Martin Shkreli, Price Gouging Pharma CEO, Arrested For Securities Fraud
Martin Shkreli, the former CEO of Turing Pharmaceuticals (he resigned on Friday) who has faced charges of price gouging patient in recent months, has reportedly been indicted on charges of securities fraud, unrelated to the price gouging incidents:
The federal case against him has nothing to do with pharmaceutical costs, however. Prosecutors charged him with illegally taking stock from Retrophin Inc., a biotechnology firm he started in 2011, and using it pay off debts from unrelated business dealings…
Shkreli was pushed out of Retrophin and sued by the board:
Shkreli started Retrophin in 2011 and was later ousted as chief executive officer and sued by its board. In lawsuits filed in New York Shkreli has been accused of insider trading and making "materially false and misleading statements" that "artificially inflated" the company's stock price.
It doesn't look great for him:
The indictment suggests that, over the course of several years, Shkreli continually lied to the tune of at least $8 million. In one case, Shkreli allegedly told potential investors that those who had invested in MSMB in 2009 had "just about doubled their money net of fees."
Shkreli often livestreams himself while using his home computer, and at one point in last night's stream, he appeared to receive a call from an FBI agent — which he promptly hung up:
Here's what's happened previously with Shkreli: why he's been accused of price gouging and why he's so widely reviled:
Previously (Dec. 12): A few months after Turing Pharmaceuticals CEO Martin Shkreli sparked outrage with his decision to hike the price of toxoplasmosis medication Daraprim, he's at it again, this time with a drug aimed at treating the parasitic disease Chagas:
Mr. Shkreli said on a conference call with KaloBios investors last week that if the company won F.D.A. approval for benznidazole, it would have exclusive rights to sell it in the United States for at least five years. He said the price would be similar to that of hepatitis C drugs, which cost $60,000 to nearly $100,000 for a course of treatment. In Latin America, benznidazole costs $50 to $100 for the typical two-month course of treatment.
As with last time, Shkreli is defending his actions:
It's been a big, bad week for Shkreli, who was also revealed — to widespread consternation — as the mysterious buyer of the Wu-Tang Clan's single-copy album Once Upon a Time in Shaolin, for which he paid $2 million. He handled it well:
He tells HipHopDX that he felt "insulted" that RZA, founding and current member of Wu-Tang Clan, commented on the deal. "If I hand you $2 million, f—— show me some respect," Shkreli said. "At least have the decency to say nothing or 'no comment.'"
Previously (Sep. 23): After two days of intense outrage and widespread media coverage, Turing Pharmaceuticals CEO Martin Shkreli announced that he will lower the price of Daraprim. He has yet to announce an exact price.
Over the weekend, the price of the drug Daraprim — used to treat victims of toxoplasmosis — shot up from $13.50 per pill to $750 per pill. The large price jump was engineered by Turing Pharmaceuticals, a start-up who bought the rights to the drug in August. As expected, raising the price of a 62-year-old drug 5,000 percent overnight was not well-received. What was not expected, however, was Turing Pharmaceuticals CEO Martin Shkreli defending the decision.
Why is he doing this? Does he have a point? Is this even legal? Here is what you should read to make sense of this wanton display of capitalism.
SEEMS LIKE A POOR BUSINESS PLAN
Shkreli Defends Actions, Will Use Money To Develop Better Drug
Martin Shkreli, the founder and chief executive of Turing, said that the drug is so rarely used that the impact on the health system would be minuscule and that Turing would use the money it earns to develop better treatments for toxoplasmosis, with fewer side effects.
"This isn't the greedy drug company trying to gouge patients, it is us trying to stay in business," Mr. Shkreli said. He said that many patients use the drug for far less than a year and that the price was now more in line with those of other drugs for rare diseases.
CAN'T EXPECT THE SICK TO HELP THEMSELVES
Except That's Not How Drug Development Works
Oncologist and CBS News medical contributor Dr. David Agus disagreed.
"Patients shouldn't be taxed and charged for future research and development. Patients should pay for the drug they're getting and what they need in the situation that they are" Agus said.
"It's predatory practice and it's inappropriate," he added.
[CBS News]
HARD TO RUN A BUSINESS IF YOU'RE KILLING YOUR OWN CUSTOMERS
The Price Increase Would Have Cost Patients Six Figures
Under the current pricing structure, it is estimated that the annual cost of treatment for toxoplasmosis, for the pyrimethamine component alone, will be $336,000 for patients who weigh less than 60 kilograms and $634,500 for patients who weigh more than 60 kilograms.
[The HIV Medicine Association]
JUST EXPLOITING A FLAW IN HEALTHCARE LAW
Still, What Turing Is Doing Is Perfectly Legal
For diseases that have a relatively small number of patients that may need a given medication, other companies often decide the drug is not lucrative enough to justify wading into generics manufacturing. Toxoplasmosis fits this bill, and the fact that no one else stepped up to create a generic competitor means that Daraprim is essentially treated like a new drug on the market. And because Daraprim is the only game in town, it provides an opportunity for startups like Turing to swoop in, snag exclusive marketing rights, and spike the prices.
HIS ONLY LOVE IS CAPITALISM
Shkreli Has Done This Before
When Shkreli was CEO of Retrophin, the company purchased a kidney medication approved by the FDA in 1988 called Thiola and increased the cost from $1.50 per pill to $30 per pill.* That drug treated cystinuria, a lifelong disease for which there is no known cure and which afflicts about 20,000 patients in the United States.
[Slate]
A REAL CAPTAIN OF INDUSTRY
He Also Stalked And Harassed An Ex-Coworker
Timothy Pierotti was a colleague of Shkreli at his pervious biotech venture, Retrophin, before an alleged business deal gone awry created bad blood. From there, legal documents allege, Shkreli proceeded to harass and threaten Pierotti's family via email, Facebook, LinkedIn, and text message.
[Gawker]
PUNK IS DEAD
He Funds A Record Label, And Artists Are Starting To Flee
But in perhaps the strangest, there were rumors that he was the deep-pocketed investor behind Collect Records, the independent punk/hardcore label run by former Thursday frontman Geoff Rickly. In addition to Rickly's own staunchly anti-capitalist screamo band, United Nations, the label is also home to acts like Creepoid and Nothing. The rumor wasn't completely far fetched given that Shkreli was prone to tweeting about bands like La Dispute and Saves the Day.
[Noisey]
