensive substitutes. Another consideration is that the FDA has a lengthy and expensive approval process for pharmaceuticals.. With just under 9,000 prescriptions for Daraprim written in the United States last year, it’s no surprise that there is little to no competition for any generics on the market. Luckily, a California company, Imprimis Pharmaceuticals is working on producing an alternative costing only $1 per pill. But there is no telling whether this alternative will be ready in time to save the thousands of Americans who need it.
Since entering the public spotlight as the single most identifiable example of the pharmaceutical industry’s excess, Shkreli’s infamy has only become more pronounced. When the public demanded that he retract the proposed price hike, Shkreli promised to do so, and then never followed through. During a congressional hearing where he was asked to testify, he appeared only to assert his 5th Amendment right against even the most benign questions. Afterwards he tweeted his disbelief at the “imbeciles” that run our country. He has also been arrested for defrauding an in- vestment company which he used to manage and appears to be genuinely unmoved by the charges or very public arrest which followed. Possibly the most incriminating for some, was Shkreli’s purchase of the only existing copy of the Wu- Tang Clan’s album Once Upon a Time in Shaolin for $2 Mil- lion, sparking a feud with Hip-Hop artist, Ghostface Killer.
At the center of this media circus is Shkreli himself who seems to revel in the role as a public villain while earnestly attacking those who dare to assault his character. Shkreli rebukes his critics by claiming to be a Robin Hood figure in disguise. His belief is that the sales from Daraprim can be used to fund research for the treatment of rare, hereditary diseases Shkreli has further insisted that insurance companies will ultimately be the ones to bear the burden of paying the difference of the controversial price hike. Unfortunately, many insurance companies have now refused to cover the drug, leaving their insured with few viable options for treatment.
Whether Shkreli’s altruistic intent is earnest or not is debatable. A truly greedy executive would be more likely to increase the price in increments over time and would likely keep a low profile to avoid public backlash. Shkreli, on the other hand, clearly has something to prove and treats his de- tractors with mocking condescension. Whether or not you believe his explanations, he appears to be motivated by more than just pure profit. Rather than a symptom of the pharmaceutical industry’s greed, Shkreli’s antagonistic behavior may be the product of his unwavering faith in the free market’s ability to generate broad social benefits, despite clear evidence to the contrary.
By Soe Tha and Michael Reed