Althouse: "A truly greedy executive would keep a much lower profile than Shkreli: there would be no headline-grabbing exponential price hikes..."

February 7, 2016

"A truly greedy executive would keep a much lower profile than Shkreli: there would be no headline-grabbing exponential price hikes..."

"... just boring but reliable ticks upward; no interviews, no tweeting, and absolutely no hip-hop feuds. A truly greedy executive would stay more or less anonymous. (How many other pharmaceutical C.E.O.s can you name?) But Shkreli seems intent on proving a point about money and medicine, and you don’t have to agree with his assessment in order to appreciate the service he has done us all. By showing what is legal, he has helped us to think about what we might want to change, and what we might need to learn to live with. Most of our Presidential candidates claim to disdain Washington politicians, but, on Thursday, Shkreli put that disdain into practice—and helped illustrate, to anyone paying attention, why it is so richly deserved. He is candid even when candor doesn’t pay... He rolls his eyes at members of Congress, he carries on thoughtful conversations with random Internet commenters.... He is the American Dream, a rude reminder of the spirit that makes this country great...."

From "Everyone Hates Martin Shkreli. Everyone Is Missing the Point," by Kelefa Sanneh in The New Yorker.

41 comments:

madAsHell said...: "He was always a good boy."
Women can never see men for what they are.; 2/7/16, 9:52 AM
Fernandinande said...: "Everyone Hates Martin Shkreli. Everyone Is Missing the Point,"
"After buying the drug [Daraprim], Turing raised its price from less than twenty dollars per tablet to seven hundred and fifty dollars."

I hope the point is that "everyone" should hate the politicians who prevent free trade (and personal autonomy):

Wikipedia:
"In India, over a dozen pharmaceutical companies manufacture and sell pyrimethamine tablets and, multiple combinations of generic pyrimethamine are available for a price ranging from US$0.04–$0.10 each (3–7 rupees).[29][30][31][32]

In the UK, the same drug is available from GSK at a cost of US$20 (£13) for 30 tablets (approximately $0.66 each).[33]

In Australia, the drug is available in most pharmacists at a cost of US$9.35 (A$12.99) for 50 tablets (approximately US$0.18 each).[34]

In Brazil, the drug is available for R$0.07 a pill, or about US$0.02.[35]"; 2/7/16, 9:54 AM
Psota said...: It seems like a complicating factor in all this analysis is the fact that he looks and acts like someone with some serious mental health issues. How much of this is unique to him, and how much is due to The System?; 2/7/16, 9:57 AM
Wince said...: The Hitler Hairdo doesn't help...

Karma police, arrest this man
He talks in maths
He buzzes like a fridge
He's like a detuned radio

Karma police, arrest this girl
Her Hitler hairdo is
Making me feel ill
And we have crashed her party

This is what you get
This is what you get
This is what you get when you mess with us

Karma police
I've given all I can
It's not enough
I've given all I can
But we're still on the payroll

This is what you get
This is what you get
This is what you get when you mess with us

https://m.youtube.com/watch?v=cpkGagK67mQ; 2/7/16, 9:58 AM
Paddy O said...: Japan exposed the vulnerability of our naval fleet defenses! We should appreciate what they did on Dec 6!; 2/7/16, 9:58 AM
Paddy O said...: We should be outraged at the system that allows such fervent discontent as we see in Afghanistan. We should appreciate bin Laden and his compatriots for awakening us to the underlying problems!

Because that was his goal, right? A truly greedy country would use monetary policy and slowly tilt trade and debt into their favor to maximize their long term gain.; 2/7/16, 10:02 AM
Paddy O said...: In other words "a truly greedy" person will express their greed in different ways depending on their own dysfunction. Soros, Trump, Buffett are truly greedy, but also very smart and strategic.

A person (or group or country) can be very greedy and do things that undermine their long term goals because they don't understand the systems beyond their immediate greed.; 2/7/16, 10:07 AM
FullMoon said...: I watched some of the inquiry. He was asked some really stupid gotcha questions. Like, what do you say to the pregnant single mom with 10 kids who needs this drug to save her child but spent all her money on baby diapers?; 2/7/16, 10:13 AM
Lem Vibe Bandit said...: We get mad when "the invisible hand" makes an appearance.; 2/7/16, 10:13 AM
mikee said...: Disdain for elected officials is admirable for leftists decrying War Criminal Chimpy McBushHitler, but nobody else better steak their act!; 2/7/16, 10:20 AM
Jim said...: This is a regulatory failure, pure and simple. In one paragraph it quotes Rep. Cummings and says he believes in regulation. In the next paragraph the author says the reason that prices on genetics can be jacked up is due to FDA regulations that make it very expensive to produce generics.; 2/7/16, 10:35 AM
cubanbob said...: With companies like Amazon available to ship worldwide I fail to see why an American consumer can't order from peer equivalent countries needed pharmaceuticals if cheaper abroad or unavailable here. That is the regulatory failure.; 2/7/16, 10:41 AM
Lem Vibe Bandit said...: "...no interviews, no tweeting, and absolutely no hip-hop feuds."

