By Shubham Goswami
In the 1987 movie Wall Street, we remember Gordon Gecko saying, “Greed, for the lack of a better word, is Good”. Is it always, though?
Imagine popping a pill before bed that cost you 100 Rupees. Now imagine waking up the next morning to find out that the same pill costs a whopping 5,000 Rupees!
Has it ever happened to you? Well, I hope not.
But in the September of 2015, residents of the United States woke up to find that a drug which was priced at $ 13.50 the night before had spiraled to $ 750. Daraprim, a drug used to treat an infection called Toxoplasmosis in people with weak immune systems, underwent a mind-boggling 5000 percentage increase.
When you are talking about a drug that is used to treat people having terminal illnesses like HIV, such a steep hike in prices is bound to spark international outrage.
AND WHO IS THE MASTERMIND BEHIND THIS MINDLESS PRICE HIKE?
Meet Martin Shkreli, the bad boy of pharma.
WHO IS THIS MARTIN SHKRELI?
He is a 32-year-old entrepreneur and pharmaceuticals executive. He is the co-founder and ex-CEO of a company called Turing Pharmaceuticals which bought Daraprim’s patent. And following that he raised the price miles beyond the poor man’s budget.
Okay, so he must be one of those privileged brats who have never had any dearth of money, right?
Well, no. Martin was born to janitor parents in Brooklyn, New York. Contrary to popular belief, he comes from a very humble background. He is an example of one of those super-ambitious young people who catapulted themselves from rags to riches. Currently, he is worth over $ 100 million.
HOW DID HE MAKE ALL THAT MONEY?
Well when he was in High School, Shkreli became interested in stocks. His peers would make fun of him for this obsession, but Shkreli was willing to make it count. He eventually found his way into a hedge fund and caught the attention of company managers by estimating pharmaceutical stocks extremely accurately.
After spending a few years as an analyst at various hedge funds and capital management firms, he started his own hedge funds Elea Management in 2006 and MSMB Capital Management in 2009. He has never looked back since.
BUT WHAT LED HIM INTO PHARMA?
Apart from his obsession with stocks, young Martin was fascinated by something else: Infections!
This is why he founded Turing Pharmaceuticals. Now, with very little competition and no government intervention the US healthcare industry is a very profitable one. Shkreli saw this as a golden opportunity to amass a really big fortune.
In America, the government doesn’t set drug prices. Private companies do. And that is why he thought he could get away with price-gouging American families.
WHAT WAS HIS RATIONALE FOR RAISING THE PRICE?
In spite of being a villain to many, Shkreli considers himself to be a hero. In fact, he has no regrets. He wishes he could set the prices even higher!
His contention is that his company will invest the money on R&D that will help improve the drug and ultimately save more lives. He accuses the previous owners of the drug for not having made any efforts to improve it. However, the irony is that experts on HIV see no need for “improving” the drug at all! They think it is perfect the way it is.
Shkreli positions himself as an altruist who cares about improving health care to save more lives. He even claims to be selling half of the stock of Daraprim to the government for only $ 1. It is probably a gambit to improve his image in the media.
HAS HE BEEN ABLE TO GET AWAY WITH IT?
He was summoned before the federal court to explain the price hike. He was even pleaded by the judiciary to reconsider his decision. All that pleading fell on deaf ears, though.
However, in an interesting turn of events, Shkreli was arrested by the FBI on charges of securities fraud from a previous venture. Following that he was forced to resign from Turing.
Shkreli seems to be controversy’s favourite child. Before the price gouging incident, he had also made the headlines for wanting to bail out Bobby Shmruda, a rapper from Brooklyn who was jailed for offensive lyrics.
And recently, he came into the spotlight once again after he purchased the only copy of a Wu-Tang Clan album for $ 2 million dollars, a record which he had no intention to play. And guess what? A New York artist sued him over copyright issues. Poor Martin!
Martin Shkreli has gone from a young finance whiz to a millionaire hedge fund manager to the Pharmaceutical Industry’s most wanted criminal. He is the new poster boy for Capitalistic Greed. Will he go down in history as the face of evil or will he come up with life-saving drugs and establish himself as the hero he considers himself to be?
Only time will tell.
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Views presented in the article are those of the author and not of ED.