Martin Shkreli

Once upon a time when school was still a thing, Martin Skrehli was mentioned briefly in class. I thought, “hey, I could blog about that!” and then I didn’t. So, here we are now, and it’s as good a time as any to blog about this man.

Martin Skrehli was a wall street man. He worked as a financial analyst, hedge fund manager, and started his own capital management company. This capital management company, called MSMB, worked a lot with biotech companies. However, this company was virtually wiped out after they sold short 32 million shares of Orexigen Therapeutics when the price went way down, from about $9 to $2.50. So MSMB wasn’t doing great, but Skrehi was able to keep it alive somewhat, creating MSMB Healthcare and Retrophin.

Retrophin was created as a company with an emphasis on biotechnology, with the goal being to create new treatments for a variety of rare diseases. However, the board of Retrophin decided to straight up replace Skrehli in 2014. And then they sued him for breaching duty of loyalty. They said he had used the company funds poorly and harassed an employee and his family. Funnily enough, this isn’t the big thing that happened. While still at Retrophin, Skrehli also hiked the price of one of the drugs, Thiola, from $1.50 per pill to around $30 per pill. Patients had to take 10 to 15 pills a day. So yeah, that was a really awful thing to do. But that’s also not the big thing.

The worst price hike he made, the one leading him to be "the most hated man in America,” was the price hike on Daraprim, a medication used to treat AIDS patients. This was after Skrehli’s removal from Retrophin, when he started a new company, Turing Pharmaceuticals. Turing raised the price from $13.50 per pill to $750 per pill overnight. The entire world got pretty mad at this guy, with multiple organizations working together trying to figure out a way to lower the price. Skrehli defended his actions however, saying it wasn’t a crime to raise the price, they had control over the medication, and felt like it was being sold at too low a price. He eventually said he would lower the price due to outrage. And then he didn’t.

After this price hike, Shkreli was subpoenaed. He refused to answer any questions under the 5th amendment. However, that didn’t stop him from getting arrested by the FBI and being charged with securities fraud, also known as stock or investment fraud, in 2015. Shkreli was eventually found guilty, and sentenced to 7 years in federal prison in 2018. And fun fact about this trial, it was very hard to find an unbiased jury, with some jury members saying "I'm aware of the defendant and I hate him" and "he kind of looks like a dick."

So, in the end, he went to jail. Not for hiking the price of a life saving drug, though that is a reason he was looked into. I think it can be pretty agreed that this guy sucks. But in economics, was he doing anything bad? He had the rights to the drug, he can price it at whatever he wants to. Was he really in the wrong for doing the economically smart thing?

Yes. I think he was. And this is why I think we can’t just have unregulated economics all the time. The demand for this drug is high of course. People would literally die without it. But it’s completely unethical to have people give up their entire life savings to get the drug, or even just die because they can’t afford to live. We can’t let things like that continue to happen. People shouldn’t have to pay to keep their right to life.