The Bad Boy of Turing
by Stefani Daniels, Managing Partner
Published on Dec 11, 2015
First we learned that Shkreli raised the price of a single Daraprim pill from $13.50 to $750. Then we heard that a single copy of the Wu-Tang Clan album was bought by a reputed $2 million by Shkreli, already dubbed as “the most hated man in America,” and now we learn of an amazing stipulation in the purchase contract.
The more I read about Martin Shkreli, the 32-year-old former hedge fund manager who founded Turing Pharmaceuticals, the more I wish he would just go away. Shkreli initially made his name on Wall Street for his aggressive entrepreneurial tactics, founding two hedge funds as well as his own pharmaceutical company Retrophin, which he later had to leave due to what Bloomberg describes as "mis-using assets."
After he was ousted from Retrophin he formed Turing Pharmaceuticals. Sound familiar? You may remember the recent headlines about his company's acquisition of an anti-parasitic drug called Daraprim. No sooner had he signed the deal, he raised the price from $13.50 a pill to $750. Turing did nothing to develop this drug; its been on the market for over 60 years. But jacking up the price 5000% after Turing acquired it made headlines.
During interviews, Shkrili speaks bluntly that the pharmaceutical industry is a business, "we're supposed to make as much money as possible," he said at a recent Forbes Healthcare Summit earlier this month. At the same conference where everyone's feathers got ruffled by Shkreli's comments, the theme of the day seemed to be about how the healthcare industry — not just pharmaceutical companies, but all parts — need to innovate and catch up to other industries that have made it so easy for consumers to have a transparent picture of how much they're paying and what they're getting into.
In other words, consumers deserve a better understanding of what goes into the price of the drug they are picking up at the pharmacy and why it's so high, or entirely out of reach for some. They also deserve to know why this is a uniquely American problem and one key factor is that, unlike most other countries, the US government isn't able to negotiate the price of drugs.
Back when President Clinton's proposed healthcare reforms were defeated, the proposed pharmacy benefit provisions sparked concerns among pharmaceutical firms that drug benefits would be accompanied by price controls and other regulation of industry practices. The Pharmaceutical Research and Manufacturers of America (PhRMA) which had historically opposed the addition of any drug benefit for fear of accompanying price controls, probably recognized that if some drug benefits were on the horizon, it would be better to help craft those benefits than to oppose them outright. So they changed their strategy and with about $17 million in lobbying clout, they succeeded. When the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 was passed, it prohibited seniors and other Americans to buy lower-priced drugs from other countries and it prohibited the federal government from using its purchasing power to negotiate better prices for Medicare beneficiaries.
With his 15 minutes of fame assured, the arogant Shkreli pops up again when it was announced that he bought the only copy of Wu-Tang's album Once Upon a Time in Shaolin for a whopping $2 million. I'm not a rap fan, so I don't follow the goings-on in the recording industry but then I listened in on the Senate Special Committee on Aging and it seemed to me that the conversation kept circling back to Daraprim and “Mr. Wu-Tang,” as Committee Ranking Member Sen. Claire McCaskill (D-Mo.) referred to him. And now comes a Twitter trend that the purchase contract Shkrili signed has a bizarre clause allowing Wu-Tang or Bill Murray to try to "steal" the album back. Probably a Twitter-feed hoax but it sure would make an interesting screenplay. Will someone please tell me what's going on?