Martin Shkreli speaks an inconvenient truth

I don’t subscribe to conspiracy theories. I never believed a second shot was fired. Nor do I believe that Bill Clinton was stalked on the grassy knoll. So I won’t speculate that Martin Shkreli’s arrest for alleged securities fraud that happened years ago is related to his raising Daraprim’s price by 5,500 percent.

Just because something isn’t suspicious doesn’t mean that it isn’t odd.

Shkreli is a perfect poster child for rapacious pharmacocapitalism — so perfect that it’s odd. He openly admits, “I have a sworn duty to my shareholders to maximize profit.” Shkreli’s admission is odd not for its implausibility, but brazen honesty.

Who, in the business of making money, says they’re in the business for profit?

Elizabeth Holmes wants to change the world, including Africa, by biotechnology, and she has recruited Henry Kissinger, known for his contributions to emerging economies and biotechnology, to help. Even Goldman Sachs believe their work leads to greater good. Their CEO once said banking is “doing God’s work.” I developed a Richter’s hernia reading that.

In a land where capitalism is infused with puritanism, Shkreli is odd because he says it as it is. We’re not attuned to such honesty because we want to believe that people want to do the right thing first, that money is incidental. Shkreli says this is not so — if you want new and better drugs for rare diseases, you must please the shareholders by making them money.

Dear Lord, deliver us from the truth.

I haven’t decided what to make of Shkreli, but there is one thing I know. History’s Chaucerian frauds weren’t in your face capitalist pigs. They were pious peddlers of righteousness. They not only feasted on gullibility, but were revered by the insatiably gullible who were gagging to believe in someone. We, too, are gagging to believe, no longer in priests, but in entrepreneurs — our new pardoners.

The robber barons were in it for the money — the railroads were incidental. Health care’s puritans are in it for the progress — the money is incidental. We got railroads. We have yet to see Theranos’s amazing detectors work their magic.

Oddly, Shkreli wasn’t arrested for fleecing immunocompromised patients, but for a Ponzi scheme allegedly set up by his hedge fund. Unlike Enron, which collapsed because it kept digging ponzily, unlike the American Insurance Group, which would have collapsed but for the grace of socialism, Shkreli’s investors actually made money! What an odd Ponzi scheme.

Shkreli is shredding our gullibility. He is saying: Children, this is how capitalism in the U.S. health care works. Did mommy forget to tell you?

He is not fooling us, but reminding us that we’re fools for being so easily fooled by piety such as this:

“My startup will solve diabetes burden, including in the poor.”

“Fantastic. Here’s a check for $400 million.”

We may not be fools, but we live in a kakistocracy. Recently, politicians demanded transparency from Gilead, the manufacturers of Sovaldi. After strutting into Gilead’s office like Spanish Inquisitors, and reading company documents, and interrogating their staff, they concluded that pharma prices drugs to maximize profit.

ROTFLMAO! What a revelation!

Maximizing profits. You really nailed them, Senators.

That high drug prices are irrational is part fallacious and part disingenuous. Yes, they are irrational, but only if we limit the price for extending our lives. What’s irrational is that we believe we’re priceless, but everything else should be cheap.

Another fallacy is that politicians know how to control drug prices. Neither Senator Sanders nor Senator Clinton show any understanding of, and any willingness to accept, the trade-offs of price control. Mercifully, Mr. Sanders has not blamed high drug prices on global warming. As for the Republican front runners — I can only assume drug pricing is still not taught in kindergarten.

Some say Shkreli is a narcissistic sociopath. Be that as it may, it is rather irrelevant. Because when you stop obsessing about Shkreli’s moral compass and follow him, he will show you the worst warts our regulatory system has created. The more we focus on the gamers of the system, the less likely we’ll fix a system that’s so easily gamed.

Pharma is suddenly interested in benznidazole. This drug treats Chagas disease, an infection uncommon in the U.S., but common in Latin America. How did pharma’s compassion for poor Latinos, who suffer the disproportionate burden of Chagas, suddenly arise?

FDA recently gave Chagas a “rare disease” status. If pharma brings a rare disease drug to the market — it matters not that they didn’t develop that drug — they get a voucher for an expedited review for another drug. This “jump the Disneyworld queue” voucher sells for hundreds of millions of dollars in the market. The price should signal something.

The CDC, which buys benznidazole from a Brazilian company, dispenses it free. Yet Shkreli spotted an opportunity, and a need — doctors must fill reams of paperwork because the CDC can’t dispense benznidazole unless for experimental purposes. Hospitals want a distributor.

After the nearly-bankrupt KaloBios Pharmaceuticals, bought rights to one version of benznidazole, under the auspices of a Shkreli-led firm, their shares soared. Because the market, spared of the fog of piety, knew that Shkreli would make money.

KaloBios may raise benznidazole’s price by factor of 100,000. A course of benznidazole is $60 in Latin America. It may cost $100,000 to treat Chagas here. If KaloBios wins FDA’s approval, it will have exclusive rights to sell benznidazole for five years in the U.S. Welcome to the rule of law.

I know you’re seething with pious rage. Before grabbing the pitchforks answer the following:

  1. Why, like the CDC, can’t/ don’t hospitals buy benznidazole directly from that company in Brazil?
  2. Why haven’t insurers pushed for buying drugs directly from foreign manufacturers for infectious diseases?
  3. What will motivate a startup to sell benznidazole in the U.S. at Latin American prices? Please don’t say compassion for poor Latinos. Christmas is no excuse for being that naïve.
  4. Why did no US pharmaceutical company (capitalist or righteous, large or small) bother looking at benznidazole before the FDA declared Chagas a rare disease?
  5. We have an FDA-approved diagnostic kit for Chagas but no FDA-approved drug for Chagas. Why?

When Shkreli says big pharma doesn’t care about rare diseases unless they’re profitable, he speaks an inconvenient truth. The Roche Group, the developers of Avastin, developed benznidazole. But benznidazole wasn’t making money because poor Latinos aren’t a lucrative market. So Roche did what we do with our most useless possessions – donated it to charity. Roche gave supplies and rights to Lafepe, a company owned by the Brazilian state. Roche could have distributed benznidazole in the U.S. — they would barely have noticed a dip in their profits.

It’s more profitable making pills that lower cholesterol, pills that make kids quieter, pills that remind old men transiently of their youth, than pills that cure multiple sclerosis. This strikes me as a decidedly upside down world. But, then again, piety never really helped the most vulnerable.

Shkreli is boldly articulating to you what classy CEOs of big pharma won’t dare admit to themselves, even in their sleep. Ladies and gentlemen, this is how it works. To draw hyenas, you throw leftover food. To draw pharma, you show dollars.

Enjoy the schadenfreude over his arrest. Remember, though, our regulatory warts won’t magically disappear, even if Martin Shkreli is convicted.

Saurabh Jha is a radiologist and can be reached on Twitter @RogueRad.  This article originally appeared in the Health Care Blog.

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