Bad boy of pharmaceuticals loses his swag

Turing Pharmaceuticals chief executive Martin Shkreli, seen here leaving a federal court in New York on Thursday, was arrested for securities fraud, but it is his drug price increases, combined with his jeering response, that have made him a lightnin
Turing Pharmaceuticals chief executive Martin Shkreli, seen here leaving a federal court in New York on Thursday, was arrested for securities fraud, but it is his drug price increases, combined with his jeering response, that have made him a lightning rod for public outrage.PHOTO: BLOOMBERG

On top of his arrest, firms scared by public reaction to steep price hikes are distancing themselves

NEW YORK • It has been a busy week for Martin Shkreli, the flamboyant businessman at the centre of the drug industry's price-gouging scandals.

He said he would sharply increase the cost of a drug used to treat a potentially deadly parasitic infection. He called himself "the world's most eligible bachelor" on Twitter and railed against critics in a live-streaming YouTube video. After reportedly paying US$2 million (S$2.8 million) for a rare Wu-Tang Clan album, he goaded a member of the hip-hop group to "show me some respect".

Then on Thursday, the federal authorities arrested Shkreli, 32 at his midtown Manhattan apartment.

Shkreli has emerged as a symbol of pharmaceutical greed for acquiring a decades-old drug used to treat an infection that can be devastating for babies and people with Aids and, overnight, raising the price to US$750 a pill from US$13.50.

His only mistake, he later conceded, was not raising the price more. Those price increases, combined with Shkreli's jeering response, have made him a lightning rod for public outrage. His company, Turing Pharmaceuticals, and others, like Valeant Pharmaceuticals, have come under fire from lawmakers and consumers for profiting from steep price increases for old drugs.

The heads of many other large drug-makers, who were frightened by the public reaction to the pricing debate, scrambled to distance themselves. "We are not like him," said Merck chief executive Ken Frazier at a recent industry conference, shortly after Shkreli appeared to argue that high drug prices are best for shareholders.

Commenting on Shkreli's claims that he needed to raise the price of Daraprim to fund research, Biogen CEO George Scangos said: "Turing is to a research-based company like a loan shark to a legitimate bank."

"Personally, I think Martin Shkreli has become wealthy at the expense of the public good. I don't believe for a second that his manipulation of drug prices fuels valuable research as he has claimed," said Ms Katie Uva, a 2006 alumna of Hunter College High School in Manhattan where Shkreli attended.

This autumn, Ms Uva started an online fund-raising drive to match a US$1 million donation from Shkreli to Hunter in the hope of persuading the school to return the donation. So far, the campaign has raised about US$800 from 16 donors.

Shkreli captured attention in a way few others have. Part of this was timing. His action was seized on by Mrs Hillary Clinton, who was about to make drug pricing a campaign issue in the presidential race.

"Instead of a nameless company, there is a sardonically smiling face to attach to all of these issues," said Dr Aaron Kesselheim, an associate professor at Harvard Medical School and Brigham and Women's Hospital who has studied drug pricing issues.

News of Shkreli's arrest prompted Representative Elijah Cummings of Maryland, a leading Democrat on the House Oversight panel, to release a statement: "Mr Shkreli has lined his own pockets at the expense of patients who desperately need their medications, and he should be ashamed of himself."

But the criminal charges brought against him actually relate to something else entirely - his time as a hedge fund manager and when he ran his first biopharmaceutical company, Retrophin.

Federal officials described his crimes as a quasi-Ponzi scheme in which he used money from his company to pay off money-losing investors in his hedge funds. A Federal Bureau of Investigation official called his business schemes a "securities fraud trifecta of lies, deceit and greed".

Still, for many of his critics, Shkreli's arrest was a comeuppance for the brash, irreverent executive who has seemed to enjoy - relish, even - his public notoriety.

On Thursday, a satirical New Yorker column by humorist Andy Borowitz said Shkreli's lawyers had informed their client their hourly legal fees had increased - by 5,000 per cent.

In some ways, Shkreli has taken the heat off other drug firms. Most do not increase prices fiftyfold overnight, as Shkreli did. But they often increase prices 10 per cent or more a year, far faster than inflation.

"Because he played the part so well of the evil Wall Street hedge fund guy, Martin really drew attention away from the more serious issues with much bigger dollar impacts," said Mr John Rother, chief executive of the National Coalition on Health Care, a Washington organisation concerned with drug prices.

NEW YORK TIMES

A version of this article appeared in the print edition of The Straits Times on December 19, 2015, with the headline 'Bad boy of pharmaceuticals loses his swag'. Print Edition | Subscribe