Martin Shkreli is health care’s Gordon Gekko, its wolf of Wall Street, the symbol of all that makes people uneasy about an industry that seeks to make money by selling treatments while vowing to care only about the well-being of vulnerable patients.
For days, a seething social-media mob backed by an opportunistic politician or two has hammered the swaggering 32-year-old “pharma bro” who jacked up the price of an obscure but critical drug, was theatrically unapologetic about it and publicly called a journalist a moron for asking why.
Shkreli’s actions were shocking for a simple reason: It was an unusual moment of complete transparency in health care, where motives, prices and how the system works are rarely ever talked about so nakedly. Shkreli’s company, Turing Pharmaceuticals, raised the price of Daraprim from $18 to $750 per pill because he could.
“I think it reflects a widespread appreciation that pricing for drugs is entirely irrational in this country and the pharmaceutical industry has total control over prices and there’s no rationality to the system,” said Peter B. Bach, a physician and director of the center for health policy and outcomes at Memorial Sloan Kettering Cancer Center in New York. “It’s such a perfect, crystalline example of everything that can be done, given the lack of rationality in the system, and the total bankruptcy of the justifications for high drug prices in the first place.”
Arthur Caplan, director of the division of medical ethics at New York University Langone Medical Center, said focusing too much on Shkreli was a diversion from the real issues in the health-care system, where it’s relatively rare to even know how much something costs or what a fair price would be.
Drug companies often set prices and try to deter questions about costs by “ringing the innovation bell” — suggesting that to limit profits in any way will leave lifesaving cures to languish in test tubes, Caplan said. Shkreli explained what he did in a straightforward way. It was kind of like speculating on a rare metal.
“The rest of the health-care system . . . no one is explaining the price. No one even knows what the price is. And no one knows what a fair price is,” Caplan said. “He was transparent — and the industry, the whole health-care industry, is not transparent. It’s not even close. It’s the most obtuse, dense, incomprehensible pricing structure ever created by humanity.”
To hear Shkreli tell it, Turing is the little pharma that could: a start-up that bought the only treatment for a severe but rare parasitic infection and then hiked the drug price more than 4,000 percent so the company could begin to turn a profit and grow.
“It’s a great business decision that also benefits all of our stakeholders,” Shkreli wrote on Twitter.
In a telephone interview Monday, Shkreli compared Turing favorably with other companies that charged more for medicines that treat diseases that were less severe and more common.
“To me, I think the pricing discussion is inappropriate, because there are far larger targets to focus on than little Turing Pharmaceuticals,” Shkreli said.
By Tuesday evening, the Internet rancor had taken its toll, and Shkreli appeared on ABC News to say he had heard the public’s complaints and would lower the price of the drug by an undisclosed amount. A spokesman for the company, Allan Ripp, said Wednesday that there was no update yet on what that price would be.
Shkreli plays the villain well — the hedge-fund manager turned pharmaceutical speculator posts smug photos of himself on his Twitter feed, lords his youthful confidence with aplomb, and isn’t afraid to say what he thinks — even, and perhaps especially, if he realizes it might annoy some people.
Before he incited the ire of the Internet this week, he had already gained notoriety as a hedge-fund manager who wouldn’t hesitate to personally contact the Food and Drug Administration to weigh in on whether the agency should grant approval for a drug that he also happened to be short-selling — a term for betting that a stock would go down.
“I am a fund manager who will benefit substantially if the FDA adopts my viewpoint,” Shkreli wrote to the FDA in 2010, exhorting them to turn down the drug Afrezza while he was short-selling its maker, MannKind. “Despite these conflicts, the FDA should review my statements with care and knowledge of my integrity.”
He’s also used to being under fire. A watchdog group, Citizens for Responsibility and Ethics in Washington, in 2012 requested a federal investigation into his short-selling activities. He is being sued for $65 million by Retrophin, a company that he founded and got pushed out of “because of serious concerns about his conduct,” according to a statement from the company. Retrophin said it received a subpoena from the U.S. attorney for the Eastern District of New York, requesting information about its relationship with Shkreli and the hedge fund where he worked, according to a securities filing.
But Shkreli’s decision to raise the price of a drug that treats a rare but severe infection that afflicts HIV and cancer patients and was approved decades before he was born incited a level of wrath that made the provocateur turn his Twitter account to private.
A spokesman for Impax Laboratories, the company that sold Turing the rights to Daraprim for $55 million, said he could not comment on whether the drug was profitable.
“It’s been around a long time,” spokesman Mark Donohue said. “It was not a core product.”
Pharmaceutical companies that make new therapies often justify prices by saying they will recoup the investment needed to research, develop and gain approval for new drugs. With Daraprim, all that money had already been spent, so radically hiking its price seems to some more the tack of a hedge-fund manager who discovers an undervalued asset than a reflection of the drug industry’s practices, analysts said.
Even PhRMA, a trade group that frequently finds itself defending the industry against critics, pointed out that Shkreli’s company, Turing, was not a member and slammed the door on him.
“PhRMA members have a long history of drug discovery and innovation that has led to increased longevity and improved lives for millions of patients,” PhRMA President John J. Castellani said in a statement. “We do not embrace either their recent actions or the conduct of their CEO.”