Martin Shkreli – “Pharma Bro” Price Gouger

Brooklyn-born Martin Shkreli should have been celebrated as another example of the American Dream fulfilled. Shkreli was born to Albanian and Croatian immigrants who worked as janitors. He grew up in Sheepshead Bay and was a bright student. Shkreli attended Hunter College, later donating $1 million to the institution, and then earned a bachelor’s degree in business administration from Baruch College.

“Pharma Bro” Martin Shkreli testifying before the US House Committee on Oversight and Government Reform in 2016.

A wildly successful entrepreneur and pharmaceutical executive, Shkreli founded the hedge fund MSMB Capital Management, was co-founder and former chief executive officer of the biotechnology firm Retrophin, and founder and former chief executive of Turing Pharmaceuticals.

Yet it was his cut-throat pricing strategy at Turing that turned heads.

Shkreli founded Turing Pharmaceuticals in February 2015, setting the company on a course to secure licenses on out-of-patent medicines and re-adjust pricing schemes to exploit opportunities.

And patients.

As distribution of these drugs is usually limited to smaller populations, they often do not have generic alternatives. By closing distribution and jacking up prices, Shkreli knew he could profit greatly.

But at what cost?

Turing acquired Daraprim (pyrimethamine) in 2015, an FDA-approved therapeutic drug in use since 1953. Among the drug’s various applications, it is used to treat AIDS patients.

When news hit that Turing raised the price of the drug by 5,556 percent, or $750 per tablet, from $13.50, the reaction was immediate.

Overnight Shkreli was crowned “The Most Hated Man in America” on dozens of media outlets and websites. From medical associations and presidential candidates to news anchors and national radio hosts, everyone with a platform or a podium was slamming the young Brooklyn billionaire who acquired a life-saving drug and made a fortune with it exploiting the simple laws of supply and demand.

After months of intense scrutiny and resounding public condemnation, in December 2015, Shkreli, condescendingly dubbed “Pharma Bro” in the media, was arrested by the FBI and indicted on federal charges of securities fraud.

In a high-profile federal trial, Shkreli was convicted on two counts of securities fraud, as well as one count of conspiring to commit securities fraud. At sentencing, Shkreli was hit with seven years in federal lock-up and slammed with $7.4 million in fines, a pittance compared to the fortune he has amassed.

Denied incarceration in a low-security camp, Shkreli is serving his time in the federal prison at Fort Dix, New Jersey.

In an interesting postscript to this story, prior to his conviction, Shkreli drew more consternation when he took $2 million of his ill-gotten gains and used it to purchase rap mega-group Wu-Tang Clan’s infamous unreleased one-of-a-kind album Once Upon A Time In Shaolin.

Shkreli scheduled a listening party at Webster Hall in Manhattan. On social media Shkreli promoted the event as “An Evening with Martin Shkreli,” featuring lecturing on politics, healthcare, investing and other topics.

The event was canceled due to numerous death threats.

 

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