And definitely no getting caught on tape saying "don't bring black people to my games".; 2/7/16, 10:59 AM
Jeff said...: Almost every time we hear one of these stories about a greedy monopolist taking advantage of his monopoly, it turns out that the monopoly is the result of a government policy. But we never blame the government, we blame the monopolist who is only doing, in effect, what the government told him to do.

If somebody gives you the exclusive right to sell something, and it turns out that people will buy it at any price, you're in effect being told to set the price extremely high. If you don't, someone with fewer scruples will buy your company out from under you and it will happen anyway.

The clods at the FDA who refuse to even consider the obvious results of their actions should be fired. They know damn well that creating these monopolies will result in great suffering, but they pretend it's not their fault. Why is the Congress grilling the private sector people who are responding to incentives created by the FDA instead of criticizing the real villains at the FDA? Or themselves, who gave the FDA the authority to do this stuff?

Have any of the presidential candidates of either party pointed out the real problem here?; 2/7/16, 10:59 AM
Tari said...: Isn't he autistic? I either read that somewhere or intuited it, but that's what I get whenever I see how this guy behaves.; 2/7/16, 11:05 AM
Hagar said...: The media uniformly refer to Shkreli as "a drug company executive," and I think they are biting the hand that feeds them. Just think of all that advertising!
The term is technically correct, but he apparently only is "a drug company executive" because he had some money from some source and used it to buy himself a company and a drug patent.
That makes him a raider who saw an opportunity to make a killing in an industry almost totally exempt from normal business practices due to its cozy relationship with government regulators and - of course - the politicians in Congress.
But thoroughly bad and corrupt as the pharmaceutical industry is, Shkreli hardly is a product of that industry.

Greed BTW, is when your avariciousness takes over your common sense to the extent that you actually hurt chances of making a profit.

But Shkreli seems to be beyond that; he looks more like a mental case to me.; 2/7/16, 11:05 AM
Michael K said...: I used to drive to Tijuana to buy prescription meds. Two friends and I would drive down there, have breakfast at a hotel that had a nice buffet, go to the pharmacy and then play golf at the Tijuana Country Club.

Then the Tijuana pharmacies all figured it out and raised prices.

I used to send my patients there but stopped once there was no discount.

I ordered stuff from Canada mail order pharmacies but that ended.

The invisible hand eventually figures out the economics of it.; 2/7/16, 11:07 AM
Jim said...: Jeff said it better than I did.; 2/7/16, 11:12 AM
Hagar said...: If this Shkreli debacle helps bring about some real scrutiny of the relationships between "Big Pharma," Congress, the TV industry, and the regulatory agencies, we will all owe Mr. Shkreli a big Thank You!!!; 2/7/16, 11:17 AM
n.n said...: This comment has been removed by the author.; 2/7/16, 12:01 PM
Michael K said...: A better term for what those of us on the right support is "free market" as "capitalism" is actually a term invented by Marx.; 2/7/16, 12:02 PM
n.n said...: Obamacare and other market manipulation schemes exposed. Monopolies and monopolistic practices are incompatible with capitalism (i.e. democratic, evolutionary economics).

Enacting social policies to promote the general Welfare, while rejecting individual dignity and intrinsic value, civil and human rights, breeds corruption.; 2/7/16, 12:04 PM
mccullough said...: Confessional hearings are a joke. They call a guy in front of the committee they know will take the 5th so they can act like they are tough. They are a joke. Gowdy and Cummings are embarrassingly bad.; 2/7/16, 12:23 PM
William said...: Edison was perhaps more a capitalist than a scientist. He was, in any case, a shrewd businessman who knew how to make a buck. Einstein was certainly more a scientist than a businessman. He pursued knowledge for its own sake, for the joy of understanding how the universe operates.........In this context, it is perhaps useful to contemplate that Edison's money grubbing led to the electric light bulb and Einstein's pure science led to the atomic bomb. Properly manipulated, the invisible hand of the free market leads to an Hitachi wand. Pure ideals purely pursued leads to the burning of martyrs in the marketplace.; 2/7/16, 12:32 PM
rehajm said...: Here's how it works... it would be easier if there were many buyers and not just one, because then some of the buyers could say 'hey fangool' I'm not including you in my benefit. But when it becomes a mandate from the people, your negotiation power goes way down because this kid's got this invention and he's like, 'well do you want it or not?' If some people actually said 'not,' he would be forced to behave a little better. But since it's illegal for anyone to say 'not', he gets to be a jerk.

