In Which Forbes’ Matt Herper Offers A More Serious Look — At Martin Shkreli. Do Go Read It.

I had (again) planned a largely satirical piece for this evening, on one of Mr. Shkreli’s uncanny abilities — in this case, to alienate even top-notch, hard-boiled, expert criminal defense lawyers. [Yesterday Arnold & Porter filed papers in New York — to withdraw, as his criminal counsel. Speculation in legal circles presently runs along the lines that his weekend TV interview on Fox 5 NY had made it very difficult to represent him — given those very public statements — from his own mouth — that are at variance with what most sensible people would see as the likely truth, related to the matters involved. So (the speculation goes) the able firm indicated that it could no longer effectively handle his case — again, the idle speculation runs, of course.] That was going to be the gist of this. But then Matt messed up all of that largely meaningless fun.

So — as a grown-up, I’ll devote more column space to Mr. Herper — and ask you to read a far more sobering, and more broadly policy-shaping piece — which he dropped into Forbes online, this morning. It will be in the paper version in early February 2016.

The notion is not entirely original, but Matt makes the case quite forcefully: Shkreli is not an abberation — or an exception to the rule — no, he is the rule. When pharma CEOs say they are not like him, they are of course right insofar as none of them stands accused of seven felonies — and facing up to 20 years of federal incarceration. But, as Matt makes plain — and I hinted at in September 2015 — his price gouging is not uncommon in pharma. It is just dressed up — in better linens, when the majors play the game. That’s his thesis (and he deftly reiterates Shkreli’s early and abiding devotion to one “Fast” Fred Hassan, and less so lately — to Brent Saunders — Hassan’s protégé). So we had to mention it. Again. Do go read it top to bottom — especially the part toward the end, about allowing direct governmental negotiations — on pharma pricing. And on remimportation initiatives. Follow this link:

. . . .Martin Shkreli has a knack of saying exactly the thing that will make people angry. But the industry’s dirty little secret is that it is full of Martin Shkrelis, albeit less greedy ones with nicer shoes and more polished manners. They usually don’t raise prices on old drugs by 5,000%–just 50% or 500%. Over the past three years Merck’s price increases have amounted to 29% of its sales growth, Pfizer’s 34% and AbbVie’s 112%, according to consultancy SSR, which does health care research. . . .

This is pharma’s Shkreli problem. Yes, many new drugs must be expensive, or nobody would spend years and billions of dollars to invent them. But should Shkreli — or anyone else — be able to raise the price of a 62-year-old drug 5,000% in one fell swoop? What if he raised the price by just 200%? What if he made sure patients who can’t afford the drug get it for free — as he claims he does? Or if he promised to put some of the money into research and development — as he also says he does? Would any of this have made it okay?

We have a new measure for claims about drug prices: the Shkreli test. How would any justification for raising the cost of a drug sound coming out of Martin Shkreli’s mouth rather than smoothly parsed in legally vetted sound bites? Some price hikes, like those for innovative drugs, clearly pass. But many others don’t. . . .

[In 2012, Shkreli told Herper — over lunch — that he] wanted to invent drugs, and he’d started a company called Retrophin to do it. Shkreli initially got money to license a muscular dystrophy drug from investors including Fred Hassan, the legendary former chief executive of drug giant Schering-Plough, and Hassan’s protégé Brent Saunders. (Both now claim that their relationships ended quickly and Shkreli exaggerated their importance.) “The only person I needed affirmation from was Fred Hassan,” Shkreli told me then. . . .

For my part, I had said that Shkreli’s odious behavior was just Fred Hassan’s world-view, taken to its logical conclusion. That was in September of 2015 — long before his rain-soaked December perp walk. And so — I think the current leadership at PhRMA ought to be thinking now about making concessions to at least some of Candidate Hilary Clinton’s points — on pricing. The tide may have turned here, just as it did in mid-2008, on health care reform, more generally. We shall see.

Sleep tight one and all!


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