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Is Martin Shkreli to blame?

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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...

29 Replies

Leah Kaminsky-Levy
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Leah Kaminsky-Levy Entrepreneur
Managing Editor, Content Stragiest and Head Writer
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
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Hans Li Entrepreneur
Research and Development at Accenture Technology Labs
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.
Michael Barnathan
4
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Michael Barnathan Entrepreneur • Advisor
Co-Founder of The Mountaintop Program, Google Alum
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.
Bill Wittmeyer
5
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Bill Wittmeyer Entrepreneur
CEO Electronic Sensor Technology INC
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.
William Holz
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William Holz Entrepreneur
Data Analyst, Visualizer, and Healthcare Strategist at Lightbeam Health Solutions
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
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Stephen Salaka Entrepreneur • Advisor
Product Development Manager at Tsunami Tsolutions LLC.
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.


Mitchell Portnoy
0
0
Mitchell Portnoy Entrepreneur
Healthcare Information Executive
In my opinion (and apparently among almost everyone else), this was a tactic that appears tone-deaf at best or incomprehensibly stupid and destructive at worst. He has turned into the poster boy of bad-boy, greedy entrepreneurialism which is fine if that's what he wants. BuIt's a bad strategic decision whatever his long term goals are for his company. Mitchell Portnoy [removed to protect privacy]
Kevin Carney
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Kevin Carney Entrepreneur
Content Marketing Training and Consulting
In an age when 1) Wall St investment banks knowingly sell "toxic assets" to their clients, triggering the worst global economic downturn since the great depression, and no one goes to prison, and 2) Volkswagen knowingly sold cars that do not meet emission control requirements by having the cars artificially pass emission control tests they don't pass during every day driving, is it any wonder that guys like Martin Shkreli try to get away with as much as they can.

It would appear that such a lack of ethics has great financial upside potential and little risk.




Mark JS Miller
0
0
Mark JS Miller Advisor
VP Marketing & CSO at Healthy Directions (A Helen of Troy Company)
If you follow Simon Sinek's approach of identifying to WHY a company exists then he made that pretty clear. The company exists to raise as much revenue as possible, in the shortest time, to pay for goals down the road. The vehicle was to gouge a vulnerable patient group who had few alternatives.

So he defined his WHY with clarity. But is it a good WHY and will their be backlash? It is most certainly not focused on patient-centric outcomes. It is to gain as much from a needy, desperate consumer base as quickly as possible. That is far from unique. Some hide it a lot better then he did. Kind of reminds me of the character Harry Lime in the brilliant movie, The Third Man. But Harry was more engaging and eloquent. Shkreli is just a punk.
Steve Everhard
1
0
Steve Everhard Advisor
All Things Startup
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.



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