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Martin Shkreli Is a Grinch, but His Arrest Won't Drop HIV Drug Prices or Expand Access

December 18, 2015

JD Davids

JD Davids

Martin Shkreli is a unifying factor, the Pharma Bro We Love To Hate. With his boastful, greedy practice of making money off lifesaving treatment, cocky self-promotion of his jerky business practices and snagging of a super rare Wu-Tang Clan album, we're just not liking this guy.

After his arrest yesterday for securities fraud, the crisp photos of his perp walk were perfect revenge eye candy. I know you've been doing plenty of clicking and gloating about it -- I have been too.

But here's the thing. His arrest has everything to do with laws that help investors watch their own backs. It has nothing to do with laws that protect the health care system or all of us who depend on it. Because, well, those laws don't exist, and a thousand Grinches grin.

Shkreli was arrested for running a "Ponzi-like" scheme, in which he allegedly used money from his first pharmaceutical company to pay off investors who had lost money from his hedge fund.

Or as Wu-Tang Clan might put it, "Cash rules everything around me. C.R.E.A.M. get the money, dolla-dolla bill y'all."

But don't get things twisted and think that justice is about to be served for disgraceful drug pricing and barriers to access.

The drug pricing shenanigans that put the spotlight on Bro in the first place are perfectly legal. Shkreli's a smart guy who figured out how to rake it in through regulatory loopholes, and we're only screwing ourselves over if we think that his comeuppance will make any difference in the availability and widespread use of these loopholes in the profit-driven pharmaceutical industry.

Shkreli's arrogance put a spotlight on activities that allow investors to run rampant over the needs of patients and public health programs. Let's review:


  1. Shkreli has a drug that's long off-patent, Daraprim (pyrimethamine), which treats a parasitic infection that can be life threatening to babies and people with damaged immune systems from untreated HIV or other conditions.

    In addition to jacking up its price, Shkreli locked up its access by controlling distribution, meaning (among other things) that there's not enough of the drug around for generic manufacturers to do comparative studies that could allow them to put out their own versions at appropriately lower prices.

  2. Next, he acquired a company that makes a treatment for Chagas disease, another doozy of a parasitic infection rarely seen in the U.S.

    For now, people in need in the U.S. can get access to the Chagas disease treatment -- benznidazole -- for free from the Centers for Disease Control and Prevention experimental treatment.

    Is this just another price hike opportunity for Shkreli? Actually, it's probably much more.

    Shkreli has a valuable incentive for getting a treatment for a rare tropical disease approved in the U.S.: a voucher entitling the holder to quicker approval of an additional drug, meaning more time to sell it. That voucher can be sold to another company for hundreds of millions of dollars.

And it's all perfectly legal. While most pharma price hikes aren't as extreme as the Daraprim example, and these voucher sales happen without much public scrutiny, these tactics are not exceptions. They're business as usual -- big business.

So, let's map out the real geometry of this situation:

Pharma Bro starts popping his mouth off and putting a well-deserved spotlight on the kind of greedy debacles that have been happening for decades in the interface between investment, drug development and patents.

That makes the Pharma Big Daddies real mad, what with little Bro spilling all the secrets and inviting scrutiny. So they're painting Shkreli as the Grinch who put garlic in the soul of the drugmaker industry.

"He is not us," said Kenneth C. Frazier, chairman of the Pharmaceutical Research and Manufacturers of America, the pharmaceutical industry's main trade group, according to the New York Times.

Isn't he, though? Shkreli might a particularly bad apple in the orchard of the pharmaceutical investments, but he hasn't fallen far from some very big trees.

There's not just one bad guy in the drug pricing and access debacles that cost lives worldwide. Our health care system is one that depends on the imagined or exaggerated beneficence of hugely profitable companies that -- particularly in the U.S. -- thrive on a lack of checks on drug pricing and a myriad of pharma-friendly loopholes that can thwart efforts to lower costs and expand access.

It's an industry full of Grinch moves; they're just usually made out of the spotlight.

As just one of many examples, Gilead Sciences's drug pricing strategies for its curative hepatitis C drugs Sovaldi (sofosbuvir) and Harvoni (ledipasvir/sofosbuvir) were so deeply profit-driven that even the U.S. Senate eventually had to sit up and take notice:

"Drawing from 20,000 pages of internal company documents, dozens of interviews with health care experts, and a trove of data from Medicaid programs in 50 states and the District of Columbia, the investigation found that the company pursued a marketing strategy and final wholesale price of Sovaldi -- $1,000 per pill, or $84,000 for a single course of treatment -- that it believed would maximize revenue. Building on that price, Harvoni was later introduced at $94,500. Fostering broad, affordable access was not a key consideration in the process of setting the wholesale prices," concluded the U.S. Senate Committee on Finance, after the completion of an 18-month investigation.

Fortunately for the collective Big Pharma club, it looks as if there's a way to take Shkreli out for cooking the books from his hedge fund days -- through laws that actually have some teeth, as opposed to those governing drug pricing. So, Shkreli's downfall has nothing to do with him being the Pharma Bro, and we allow that at our peril.

We need to close the loopholes that put greed above need for lifesaving treatments, and establish real limits on the pricing of pharmaceuticals.

And that will take dogged work going up against the vested interested of Big Pharma, with their battalions of lobbyists and squadrons of public relations managers.

It's been a long time since the HIV community came together to scale up big time against drug pricing. May that be our gift from the Grinch this year, as we set our priorities for 2016.

JD Davids is the managing editor for and Follow JD on Twitter: @JDAtTheBody.

Copyright © 2015 Remedy Health Media, LLC. All rights reserved.

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