Martin Shkreli — Evil Genius or Industry Hero?
I subscribe to the Wall Street Journal, among other newspapers — and enjoy perusing the trenches of daily news. One theme I run into often is “Martin Shkreli’s Punchable Face” (Nymag), and how this affluent young CEO is the new Bernie Madoff of the pharmaceutical industry. Why all the hate? He seems smug, arrogant, and in need of a juicy slice of humble pie — but not evil. That is until I read that one of his actions as C.E.O of Turing Pharmaceuticals was buying a drug called Daraprim, and raising its price overnight from $13.50 per pill to $750 per pill, more than a 5,500 percent increase. Daraprim is a life-saving drug in the form of an orally ingested capsule, which introduces and maintains a chemical in the human body at a constant level in order to kill a parasite known as Toxoplasma gondii, in a disease known as toxoplasmosis.
No single event in the past 4 years has united an industry more than this action in August of 2015. Within days, headlines everywhere were blasting Martin and his company for using a life-saving drug for a rare disease as a cash cow. Presidential candidates Hillary Clinton, Bernie Sanders, and Donald Trump all called for Martin to lower the price. Petitions and initiatives to lower the price have been passed by 155 medical organizations in over 31 states. But to understand the situation from an objective point of view, I shoved away the media hype and tried to understand the drug — and the disease — from a more knowledgeable standpoint.
Toxoplasmosis is a parasitic disease. Over half the world is infected by it. Okay, don’t panic. Before you let that information digest too much, know that over 99 percent of all toxoplasmosis infections have no symptoms or adverse effects on the functions and systems in your body. The immune system is more than capable of keeping it in check — much as it is capable of keeping Escherichia coli in check. (E. Coli is a natural bacteria found in the human intestine that can cause extreme sickness if ingested due to contamination of food. See Chipotle for more information.) Over 23 percent of Americans have toxoplasmosis — so there is a 1 in 4 chance that I have it as well. Fortunately, I feel fine — but if I were to get a disease that weakened my immune system, such as HIV or AIDS, then I would be in trouble. Extreme toxoplasmosis — such as that found in people with AIDS, is capable of causing permanent brain damage and necrosis of the retina in the eyes, as well as flu-like symptoms such as coughing, muscle aches, and swollen lymph nodes.
Daraprim is a 62 year old drug and it was invented and perfected in the glory days of pharmacy where drugs like Sulfa and Milltown were kings. (Sulfa was an anti-bacterial that ended up destroying the human kidneys when taken long-term, the reason why my great grandfather Martin died at the age of 48, and Milltown was an anti-depressant given to housewives who were shockingly upset that they had to cook and clean all day). Unfortunately, Daraprim kills human cells at the same rate it kills toxoplasmosis, and with a weakened immune system — for many people who take it, it’s a gamble to see what will die first, the parasite, or the patient. Unfortunately, Daraprim cannot completely kill toxoplasmosis. It can drive the parasite numbers down to an undetectable level, but the parasite will eventually come back. In layman’s terms; it’s a bad drug. Daraprim blocks folic acid production to interfere with parasite reproduction, but this can also lead to folate deficiency, which leads to blood toxicity. So why make such a bad drug so expensive?
The reason is improvement. Extreme toxoplasmosis is such a rare disease, that there is no profit or market to be found in its improvement. Why cure the disease when you can make money treating its symptoms forever? Since 1952, no major effort or initiative to improve Daraprim has happened. This is exactly the reason for the price hike. Although he won’t release his financial details, Shkreli claims that all profits that are being made due to the price increase are going straight to “R&D”, or research into creating a new drug that can more effectively combat the parasite.
Shkreli also claimed that you can get Daraprim from him for free, if you contact him citing financial difficulties in obtaining the drug, a claim that has yet to be confirmed or verified, but nobody has spoken against it — partially because no light has been shed on this yet unheard-of side of Shkreli. He has told numerous sources (Vice, and on his “livestreams” where he allows anybody to ask him questions) that he only charges full price to insurance agencies and medical aggregators, such as Aetna or Walgreens. He pumps this excess money directly into research at his company. Shkreli was subpoenaed by the U.S. House of Representatives to answer for the price increase, and plead the fifth, retorting “I am going to follow the advice of my counsel, not yours.”
Clearly, he has an attitude problem. He chose to act aloof and impartial during an opportunity that he could have used to explain his side of the story. His prior record before Turing is shady as well — his previous company, Retrophin, slapped a $65 million dollar lawsuit on him for “committing company funds to stock trading irregularities and other violations of securities rules”, and also claiming that he harassed a former employee and their family. Because of this, Shkreli has been under investigation by the New York Eastern District U.S. Attorney’s office, and was arrested in December of 2015, but released on bail.
I do call into question the integrity of Shkreli’s business practices and the morality of his character, but the evidence against him is largely based on loose laws regarding CEO use of company finances. If it can be proven that he has not used the profits for personal gain, then he has done nothing illegal during his tenure at Turing. I speak in this tense because he resigned in January. Have we finally beaten a greedy corporate hound before he grew too large to destroy? I disagree. I believe we have slaughtered a man who could have made a difference in an industry ruled by already-too-large companies that profit from disease. This approach of investing heavy monetary aid into research programs might suffice to cure some diseases once thought incurable, and Shkreli seems to have been the poster boy for that short-lived school of thought. Clearly, the man is arrogant — but he stuck a message to the system. He demonstrated that CEOs of large medical companies have the power to change the direction of modern medicine, and that the world of wall street is still the dingy, corrupt gutter we always believed it was. If anything, we can use Shkreli as an example. An example of why companies should perhaps rethink the distribution of their finances, and reallocate money away from the personal pockets of executives and into the laboratories that help prevent disease and death.