I don't think it was that big of a surprise to hear that capitalism remained very much alive and well at big banking and financial institutions after the crash in 2008/9, and Obama's bailout simply seemed to serve merely as a slap on the wrist and "now get back to work" (making tons of money) after the hullabaloo had died down. Sure, some of the senior personnel in those institutions did get squeezed out, to gloriously wealthy retirements, but they were immediately replaced by the salivatingly hungry next in line whose driving force and raison d'être was and is to also make truckloads of money!
Business as usual in the financial world, and many think that that's not such a bad thing. However, when it comes to healthcare and the pharmaceutical world, people ruthlessly making money at the expense of the vulnerable and the sick is a much more bitter pill to swallow. It has gone on for eons with only the occasional blip along the way, but the appearance of one Martin Shkreli on our evening news TV screens recently caused the bile to build up and basically boil over right on top of the pharmaceutical world in general.
So who is this guy? Well, a drug-discovering disease-busting titan he is not. In fact he is a 32-year-old former hedge fund manager (surprise, surprise!) who founded a start-up called Turing Pharmaceuticals, which acquired the rights to a 62-year-old drug this past August. What was his first move as CEO and founder of this heretofore unknown start-up? Well, he jacked the price of that decades-old drug (Daraprim) by over 5,000% overnight - from it's previous price of $13.50 per tablet to a skyscraping $750 - and instantly became the most reviled man in America (if not here in Canada too), also overnight!
A great deal of outrage ensued following this move, and if Shkreli wanted attention and free publicity he got it in bucketloads, and his interviews on early evening American news only caused people to detest him more. Essentially, he displayed few redemptive qualities and came across as an out-and-out capitalist who saw an opportunity to print money, by squeezing the sick dry. A year's treatment with Daraprim went from being an affordable expense to one potentially costing hundreds of thousands of dollars, and this understandably caused a firestorm of controversy.
One of the most infuriating aspects of this entire story is the lack of any justifiable (and verifiable) reason for this astronomical price hike, other than as a get-rich-quick scheme. It actually seems to have evolved more into a "get-rich-or-die-tryin'" move, typified by the somewhat (in)appropriately named "50 Cent". As much as the media and public piled scorn upon Shkreli and Turing, it wasn't to be long before another elite breed was going to revile him with perhaps greater rancor - we are of course talking about CEOs at other public companies that had been previously accused of having business models based on tax inversions, acquisitions and price-gouging - at the expense of us all.
The most astute of that elite breed perhaps saw it coming, but even if they didn't, the sudden intrusion of Hilary Clinton into the fray sure got the kindling burning forest-fire bright. All of a sudden the spotlight turned onto a few key players, and that included our very own Montreal-based neighbours, Valeant Pharmaceuticals, who have been doing very nicely with their Canadian tax inversion HQ and acquire-and-hike business model. In fact, two members of the US Congress wrote to Valeant in August after they acquired two heart drugs (Isuprel and Nitropress) from Marathon Pharmaceuticals and promptly raised their prices by some 500 and 200%, respectively. This was after Marathon themselves had previously quintupled prices following their acquistion of those two drugs!
You get the point, right?! Subsequently to the events above, Valeant's previously defiant CEO, one J. Michael Pearson, has been "invited" to come meet with Congress who have targeted Valeant in their investigation into drug pricing issues, as two recently issued subpoenas involving Valeant attest. In fact, lawmakers have gone as far as directly comparing Pearson to Shkreli himself, which must surely come across as an insult given Pearson's tenure and success at a company that cannot be even vaguely described as a "start-up".
Having said that, he has had some very controversial and high profile dealings with the inestimable (or inscrutable) Bill Ackman (remember the protracted, hostile and ultimately failed takeover of Allergan?), who is, wait for it, a hedge fund mogul! Coupled to Pearson's clear and undeniable business strategy of acquiring (and price-hiking) assets from other companies, well, there is perhaps some undeniable similarity in the business models of Pearson and Shkreli, if not in their real attitude to the development and/or manipulation of medicines.
Being put under such scrutiny and squeezed under the lens of governmental microscopes is a considerable burden, and it seems that Pearson senses the times-they-are-a-changing, because in a Q3 results conference call yesterday, Valeant announced that they will increase spending on R&D (something unheard of in recent history!) and decrease their reliance on acquisition of (theoretically) under-priced drugs that merit price hikes! It's obvious that this is not some altruistic decision on Pearson's behalf but rather came due to the mounting pressure to do something to get the lawmakers off his back and out of his back pocket. What happens after the dust settles and the focus moves elsewhere remains to be seen, of course.
For now, the pressure remains fully on, with another politician and Republican party 2016 presidential candidate, Marco Rubio (Florida), stepping out with further negative commentary on the pharmaceutical industry. It goes without saying that aspiring leaders will say and do almost anything that they feel will garner public support in the run-in to an election, but Mr. Rubio's words in New Hampshire last week will probably haunt a few pharma CEOs in their sleep (or lack thereof) in these turbulent times.
