WHO’S LAUGHING NOW
Martin Shkreli Is Just One of Many Pharma A-Holes
They throw lavish boat parties while marking up life-saving medication 5,000 percent.
Nancy Retzlaff is not Martin Shkreli. She won’t inspire hundreds of news articles nor will she become the subject of any Internet memes. She won’t threaten Ghostface Killah and it seems unlikely that she will ever flirt with a minor on a YouTube livestream.
But the chief commercial officer for Turing Pharma is just as responsible for keeping the price of the life-saving drug Daraprim 5,000 percent higher than it used to be. And as long as the public eye is still trained on the Shkreli sideshow, she’ll get away with it.
During last Thursday’s congressional hearing on prescription-drug pricing, Retzlaff sat next to her smirking ex-CEO, calmly defending her company’s choice to keep charging $750 per pill for Daraprim, which is used to help pregnant women, HIV patients, and other immunocompromised individuals fight off toxoplasmosis infection.
She even admitted that Turing handed out large salary increases and held a lavish boat party while the year-old pharmaceutical company was still reportedly in the red.
“Do you know who Metro Yacht Charters is?” Rep. Jason Chaffetz asked her.
“Uh, yes, I do,” she admitted after a pause.
“Why would you know them?”
“I believe we rented Metro Yacht Charters for a sales force meeting,” Retzlaff replied.
“Yeah, for a party. Twenty-three thousand dollars” Chaffetz said, consulting Turing documents. “Did you spend money on fireworks?”
“Did you spend money on a cigar roller for a yacht night?” he persisted. “Eight hundred bucks?”
“Yes, we did,” was Retzlaff’s response.
It should have been the story of the hearing: Turing Pharma partying on the dime of the hospitals and insurers who are now paying exorbitant amounts for Daraprim, which used to cost $13.50 per pill. Instead, Martin Shkreli stole the show by repeatedly pleading the Fifth Amendment during his own questioning before leaving the room and calling Congress “imbeciles” on Twitter.
Shkreli’s stunts have been effective in drawing public attention to the problem price gouging in the pharmaceutical industry. But now that he’s at the center of that conversation, he’s threatening to suck all the air out of the room. And if the Pharma Bro has been telling the truth about one thing, it’s this: This problem is so much bigger than him.
For one prominent example, all you have to do is follow his trail. In 2014, Shkreli, then the CEO of Retrophin, bought Thiola, used to treat the rare kidney disease cystinuria, and raised its price from $1.50 to $30 per pill. Shkreli was then fired from the company but his price hike lived on. A single 100-milligram tablet of Thiola at a New York City pharmacy costs around $36.
The current CEO of Retrophin is Stephen J. Aselage. His name is not on the front page of any newspapers. He doesn’t tweet. He didn’t buy a Wu-Tang Clan album. But he still hasn’t reversed Shkreli’s decision.
Outside of Shkreli’s sphere of influence, there are still more cases of extreme price hikes.As Bloomberg reported, a recent DRX survey of around 3,000 brand-name prescription drugs found that prices had been at least quadrupled in 20 cases and doubled for 60 since December 2014. The most dramatic increases—of 500 percent or over—include a heart disease treatment, a beta blocker, and an antidiabetic drug.
“The data shows that price increases are an integral part of the business plan,” Jim Yocum, executive vice president at DRX, told Bloomberg of the survey.
It’s disappointing that it took Shkreli’s antics to bring this problem to the attention of Congress. Now, at least, some of these companies are being asked to account for their price hikes even if they don’t have notoriously mouthy leaders.
Valeant Pharmaceuticals, the company behind two of the most egregious increases of recent years, was also present during last week’s hearing at the House Committee on Oversight and Government Reform but their representative, at least, had the good sense to act contrite.
“Where we’ve made mistakes, we’re listening and we’re changing,” Howard Schiller, interim CEO of Valeant, said before the committee, adding that “our price increases in the future will be well within industry norms and much more modest than the ones that drew your legitimate concerns.”
In February of last year, Valeant had raised the prices of two heart medications, Nitropress and Isuprel, by 525 percent and 212 percent.
Retzlaff, on the other hand, was unrepentant, saying that she was “comfortable” with the decision to raise the price of Daraprim under Shkreli’s tenure. In her prepared statement, she trotted out the same excuses that the former CEO once used to defend the price hike: Some revenue was used on research and development, hospitals were given a “discount”―which only reduces the price of a 100-count bottle to $35,000―and patients were given access to an assistance program.
“I believe the decisions made by the company have been appropriate and strike the right balance between patient access, innovation, and shareholder value,” she concluded.
She said this even while sitting next to the smug 32-year-old ex-hedge fund investor who wrote “$1 [billion] here we come” in an email to the Turing board when they were about to close the deal on Daraprim.
Under questioning from Chaffetz, Retzlaff noted that Turing’s first-year net sales were $20 million, largely resulting from sales of Daraprim, which she estimated is used to treat only about 3,000 people.
And under fire from Rep. Elijah Cummings, she said Turing’s attempts to secure a meeting with the president of the Human Rights Campaign was not PR maneuvering but an attempt to “engage all important stakeholders to make sure they were aware that the most vulnerable patients suffering from toxoplasmosis … can access that product at a penny per pill.”
Martin Shkreli became the public face of price gouging because he was so transparent. But Retzlaff’s cool, calm, and collected attempt to spin the same exorbitant price increase for an HIV drug as a net good is arguably more dangerous because it is less obvious. Hate the man who raised the price but beware the executive who cleans up his mess and answers questions about the cost of a cigar roller with a straight face.
There are more Martin Shkrelis out there, and not all of them are acting like assholes on Twitter. And if the Shkreli Show overshadows the people who still need easy access to a once-affordable treatment, everyone loses. The Pharma Bro started out as a poster child for a pressing problem. He may end up being a red herring.
Martin Shkreli can go to jail. But that won’t change the price of Daraprim.