Healthcare · Entrepreneurship

Is Martin Shkreli to blame?

Anonymous

October 5th, 2015

Martin Shkreli, the American hedge fund manager and entrepreneur was criticized when Turing Pharmaceuticals obtained the manufacturing license for Daraprim, an out-of-patent medicine, and raised its price by 5,455 percent (from $13.50 to $750 per tablet). Was Martin’s 5,455% price increase on a life saving drug a great move financially as an entrepreneur, or was it unethical & wrong?Curious to hear reactions to this move...

Bill Wittmeyer CEO Electronic Sensor Technology INC

October 5th, 2015

If you asked this question using value neutral words you might get a different response than the answers you are going to get now. Devising questions to elicit information instead of confirming observer bias is hard.

Michael Barnathan

October 5th, 2015

It was wrong, but the economy and particularly the unique environment of the healthcare sector is set up in a way that incentivizes this behavior - demand for drugs is inelastic (if you need medication, you need medication regardless of how much it costs) and pricing is notoriously opaque. The costs to develop a drug are quite high (and as someone who had attempted a medical device venture in the past, I consider much of that regulatory overhead needless, but that's another topic for another day), which creates an easy justification for any ridiculous price changes (even though this one involved no additional research costs, making the justification rather flimsy)

It would have been a stupid move regardless, as this drug is no longer patented. If he were not forced to backpedal, driving the price up so drastically would have created an opportunity for competitors to undercut him, piggybacking on the drug development that's already been done.

Bruce Preville Sustainable Cities Initiative

October 7th, 2015

Capitalism didn't used to be associated with selfish motives only. Consider that the market is operating within our society exactly as designed. Social technologies like Facebook, etc. are now enabling huge publicity and shaming of those displaying such selfish motives, and in fact he flinched big time. Thus society has reinserted itself and continues to do so into the marketplace, as societies have always operated against those who seek selfish gains. It's working and took new technologies to rally the public against the advantages in our complex society that some business people have grown too comfortable taking advantage of. Keep the observations and shaming going, it's working.

In fact, WE would be to blame for the negative impact on society if we did not do this shaming.

Leah Kaminsky-Levy Managing Editor, Content Stragiest and Head Writer

October 5th, 2015

It was definitely unethical and wrong. It was also a terrible move as an entrepreneur. He operated under the misconception that morality and the markets are two separate entities. They shouldn't be, and they're *not* if the moral outrage is so overwhelming that he had to backtrack and set a lower price, ruining along the way his own reputation and that of everything he invests in from here on out. If this were a similar move regarding a product the users had more of a choice about using, they would certainly have flocked to competitors; the fact that they have so few to turn to is a part of the heinousness of this act. Not a smart move in any sense.

Hans Li Research and Development at Accenture Technology Labs

October 5th, 2015

I think Martin's main targets are the insurance companies and the profit chasing medical industry as a whole. The patients are just a by-product of this conflict.

William Holz

October 5th, 2015

It's quite definitely unethical, but it was also a pretty big business risk. It doesn't come across as shrewd from any perspective and looks more like the sort of move somebody who has been succeeding despite himself would make rather than some extremely clever chess move.

A high cost coming to market can be justified as part of R&D and ramp-up costs, but with the product already in the market it was guaranteed to raise red flags on the insurance company side, so even without the fact that it's a life-saving medication makes things that much worse with the almost predictable public relations disaster we're all seeing.

Edit to Add: Stephen Salaka makes an excellent point in that it's probably a good thing for us as a society. This has been a problem for a long time and it hasn't been getting the attention it deserves. And as Michael Benjamin points out above this is a pretty odd hill to die on from a competitiveness standpoint as the drug doesn't have much for monopoly protection at this stage of it's lifecycle.

Stephen Salaka Product Development Manager at Tsunami Tsolutions LLC.

October 5th, 2015

It was actually a great move. Although there were people who were impacted by this move, it brings to the forefront of the media attention the problems with the pharmaceutical companies. 

His was not the first and was by far not the worst of the price gouging (some other recent movements have impacted a much more significant population). This sort of thing happens all the time and will not be the last time this happens. 

http://www.washingtonpost.com/news/wonkblog/wp/2015/09/21/how-an-obscure-drugs-4000-price-increase-might-finally-spur-action-on-soaring-health-care-costs/

http://www.zerohedge.com/news/2015-09-28/dear-martin-shkreli-how-you-hike-drug-prices

While the move itself is nothing saintly - the fact that this is sparking discussions is a very, very good thing. 


Steve Everhard All Things Startup

October 5th, 2015

Put the morality question to one side, and perhaps even the wisdom of hiking an out of patent drug with a low user base. He lost mostly because he didn't manage the story so he came across and gauging and arrogant and his profile image reinforced that conclusion.
Turing has virtually no other product. He spoke about reinvesting in better drugs when no-one thought they needed one, and with no research facilities to speak of that reounded like a dropped bell. Whatever Turing decides to do their offerings will be seen as expensive, even if they are not. 
Regardless of whether the pricing strategy was justified or not from a business perspective he lost control of the message. A sanguine lesson for everyone.



Anonymous

October 8th, 2015

hey Chris, be aware of the fact that people from other countries with a completely different background are on this site as well. Let's keep the politics out of the discussion.

Bill Wittmeyer CEO Electronic Sensor Technology INC

October 8th, 2015

Dirk de Kok

It is named "The London School of Economics and Political Science" because it is not possible to separate politics and economics. They are part of the human condition. 

And if one cannot deal with disagreement, and different ideas, even if expressed crudely or passionately  stop reading.