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I am a fund manager and I have followed Martin Shkreli since his prior company, Retrophin, went public about two years ago. Simply put, Martin is a sociopathic

• cmiles74 11y ago
  It seems to me that the overall result would be other companies start manufacturing the generic and sell the drug for maybe 20% less than Martin and over time the price drops back down towards where it once started. In the meantime, this company either goes bankrupt or is sold off. Or the government passes a law capping how much you can raise the price of a generic drug over so many years.
  • bedhead 11y ago
    That's the loophole though, the quantities are so small that realistically, no pharmaceutical company has the incentive to make their version of the drug, even at $750 per dose. There are still costs to making a drug that's off-patent, and sometimes the number of patients being treated is only in the double digits. Additionally, a competing drug released at say, $500 per dose would still be considered predatory anyway. This is really the backwater of pharma. The case of KV Pharmaceuticals that I cited was a little different since compounding labs had already been making the drug Makena. In that case, the FDA actually sent these labs a letter essentially saying, "Go ahead and keep making the drug even though KV now has a patent for it. We are choosing to not enforce their patent because their price increase was bs." Maybe the government can prove its worth and get off its ass and quickly figure out how to close this loophole, then go after Martin and others like him.
    • danmaz74 11y ago
      They should just allow importing drugs from other markets that have good enough quality standards - like the EU or Canada I guess. Problem solved.
      • imdsm 11y ago
        Can this drug be reproduced by others? Is it simply a licensing issue?
        • TD-Linux 11y ago
          All of the drugs mentioned in the article have had their patents expire long ago.
      • ssmoot 11y ago
        But who provides the quality standards oversight? The drug is apparently produced in India. What if pills were shipped to the US and it was found after the fact that many batches contained unacceptable levels of iron? Who to blame? I'm sure Canada has decent oversight, but who wants to say that the solution is no direct US agency oversight, and that we want a "Pharmaceuticals-NAFTA"? It seems funding oversight with a "homeland" agency is one issue you could get bipartisan support on. While sure, I doubt many have a problem with medical tourism, I'm not sure bringing drugs across the border intended for distribution without FDA approval is the answer. On the other hand maybe countries working together at the agency level to ensure their oversight measures are in compliance with some agreed upon standard is a sane way to move forward. But then who maintains the list of approved drugs? Is that power given to some international body? Or does the FDA still have to approve drugs for distribution and only alternatives are brought in? And then what about drugs that are patented in the US (like this one), but freely available in other markets from other manufacturers? It seems a worthy enough goal in general, but I don't think a fully libertarian approach to the problem comes close to being the right answer either.
        • danmaz74 11y ago
          > Pharmaceuticals-NAFTA I'm not a libertarian and I'm in favor regulations when needed, but in this case I think that recognizing drug testing and quality controls between countries that have similar standards would be a great help at curbing costs. "FDA approval" in this case should mean that the FDA could recognize that if agency X from Country Y says that a generic pharmaceutical is safe, you don't need to do the same tests again. Of course this should work both ways - I'm from the EU, and I'd like to be able to get drugs manufactured in the US when they're cheaper and just as safe.
  • Bluestrike2 11y ago
    That's exactly what would happen, but the generics companies can't procure sufficient samples due to the changes in how Daraprim is distributed. So long as Shkreli is able to control distribution tightly enough, there's no worry about a generic coming onto the market.
    • dperfect 11y ago
      I don't completely understand how they can effectively prevent generics companies from producing it (even through tightly controlled distribution), but if that's the case, I believe that should be the story here as opposed to the bit about raising prices. Under normal market conditions, either the demand and price will naturally incentivize generics to enter the market (even at high costs), or this is really not much of a story because the total addressable market is so small that price * demand won't significantly move the needle in the books of insurance companies who will be paying for it. If total addressable market is significant and the producers can manipulate the market in ways outside of patents to abuse monopoly power, then that's the misdeed (in my opinion), not the raising of prices. In other words, with very few exceptions it's futile to blame a company for their prices. On the other hand, if unscrupulous manipulation of a market is the culprit for unreasonable prices, that's where we should demand/enforce a higher standard.
      • sageikosa 11y ago
        Or perhaps the story should be about how the drug market is not normal. It is regulated, i.e. ruled, by bureaucratic policy and operating procedures.