"These companies decide, 'We can get away with charging it, and so because we can, we do'. And it's just pure profiteering. It’s a new issue that’s emerged over the last few years but it’s a significant one, because it threatens to bankrupt our system. It’s a complex issue but it’s one we have to confront."
Drug pricing has become a big ticket issue of late, and all of the US presidential candidates appear to be incorporating it into their campaign list of "must-haves" as they beat the pulpit. But it's not entirely out of the blue, in that the cost of certain anti-virals from Gilead, for example, as well as new PCSK9 biologics from both Amgen and Sanofi-Regeneron, have already seriously raised eyebrows (if not the dead) and shaken the lid off of the vampire's coffin hidden in the price wars dungeon. Sorry, couldn't resist a little Halloween imagery!
The most interesting point I have seen about all of this recently was the positioning of Martin Shkreli as the whistleblower of the pharmaceutical industry, perhaps by those looking to derive something positive from this sickening (to many) story, or perhaps by friends of Shkreli himself. The Edward Snowden of the pharma world?! He definitely did get the price-hiking issue right onto the dinner tables of sickened (as well as sick) Americans everywhere, but whether he simply got caught emulating the likes of Valeant, or was truly motivated to expose this sorry affair remains totally unclear to this writer - if I was forced to choose, I would dare suggest that the former is way more likely than the latter - he is a proud out-and-out capitalist, after all! ;)
You get the point, right?! Subsequently to the events above, Valeant's previously defiant CEO, one J. Michael Pearson, has been "invited" to come meet with Congress who have targeted Valeant in their investigation into drug pricing issues, as two recently issued subpoenas involving Valeant attest. In fact, lawmakers have gone as far as directly comparing Pearson to Shkreli himself, which must surely come across as an insult given Pearson's tenure and success at a company that cannot be even vaguely described as a "start-up".
Having said that, he has had some very controversial and high profile dealings with the inestimable (or inscrutable) Bill Ackman (remember the protracted, hostile and ultimately failed takeover of Allergan?), who is, wait for it, a hedge fund mogul! Coupled to Pearson's clear and undeniable business strategy of acquiring (and price-hiking) assets from other companies, well, there is perhaps some undeniable similarity in the business models of Pearson and Shkreli, if not in their real attitude to the development and/or manipulation of medicines.
Being put under such scrutiny and squeezed under the lens of governmental microscopes is a considerable burden, and it seems that Pearson senses the times-they-are-a-changing, because in a Q3 results conference call yesterday, Valeant announced that they will increase spending on R&D (something unheard of in recent history!) and decrease their reliance on acquisition of (theoretically) under-priced drugs that merit price hikes! It's obvious that this is not some altruistic decision on Pearson's behalf but rather came due to the mounting pressure to do something to get the lawmakers off his back and out of his back pocket. What happens after the dust settles and the focus moves elsewhere remains to be seen, of course.
For now, the pressure remains fully on, with another politician and Republican party 2016 presidential candidate, Marco Rubio (Florida), stepping out with further negative commentary on the pharmaceutical industry. It goes without saying that aspiring leaders will say and do almost anything that they feel will garner public support in the run-in to an election, but Mr. Rubio's words in New Hampshire last week will probably haunt a few pharma CEOs in their sleep (or lack thereof) in these turbulent times.
"These companies decide, 'We can get away with charging it, and so because we can, we do'. And it's just pure profiteering. It’s a new issue that’s emerged over the last few years but it’s a significant one, because it threatens to bankrupt our system. It’s a complex issue but it’s one we have to confront."
Drug pricing has become a big ticket issue of late, and all of the US presidential candidates appear to be incorporating it into their campaign list of "must-haves" as they beat the pulpit. But it's not entirely out of the blue, in that the cost of certain anti-virals from Gilead, for example, as well as new PCSK9 biologics from both Amgen and Sanofi-Regeneron, have already seriously raised eyebrows (if not the dead) and shaken the lid off of the vampire's coffin hidden in the price wars dungeon. Sorry, couldn't resist a little Halloween imagery!
The most interesting point I have seen about all of this recently was the positioning of Martin Shkreli as the whistleblower of the pharmaceutical industry, perhaps by those looking to derive something positive from this sickening (to many) story, or perhaps by friends of Shkreli himself. The Edward Snowden of the pharma world?! He definitely did get the price-hiking issue right onto the dinner tables of sickened (as well as sick) Americans everywhere, but whether he simply got caught emulating the likes of Valeant, or was truly motivated to expose this sorry affair remains totally unclear to this writer - if I was forced to choose, I would dare suggest that the former is way more likely than the latter - he is a proud out-and-out capitalist, after all! ;)
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