Back in September of 2015, the pharmaceutical industry was in complete uproar over the 5,000% price increase of a life saving drug. And just a month ago, the infamous “pharma bro,” Martin Shkreli, who was responsible for this price hike, was arrested. Ironically, his arrest was not on the basis of the unfair price increase; rather, Shkreli was arrested on fraud charges on his previous companies.
Taking a step back, Martin Shkreli, dubbed the “morally bankrupt sociopath,” “a scumbag,” “a garbage monster,” and “everything that is wrong with capitalism,” once was a rap music-loving and hedge fund manager; with one move overnight, he became the ridicule and criticism of people across the Internet and country.
Under Turing Pharmaceuticals, one of the many companies he founded, Shkreli acquired the rights to the drug, Daraprim. Previously only costing $13.50 a dose, this drug is a treatment for the relatively rare parasitic infection toxoplasmosis, and a drug that patients of weakened immune systems, such as AIDS, have come to depend on. What came to be the most controversial move in pharmaceutical history, Shkreli raised the price of this drug to $750 a dose, a 5,000% increase from its original price. Although such actions of raising drug prices for profit are commonplace in the pharmaceutical industry, seldom has any individual company dared to do so so publicly and unapologetically.
Following the public’s response, he later conceded that his only mistake, unapologetically, was not raising the price more. For a person to make a tremendous profit off a critical and devastating life situation evoked backlash from people, both morally and economically. And just overnight, Shkreli was propelled into the criticism and disdain of the public (although not as much as Trump, who knows?) and became the symbol of greed in the industry.
However, despite all this controversy, Martin Shkreli was not arrested on charges of this scandal that had made headlines. He was instead arrested for using money from a biopharmaceutical company, Retrophin, which he started as a hedge fund manager, as his own personal source of funds to pay off investors who lost money at his previous hedge fund. Shkreli’s previous business expenditures were not all that clean, and he had experienced many bankruptcies and failures. With every failure, debt accumulated and his liabilities to the investors of his hedge funds grew significantly.
And his way of paying off this debt? Even more startups.
Shkreli began a vicious cycle of creating new startups to pay off previous debt, but then having that startup fail and add to his existing debt. Using his startups to pay his private debts, his practices were soon found out and he was consequently arrested.
In the end, Shkreli was not caught legally for the crimes we know him best for, but for something we probably would never have known about had we not paid so much attention to his conducts. Martin Shkreli’s decision to drastically raise the price of the drug garnered him lots of attention, and because his action was not legally wrong, there was no way the public could throw him in jail. It’s ironic how Shkreli’s plans for profit only led him to his downfall. It was revealed that previous companies had flagged Shkreli on fraudulent charges, but had no results and conclusive findings. Yet after people paid more attention to him, were prosecutors able to find these fraudulent practices. We can only say, how the tables have turned.