    • nhstanley 11y ago
      Why would they need samples when the chemical structure is so widely known[1]? It's not like it's a biologic where sequence and other formulation details are critically important. Can you explain? [1] https://en.wikipedia.org/wiki/Pyrimethamine https://en.wikipedia.org/wiki/Pyrimethamine Edit: I noticed that paulmd, further down, explained why this is important. I didn't realize the rules were this stupid. The FDA should be able to force companies to make their product available for comparison testing. It's insane that it isn't the case.
  • anigbrowl 11y ago
    The strategy is to prevent other companies from manufacturing the generic by withholding supply from them so as to prevent them demonstrating bioequivalence. ISTM that the least-onerous regulatory solution would be to require manufacturers to provide supply at cost to FDA on demand for testing purposes.
    • zaroth 11y ago
      It seems amazing that supply can be clamped down to such an extent that a competitor literally couldn't obtain some samples for bio-equivalence testing, even under a false pretense if necessary. Completely agree that if someone is willing to pay the list price, they should be guaranteed availability within some reasonable time-frame for testing purposes. I assume if the only drug line is effectively "shut down" then there's no way to run bio-equivalence and to bring on a new manufacturer they must test some other way? I guess whatever that procedure is, should take effect if the pills can't be ordered for testing.
  • marincounty 11y ago
    "Or the government passes a law capping how much you can raise the price of a generic drug over so many years." Congress, controlled by Rebublicans, right now, won't let government get involved. I don't even want a cap. I would just like governmental over site/approval on Pharmacutical accuisition. I asked my pharmacist why my generic drug(not orphan drug, noting fancy) is going up in price. I don't know if she's right, but she told me big Pharmacutical companies are buying out generic drug companies, and raising the prices of the generic drug, or shutting the newly bought company--so they can keep supply down? I don't know if this is going on, but i've heard it, from at least, two sources. I know it sound extreme, and hard to imagine, but these pharmacutical companies are loaded with cash? Plus, they have government protection--can't buy from Canada, etc. So, in the end, we are going to be at their mercy? As to just effecting Insurance Companies, my prescription formulary excludes so many drugs, or makes them difficult to buy; I pay out of pocket. These drug prices are coming out of our pockets. (It's not just this future bottom boy at some federal correction facility, it's most of these Pharmacutical companies, or hedge funds? I can't tell the difference anymore. Oh yea, Biomarin seems just as shady, but because people don't understand what they do, they seem to just get a pass?)
• thomnottom 11y ago
  When I saw the headline I had a feeling it would be Turing. I was contacted by a recruiter last year and had a couple conversations about joining them as they were looking for an IT guy - the CIO was doing all of that work and they wanted someone else to be hands-on and eventually build a team. Sounded like a great opportunity and things were progressing. Then I bothered to Google them... Once I read up on Martin Shkreli I told them that I did not think it was the kind of place for me and withdrew. I have no idea if they would have hired me or anything, but just reading about him gave me a sick feeling in my stomach.
  • odonnellryan 11y ago
    How did they respond?
    • imdsm 11y ago
      Maybe they bought his apartment and put his rent up by 5,455%
      • kordless 11y ago
        Those apartments are so rarely used that the impact on the rental system would be minuscule!
      • wdr1 11y ago
        Sure, but that's just San Francisco.
    • thomnottom 11y ago
      I never got a direct response from them, but since the recruiter continued to reach out to me for other opportunities they must not have been too upset about me bailing on the meeting. I did avoid using any terms like "criminal behavior" in my response. :)
  • thomnottom 11y ago
    Just wanted to clarify one mistake - it was actually February of this year. I checked my emails after seeing the dates listed in the articles.