-Jonathan Bush

I'm reminded of the way government regulation led to the twisting and perversion of the housing finance markets and how all the blame has fallen to the market participants when it was the imbeciles who represent the people who created the damage.; 2/7/16, 1:09 PM
Unknown said...: He did what I have always wanted to do, go in front of Congress and tell them what their name is.; 2/7/16, 3:05 PM
Hunter said...: It's interesting, just today I watched the Vice interview with Shkreli.

Long figured there must be another side to this story since all you see is the one-paragraph (or less) summary of "he bought a drug people need to live and jacked up the price so they can't afford it" and basically painting him as a Disney villain.

Shkreli claims (starting about 5:05) the only people he is charging the high prices are big companies that can pay it, like Walmart and ExxonMobil "because fuck them, why shouldn't they [pay]?" That his company sells drugs to the government for $1 and most of the people who need it get it for free, and if they can't afford it they can reach him personally and he'll give it to them for free. They also made accommodations to solve the issue of hospitals not being able to have Daraprim on hand due to its increased cost.

He says his company's goal is to put 60% of its money back into R&D, several times more than other drug companies do, because he cares deeply about people with illnesses and wants to discover new drugs that will help them. Including maybe a drug that will do what Daraprim does but without the nasty side effects.; 2/7/16, 3:16 PM
Sydney said...: It's pretty clear that he's someone who pushes the envelope on the rules as much as he can to his utmost benefit. He's not the first pharmaceutical executive to do this kind of thing, either. There was generic progesterone which went from $10 an injection to $1500 an injection when the FDA gave an exclusive patent for it to one company. The same thing happened with generic colchicine, a drug that has been used for centuries, yet only "FDA approved" in 2009. Be glad they haven't decided to give their approval to aspirin - yet. We live in the golden age of crony capitalism.; 2/7/16, 4:04 PM
jr565 said...: Other countries get cheaper drugs because we basically subsidize them. The drug companies let those countries pay less, and then we pay more, because, I guess we are a richer country. And yet people ask us why we can't be like canada where the drug prices are so much lower. Yeah, good question.; 2/7/16, 7:54 PM
Sammy Finkelman said...: cubanbob said...2/7/16, 10:41 AM

With companies like Amazon available to ship worldwide I fail to see why an American consumer can't order from peer equivalent countries needed pharmaceuticals if cheaper abroad or unavailable here.

It's illegal, but enforcement is somewhat spotty. Efforts to make it legal faled in Congress. The official argument I think is that we can't rely on other countries's regulations and there is too great adanger of counterfeit drugs, and another might be that imporation undermines the whole patent system or something. This case of course involves a non-patened drug. I think the regulatory failure is that the standards for safety are too high and difficult to meet and too time consuming. Perhaps some manufacturers ought to just be cnsidered to be trusted.

That is the regulatory failure.; 2/7/16, 8:31 PM
Sammy Finkelman said...: Martin Shkreli ran what amounted to or outright was a Ponzi scheme and this was his way of getting himawelf out of the hole.; 2/7/16, 8:33 PM
jr565 said...: Here he is in an informal interview with Vice where he explain how he is kind of playing as the Bond villain, deliberately. But also goes into the inner working of the drug business, as well as drug itself. And he doesn't come across as evil as I initially thought:

https://www.youtube.com/watch?v=2PCb9mnrU1g

Yes he's smug but i think some of the reaction to his move is because we don't understand who pays for drugs.

"yeah I'm a capitalist and yeah I'd love to make an even bigger fortune than I have now. But I'm not going to do it at the expense of human life. We sell our drugs for a dollar to the govt. But we sell our drugs at 7.50 a pill to Walmart, Exxon Mobile and all these other companies and THEY pay full price because fuck them.. why shouldn't they?. And if I take that money and use it to fund research for dying kids. I think I'm a hero... let alone a villain."
Who then is paying the price? He's saying the big companies that can afford to do. But its not a given that just because the price is listed at 7.50 that the customer will pay 7.50. The big corps subsidize the costs.I can't help but think that he might have a point there.

He also makes the point that the drug, Daraprim was purchased at a high price by his company. AND that its barely used. and that 60% of the customers eventualy do get it for free. And are not paying 750 dollars, or whatever the absurd amount is.
Further he makes the point that most hospitals will never use the drug. They might have a single bottle on hand for emergencies, because so few people actually come in with the disease. to fix this issue they offered hospitals a tiny bottle with a few pills as opposed to making them pay for a bottle with a full supply for a drug that will rarely be used.

