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January 13, 2016 | by Sarah Massey, M.Sc.
The drug pricing debate has increasingly been at the forefront of the minds of politicians, pharmaceutical companies and the public. While growing unrest over pharmaceutical affordability has steadily increased over the years, one man single-handedly catapulted the issue of poorly-regulated drug pricing measures, back into the limelight.
By now, most people have heard about Martin Shkreli’s most infamous move: his company, Turing Pharmaceuticals, decided to elevate the price of a 1950’s-era antiparasitic drug called Daraprim, by a staggering 5,000 percent. While Shkreli certainly didn’t invent the practice of acquiring an old orphan drug and increasing the price to maximize profits, he did take the practice to a new extreme inciting widespread concern over pharmaceutical companys’ seemingly untouchable control over drug pricing.
Those following the recent developments with the Turing Pharmaceuticals CEO surely have heard about Shkreli’s recent arrest on charges of securities fraud, but what were the events that led up to Shkreli’s arrest? While being taken into custody has nothing to do with his pricing decisions as CEO of Turing, the years leading up to the controversy surrounding Daraprim reveals detail about Shkreli’s entry into the pharmaceutical sector, and his contribution to the reputation of greed often conferred upon the pharma industry.
One year later, Shkreli is ordered by a judge to pay the former investment bank, Lehman Brothers
, $2.3 million after failing to pay up on the losing bet that the market would fall. Lehman Brothers declared bankruptcy in 2008 and was never able to collect the debt from Elea or Shkreli.
- Shkreli founds another hedge fund, MSMB Capital Management, where he preaches the virtues of shorting biotech stocks – or betting that a stock will fall – while taunting the same companies on social media.
- Shkreli founds his first pharmaceutical company, Retrophin, and focuses on acquiring drugs used to treat rare diseases. His company acquires Thiola – a drug used to treat a rare but painful form of kidney stones known as cystinuria – and quickly raises the price from $1.50 per pill to $30 per pill. The 2000 percent price hike incites some criticism from those in the industry.
- Shkreli is replaced as CEO of Retrophin, and resigns from the company not long after.
- In February, Shkreli founds Turing Pharmaceuticals
- In August, Turing acquires the rights to Daraprim, a drug used to treat infection with toxoplasmosis which was originally approved in 1953, for $55 million from Impax Laboratories.
One week after acquiring Daraprim, Retrophin raises a lawsuit
against Shkreli, claiming he used company funds to pay investors that lost money in his failed hedge fund. Shkreli claims the company owes him $25 million and files an arbitration
case against Retrophin.
In September, Turing Pharmaceuticals raises the cost
of Daraprim by over 5,000 percent – from $13.50 to $750 per pill.
A few days after the announcement that precipitated unprecedented anger from the general public and sparked debates over the current state of drug pricing, Shkreli recantes
the price hike without specifying the new price of the drug.
In November, Shkreli buys failing pharmaceutical developer, KaloBios
, after the company announces that they plan to shut their doors. Shkreli sees promise in the KaloBios-owned drug, lenzilumab – a drug that failed in a clinical trial for severe asthma but could have an application in treating chronic myelomonocytic leukemia (CMML).
Shortly after buying a controlling stake in KaloBios and appointing himself CEO of the company, Shkreli expresses his intention to once again raise the price of a drug. This time, the drug is question is Benznidazole
, which is used to treat the rare parasitic infection known as Chagas disease and is awaiting FDA approval.
November also saw the much-anticipated announcement of the revised price of Daraprim. Turing announces it will offer a 50 percent price
reduction on Daraprim for certain hospitals.
In December, Shkreli is arrested
on charges of securities fraud in which the FBI alleges that the CEO was misappropriating funds from his former company, Retrophin, to appease angry investors in his hedge fund, MSMB Capital.
One day after his arrest, Shkreli resigns
as CEO of Turing after posting his $5 million bail, and asserting his innocence. Shkreli’s $45 Million E*Trade
account was used as security for bail.
Just before the end of 2015, KaloBios files for bankruptcy
and announces plans to restructure the company.
- Shkreli is set to appear in court on January 20th.
A spokesman for Shkreli commented on the charges in a statement, saying, “It is no coincidence that these charges, the result of investigations which have been languishing for considerable time, have been filed at the same time of Shkreli’s high-profile, controversial and yet unrelated activities.” Shkreli himself tweeted, “I am confident I will prevail. The allegations against me are baseless and without merit.”
What’s your opinion of former pharma CEO Martin Shkreli and the charges raised against him? Share your opinions in the comments section below!
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Keywords: Drug Pricing, Turing Pharmaceuticals, Orphan Drug, Rare Disease
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