Martin Shkreli: The Symbol for the Cynicism in the Pharmaceutical Industry
Poor prominence for Martin Shkreli continues to develop as more news breaks about this former Turing Pharmaceuticals CEO. The spotlight has once again shined on Shkreli as footage surfaced of a hearing he testified at for the House of Representatives Committee on February 4th, in which he smirked and declined to answer questions. Infamously referred to by many as the “Most Hated Man in America”, Shkreli initially grabbed the attention of the public when he raised the price of Daraprim, an essential drug in treatment for patients with Malaria or HIV/AIDS, by over 5,000% ($13.50 to $750 per tablet). He once again made headlines when he was arrested in December on fraud charges for running a Ponzi-like scheme. Even if he is an extreme case, Martin Shkreli is seen by many as an embodiment of the dark side of the pharmaceutical industry. People argue that many companies greatly prioritise profit in this industry to the point that unethical decisions are made, even if these companies are operating in the crucially important field of human health. One of the recurring controversies in the industry is when selective data on pharmaceutical research is published. Adverse data collected by pharmaceutical companies, even data that can go beyond the scope of side-effects, has been known to be unpublished on occasion as companies compromise ethics for the potential profit to be made. Another controversy in the industry is that some pharmaceutical companies tend to develop close relationships with practicing medical doctors with the intention that the doctors will recommend these drugs to patients. Whether it is the cliché young attractive pharmaceutical sales representative that embellishes the drugs they are pitching to a medical doctor, the industry has garnered a reputation for pushing the limits of ethical behaviour at times.
The major price hike of Daraprim has sparked outrage amongst not just the users of Daraprim, but also amongst the general public. Many find it incredibly immoral for a company to raise the price of a drug as essential as Daraprim to the point that many users will struggle to afford it. As with America’s non-universal healthcare, “consumers” are subjected to price changes in drugs, even ones as significant as this. But for Shkreli, he looks past these outcries as he attempts to justify his actions in the economic sphere. In an interview with Forbes in December 2015, Shkreli has the audacity to say that if he could have done anything differently within this entire endeavour he “would have raised the price higher”, citing that he believes pharmaceuticals are more price inelastic than he estimated. A recurring notion that Shkreli presents in interviews is that this price change is all about maximizing profits, which he believes is his sole duty to shareholders. The many who are outraged by the price hike believe Shkreli has a duty to fulfil to all the stakeholders, such as the consumers of Daraprim. In any event, Shkreli’s pricing strategy may be ultimately unsuccessful in the long run as he is misjudging the market he is operating in. Shkreli is following a price-setting strategy common amongst monopolies because a true monopolist knows competitors will not emerge due to barriers of entry and thus consumers will have virtually no choice but to accept the price that is set. However, Imprimis Pharmaceuticals has developed and released a generic alternative (pyrimethamine) to the brand name Daraprim for only $1 per pill. While Shkreli’s title as the “Most Hated Man in America” stems as much from his unpleasant attitude as it does his price hike and fraud charges, it appears as though justice is being served in both the legal sphere and the economic sphere.