Because it cost so much to purchase and because so few people use it they had to raise the price. Lastly, he says the drug is actually very dangerous. The company he bought it from didnt' care about the drugs side effects so they need to research how to reproduce the drug absent those side effect so a lot of money goes back into R&

I'm sure some of it is bullshit, but perhaps our visceral reaction to someone raising the prices is because we don't really want to know how drug pricing works. We just think its greed.And there are actual a lot of subtle issues behind pricing. Drugs are a lot more expensive to put out than we think. It's made worse by the FDA making it so hard to actually release a drug. Drug companies have to recoup those costs. Drugs are not socialism. There is no such thing as free drugs.
having watched this video, and having seen what he's like when he's not smirking on camera and acting like a villain, maybe I will not reflexively scream at the tv every time he comes on.; 2/7/16, 8:41 PM
jr565 said...: (cont) that his his side. of course. As I stated, some of it could be bullshit. if he did it as a ponzi scheme then obviously he committed fraud. But if his story has any truth to it, though he may come across like a villain, I don't necessarily know if what he did was wrong.; 2/7/16, 8:43 PM
narciso said...: yes he used to be one of kramer's gofers, but this might be why he is so smug,

https://pjmedia.com/trending/2016/02/05/pharma-bad-boy-martin-shkreli-is-a-big-democrat-donor/; 2/7/16, 9:37 PM
jr565 said...: narcisco,
Good catch. Same with Bernie madoff.; 2/7/16, 10:22 PM
Fred Drinkwater said...: Again, I'm strongly recommending Derek Lowe's posts on this issue.
http://blogs.sciencemag.org/pipeline/; 2/7/16, 11:05 PM
Rich Rostrom said...: I am rather annoyed at the numerous commenters on this thread who clearly have no idea what Shkreli actually did. It has nothing to do with Big Pharma, socialism, or cross-subsidies.

Shkreli acquired the U.S. right to market Daraprim, which derived from the holder of the long-expired patent. These rights remained exclusive because no other company spent the $50M-$100M required to validate a generic equivalent drug. That is because the entire market for Daraprim is only about 8,000 prescriptions a year.

Shkreli could squeeze those few patients because they won't buy enough generic Daraprim to pay off the cost of entry for a competitor.

In short, he's working a small niche created by regulatory overhead.; 2/8/16, 2:51 AM
Jeff said...: These rights remained exclusive because no other company spent the $50M-$100M required to validate a generic equivalent drug.

And that's the problem right there. There's no reason, other than FDA stupidity, why it should cost that much to be able to market a generic drug, particularly one that is available from several international sources and that has been in use for years.

Ask yourself what that $50M-$100M is actually spent on. How much of it goes to fund the FDA itself? How much is, in effect, a guarantee of full employment for "medical researchers" who are actually just lawyers filling out forms for a high price? There's no research needed for Daraprim, it's all just ripping off the people who need the drug for the benefit of people who are playing footsie with the FDA. It has nothing to do with drug safety and everything to do with enriching people using the revolving door between pharma and the FDA.; 2/8/16, 7:22 AM
Sigivald said...: A truly greedy executive would stay more or less anonymous.

No.

"Truly greedy" is not the same as competent, is the problem with that thesis.

(And yes, as others said, this is basically the equivalent of rent-seeking based on regulatory burdens. When you make validating a generic cost millions and millions of dollars and the market for a drug is small, you are never going to get meaningful competition.

Everyone who says we need the FDA to keep Big Evil from poisoning and murdering us - because it'd just be legal without the FDA, right, because false advertising and poisoning aren't crimes in themselves! - is stuck with this as a side effect.

An irreducible one, short of handwaving "just make the government fix it" - which nobody wants to pay for.

Gods, Headings, Copybook.); 2/8/16, 12:00 PM
Sammy Finkelman said...: In addition to situations like Shkreli raising the price , we also get drugs going out of production or having greatly produced production. More and more drugs are becoming unavailable or have shortages.; 2/9/16, 10:48 AM
Rich Rostrom said...: Blogger Jeff said: Ask yourself what that $50M-$100M is actually spent on.

Proving the bioequivalence of the generic product, setting up a production facility, and verifying production standards to the FDA's satisfaction. These are reasonable requirements; arguably they cost too much at present, but no one seriously suggests that they could be dispensed with, or that even at best the cost could be reduced below $10M-$20M.

This may seem like a lot of money, but it's very small compared to the cost of getting a new drug approved.; 2/10/16, 5:06 PM