Drug Profiteer’s Price Gouge
Brazen move vilified on social media, may draw federal action
Extreme backlash — among patients and also lawmakers — against a drug company’s decision to price-gouge consumers on a 62-year-old medication used by some AIDS and cancer patients may be a tipping point in the national battle over soaring health and drug costs.
Turing Pharmaceuticals CEO Martin Shkreli, 32, announced last week his company would increase prices on Daraprim, a protective medication for food-borne illness. His hike? From $13.50 per pill to $750 — a more-than 5,000 percent increase, and one certain to make it out of reach for many who need it to survive.
His actions also caught the attention of Washington, where furious politicos called for something to be done to stop such tactics.
The Washington Post compared the decision to someone waking up one morning only to discover that gasoline now costs $100 per gallon. It also described Shkreli as a “new icon of modern greed.”
Shkreli’s quick decision — and heartless early defense — quickly engulfed social media, where the corporate millennial and one-time hedge fund co-founder was called out as thoughtless.
His actions also caught the attention of Washington, where furious politicos called for something to be done to stop such tactics. Even Democrat presidential candidate Hillary Clinton expressed anger, taking to Twitter to say she would introduce a plan to keep it from happening.
Amid the outrage, Shkreli relented, lowered the price on the drug and tepidly apologized. But he has become a youthful whipping post for the Snapchat set, with its generational less-is-more consumerism. They are, in a word, pissed.
“Half the country doesn’t like drug companies. The other half of the country doesn’t care. But in terms of the business, it’s been a wonderful move.”
He was described in one online account as “big-pharma’s biggest a**hole.”
The rakish Shkreli doesn’t seem to mind, telling Forbes’s Matthew Herper, “The media backlash is not something I take too seriously. Half the country doesn’t like drug companies. The other half of the country doesn’t care. But in terms of the business, it’s been a wonderful move.”
It seems Shkreli could be called upon soon to visit Capitol Hill — and it won’t be to tour monuments and dine in Georgetown, some suggest.
Lawmakers sent out a letter to his company Monday seeking information about its profits, its company executives and sales data, drawing Turing Pharmaceuticals into an ongoing congressional investigation over soaring drug prices.
“The enormous, overnight price increase for Daraprim is just the latest in a long list of skyrocketing price increases for certain critical medications,” wrote Democrat presidential candidate Vermont Sen. Bernie Sanders and Maryland’s Rep. Elijah Cummings in a statement. “Americans should not have to live in fear that they will die or go bankrupt because they cannot afford to take the life-saving medication they need.”
Shkreli initially dubbed his 4,000-percent price hit on Daraprim as “altruistic.” After reversing course, he told ABC News Tuesday, “We’ve agreed to lower the price on Daraprim to a point that is more affordable and is able to allow the company to make a profit, but a very small profit. We think these changes will be welcomed.”
He did not confirm a specific price. It’s also not the first time he’s tried such a tactic.
In 2014, flying largely under the radar, Shkreli, working as CEO at another company, Retrophin Inc., went after the drug Thiola, Business Insider noted. Its price was raised from $1.50 per tablet to $30.
Thiola is used to treat cystinuria, a rare and incurable kidney disease. Adult sufferers have no other drug alternative and must take up to eight pills daily — a cost of $240 a day, it noted.
Shkreli’s attitude amid the brewing controversy earned him names unfit to print. And his public conduct raised eyebrows.
When John Carroll, an editor of the publication Fierce Biotech, took to Twitter to ask Shkreli to explain, seeking a public statement on the move, the exec made it personal, calling Carroll in a Tweet “such a moron.”
Later, appearing on “CBS This Morning,” he defended his decision. “Any company selling it would be losing money. At this price it’s a reasonable profit, not excessive at all.”
Undaunted, he was soon doubling-down. “I can see how it looks greedy, but I think there’s a lot of altruistic properties to it.” The last quote he uttered with a smile.
His public pettiness strained the bounds of executive etiquette, and heightened concerns that other companies could follow suit.
Forbes called the whole incident a “gift” for politicians and “perhaps an enduring headache” for biotech.
Wall Street was unhappy with the fracas and attention to drug costs. Biotech stocks fell off on Monday after Clinton announced she was going after such drug price-gouging efforts. The Associated Press noted, “It was the one of the worst days of the year for the stock market performance of the biotech industry.”