• drzaiusapelord 11y ago
  From an economic and policy perspective, unfortunately, Turing is doing everything right. Makena is probably not a great comparison as its used for prevent early birth, which is something of an edge case for certain pregnant women, versus Daraprim, which is a more common drug. It is the only FDA approved drug for Toxoplasmosis. According to wikipedia: Up to half of the world's population is infected with toxoplasmosis.[8] In the United States about 23% are affected[9] and in some areas of the world this is up to 95% What no one seems to be discussing here, is why there is such a long approval process from the FDA for generics? Ideally, someone should be able to ramp up production of this quickly, but apparently it takes years just to get the FDA to test your generic, even if its detected in the lab as being 100% chemically identical to the now expired patented drug. Turing is using this lag time to its benefit, but why aren't we yelling at the FDA to move faster on this kind of thing? I guess this might be moot because Turing can simply drop prices to scare off the investors of this hypothetical generic competitor. Say its x amount to launch this and they need to sell at $25 a pill for 10 years to break even. Turing now drops its price to $24 a pill. They're going to have a lot more flexibility here than someone entering the market from scratch and as long as they're selling above the old generic rate, they will continue to make serious money. Also, from perhaps a less practical POV, considering what the government spends on medicare (3% of our GDP), perhaps it should be building its own generic drug producing plants. Private industry has 20 long years to make profit on patented drugs, but after that it should go into a federal program. This avoid these situations entirely, cut costs, etc. Or regulate prices on generics, or heaven forbid, finally bite the bullet and migrate into a Euro-style socialized medicine/single payer system and be able to bargain with big pharma as one 800lbs gorilla as opposed to hundreds of 6lbs capuchins. Expecting people seeking profit to "act nice" is asinine. We can insult Shkreli all day but it doesn't change the status quo. Even if he's an outlier, how long is your average white collar criminal case resolution, assuming he's even doing something illegal? 2, 3, 4, or even 5 years? That's a long time for a drug to be off market or be unaffordable to people who need it. Right now a lot of people are looking at this business plan with envy. In fact, this kind of generic trickery is status quo - see the "reformulations" of generics and then stopping production of that generic. The system is broken if it allows this kind of thing. What we need is a system that's not broken and that can't be gamed this easily. The current regulation model guarantees companies like Turing doing exactly this. Sadly, online discussions often degenerate into witch-hunts with the assumption that if we stop this one guy, then everything will be fine. I guess its much less emotionally satisfying to discuss systemic political or regulatory issues.
• logicallee 11y ago
  I don't know who you are, but my reaction is that a comment like this shouldn't be stated in the exact tone you've chosen/reacted with. (I looked through your past few comments, and a lot of them are the same way - "There is no shortage of scammy software companies like AVG, but what always cracked me up about AVG was their logo.") I like the fact that HN is a particularly civil place - it's in the guidelines. Now granted, AVG or Martin Shkreli aren't a member of the HN community in a very narrow sense (though I'm sure AVG engineers read it), unlike a startup founder. But I would appreciate it if you would hedge your statements, lead with the facts, and make them subjective. It may sound like reserved understatement if you do so, but people here know how to read between the lines. I don't object to any of the facts you've presented, in fact your view is appreciated here, and you don't have to be "neutral", you're not Wikipedia. I just wish you would take a moment and phrase it more carefully. HN has a rule, no gratuitious negativity, and civil discourse. (Again I'd like to emphasize that I enjoyed reading your take and the facts you've presented.) EDIT: This comment is now at -4. I'm sorry, downvoters are not following HN policy. "Simply put, Martin is a sociopathic criminal with a well-established, and consistent track record of deceit, recklessness, failure, and just plain old stupidity" without references, and "In all my years of investing, he is one of the most unique scumbags I've ever come across" is extremely inflammatory. As you can see from the number of replies that it has generated. We don't need to make HN reddit. The facts speak for themselves - when they're presented.
  • anigbrowl 11y ago
    I didn't downvote but I do disagree with you. It's a blunt opinion, but one supported by reference to the article and to the cited litigation, from someone with meaningful perspective as a professional investor - in the same way I'd be OK with a professional crypto researcher saying 'Product X is blatantly insecure, and Software Company Y is dishonest when it claims otherwise,' or any number of other contexts. I'm with you on thinking one should be diplomatic most of the time absent full possession of the facts, but I don't think one should hedge one's personal experience as long as its appropriately qualified. In this case I saw an unusually blunt opinion, but one formed with additional information that I don't have access to. I don't take the opinion at face value, but it expands the scope of the discussion with additional data rather than being purely a reaction to the NYT article, not least because the author of the opinion is signaling a willingness to risk reputational damage by making such blunt statements.
• johansch 11y ago
  Isn't this one of those very few cases were nationalisation of a company is called for?
  • nickff 11y ago
    Why do poor business decisions make a case for nationalization?
