Martin Shrekli, aka “the most hated man in America” finally got a taste of the U.S. justice system.
The “most hated man in America” just got a taste of the U.S. justice system. The “pharma bro” you might remember from his decision to spike the list price of Daraprim, a drug used by HIV/AIDS and cancer patients to fight infections, by more than 5,000 in 2015 under his previous company Turing Pharmaceuticals—was convicted on three criminal securities fraud and conspiracy charges by a Brooklyn jury on Friday. He had been indicted on eight wire and securities fraud counts by federal prosecutors and could potentially face years in prison following sentencing.
The trial took more than a month and jury deliberations expanded out of the course of this week. Amazingly, for all the media attention on the case, the trial verdict had nothing to do with the drug price spike that drove him into the national spotlight. That was entirely legal—rather, the charges against Shkreli centered on him allegedly bilking his other former drug company Retrophin to repay defrauded investors of various hedge funds he also operated. (Shkreli was acquitted on some of the more serious wire fraud charges levied against him.) But the actions that made him a household name highlight some of pharma’s most debated pricing and business practices.
Shkreli’s basic modus operandi in the biopharma sector was to take niche drugs in treatment spaces where U.S. patients have few options and bring them to market, after which he’d sustain carte blanche on the products’ prices. That means minimal clinical trial expenditures and big returns in a cornered space. Shkreli has effectively pointed out on numerous occasions that patients don’t actually have to pay the full list prices he sets, especially after financial assistance programs and rebates; though, the costs do get transmitted on to other players in the health care industry, such as insurance companies and benefits manager. That can have downward effect on what consumers have to pay.
Another controversial element of Shkreli’s business model involves the Food and Drug Administration’s (FDA) “priority review” program. This is meant to endorse the development of rare disease drugs and treatments for unmet medical needs. But the initiative comes with another big financial reward for firms that successfully win FDA approval for these niche therapies: a priority review voucher that can be used to cut the regulatory period for a different experimental specialty treatment being developed by a drug maker or, mostly, sold for potentially hundreds of millions of dollars to another pharma company. Critics report the program’s structure may weaken its purpose and cut it to a cash-grab for firms trying to make a quick dollar.
When it comes to Shrkeli, none of these business and pricing practices are unique, as he has ran relatively minor organizations in the drug-making world. He himself added in a website attacking big pharma and biotech companies earlier in 2017, price spikes are mostly business as usual among biopharma companies both small and big. For example, earlier in 2017, a company called Marathon Pharmaceuticals was criticized for taking a common, cheap steroid available in dozens of other nations and setting the price at $89,000 in the U.S in order to treat the symptoms of a rare disorder called Duchene muscular dystrophy. Shkreli’s dislike and pomposity has made him easy targets for scrutinize. But he’s not really an outlier.