    • infamouscow 11y ago
      Because we've agreed that the public can't hunt these people down and kill them for this kind of nonsense.
      • nickff 11y ago
        I have re-read your comment a dozen times, trying to grasp what you mean, and come up short each time. Do you mean to say that whenever a business makes a decision that you disagree with, you (or someone else) should feel morally entitled to go a kill the individuals working there? Or do you mean that whenever a business makes a decision that you disagree with, the state is entitled to focibly take the company? I personally find both to be morally problematic (to say the least), and unless you can establish a viewpoint neutral rule for this new criteria for nationalization (or murder), it will be enforced arbitrarily and capriciously.
        • supercanuck 11y ago
          >I have re-read your comment a dozen times, trying to grasp what you mean, and come up short each time Keep trying, don't give up
        • zem 11y ago
          would you complain about the state simply setting up a plant to manufacture and distribute a generic version of the drug, thereby driving the predatory company out of business? that seems like it would be an ideal solution that doesn't involve forcibly taking anything away from anyone.
• kgwgk 11y ago
  As Derek Lowe said recently, biopharma will not be dull as long as Martin Shkreli’s around http://blogs.sciencemag.org/pipeline/archives/2015/08/19/biopharma-will-not-be-dull-as-long-as-martin-shkrelis-around http://blogs.sciencemag.org/pipeline/archives/2015/08/19/bio...
• jmsdnns 11y ago
  If this was done slowly, it could be an extremely effective strategy. Not too different from what Berkshire did with See's Candies. http://www.fool.com/investing/general/2014/07/13/warren-buffett-bought-this-company-for-25-million.aspx http://www.fool.com/investing/general/2014/07/13/warren-buff...
  • francoisdevlin 11y ago
    Except... 1. No one dies if they don't get See's Candies 2. There are other chocolates out there
    • elevenfist 11y ago
      And you can make chocolates in your kitchen with ingredients from a grocery store.
    • jmsdnns 11y ago
      I didn't mean to suggest what he's doing is good. Just that it's a common business strategy and this person applied it in a horrible way. Most people don't want to get rich slowly, as Charlie Munger says
  • cm2012 11y ago
    That's really very different. Berkshire isn't undercutting anybody in price with See's, just getting a premium for a brand name.
    • jmsdnns 11y ago
      That is a fair distinction. I believe the common thing between them is exercising untapped pricing power.
• JTon 11y ago
  Your post tickled my curiosity. So I went to Wikipedia... and found this: http://imgur.com/lNpPWkP http://imgur.com/lNpPWkP
  • rev_bird 11y ago
    I was less surprised by the vandalism than I was by how tame it was.
    • fudgy73 11y ago
      Looks like it's gotten a bit worse: http://imgur.com/a/7X0Wt http://imgur.com/a/7X0Wt
      • deleted 11y ago
        [deleted]
      • Natsu 11y ago
        The sad thing is that it made my try to remember the biography of living persons rules to figure out whether any of those quotes could be kept if they were noteworthy and properly sourced.
• 404error 11y ago
  The masses should make a long term bet and short the company stock if its listed.
• afr6262 11y ago
  Shkreli seems like a scumbag but how is that different from what Valeant, Mallinckrodt and others do. Buy another pharma company and jack up the price. http://www.wsj.com/articles/pharmaceutical-companies-buy-rivals-drugs-then-jack-up-the-prices-1430096431 http://www.wsj.com/articles/pharmaceutical-companies-buy-riv... I'm honestly looking for an answer here. Maybe there is a good reason Valeant can and should be able to get away with it.
  • closetnerd 11y ago
    Short answer is they're not different. He likely has a brash personality making him an easy target.
    • m_mueller 11y ago
      In other words, blame the game. From where I come from it seems very strange that medical services / prescribed medicine has free floating 'market prices' in the US. There is no such thing as a functioning market for these products - you have complete information asymmetry as well as government enforced monopoly on medication (pharmaceutical patents). Letting the providers set the price is just asking for trouble. Negotiating medical prices on government level and setting fixed prices for medical services (adjusted periodically) is absolutely necessary for a functioning general healthcare.
• deleted 11y ago
  [deleted]
• unsupak 11y ago
  He's no different from the other Wall Street thugs. Though he being an outsider may stand out more and make an easier target for NYT compared to his other colleagues.