Martin Shkreli Out and About Again

How would you feel if your life-saving medication shot up in price 5000% overnight?

One of the many legacies of this guy, was once hailed as the ‘Pharma Bro.’

Earlier this year, I started a new series, ‘The Dirty Dozen Revisited.’

This represents some of the most unethical people I have come across. Mr. Martin Shkreli, former CEO of Turing Pharmaceuticals, has made my first list, and now he is back on my second list.

He is now back in action, would you believe, as a consultant to a law firm. What exactly he consults boggles the mind. I can think of many categories. None are complementary. All are about how to avoid the law.

Shkreli was convicted of fraud in 2017 and sentenced to five years in jail. He served five of those five years and was released in June 2022.

A career of lies and deceit.

In September 2015, The New York Times wrote about a young C.E.O. and former hedge-fund manager. He had hiked the price of a lifesaving drug, Daraprim, by over 5,000% overnight.

The drug went from $13.50 to $750 per dose.

Shkreli saw nothing wrong with raising the price of a drug for AIDS patients. Maybe you don’t either; business is business, after all!

The problem is that he didn’t develop the drug, and the drug was over sixty years old. He was guilty of three counts of securities fraud. He defrauded millions of dollars from investors in his hedge funds.

The same year, people branded Shkreli “the most hated man in America.”

He has been labeled a “morally bankrupt sociopath,” a “scumbag,” a “garbage monster,” and “everything wrong with capitalism.””

Those are some of the tamer comments. How did a rap-loving, ex-hedge-fund manager become a target of online ridicule and death threats?

Shkreli ran Turing Pharmaceuticals, which acquired the rights to Daraprim. Developed in the 1950's, the drug is the best cure for a rare parasitic infection, toxoplasmosis. People with weakened immune systems, such as AIDS patients, came to rely on it.

At 17, Shkreli interned at a hedge fund founded by TV host Jim Cramer. In 2016, he started his hedge fund, Elea Capital Management.

The fund closed a year later, after a $2.3 m lawsuit from Lehman Brothers, before anyone could collect.

After Elea, Mr. Shkreli started MSMB Capital Management in 2018. The fund would be his launchpad for founding biotech firms, including Turing.

The Turing Fiasco

Turing was not Shkreli’s first foray into the pharmaceutical industry. In 2011, he founded a biotech firm, Retrophin. It aimed to develop medicines for rare diseases.

There, he also jacked up the price of the rare disease medication Thiola from just $1.50 to $30 per pill. Retrophin’s board tossed out Shkreli after he became infamous as Turing Pharmaceuticals’ CEO.

A year later, the company sued for $65 m. It claimed Shkreli created and took Retrophin public to pay off investors in his failed hedge fund, MSMB.

Shkreli argued the Daraprim price increase was warranted. The drug is highly specialized. He likened the Daraprim to an Aston Martin, which was sold at a bicycle’s price.

The additional profits, he said, will be used to make improvements to the 62-year-old drug recipe. That didn’t happen.

The FBI arrested Shkreli in December 2015. He used shares of Retrophin to settle debts from his hedge fund, MSMB Capital Management.

An SEC investigation alleged that Shkreli claimed to have $35 million when he had $1,000.

The SEC alleged that he ran a Ponzi-like scheme. He told investors that MSMB had a 36% return. In fact, it was losing 18%.

Shkreli allegedly lost over $10 million of his hedge fund investors’ money. He turned to Retrophin’s funds to repay it. Rather than owning up to his lies and admitting his investments were a failure, he doubled down by engaging in an even bigger fraud.

Shkreli’s negative press was so well-known that it took the court three days to find 12 jurors who had no opinion of him.

Venting on Social Media

He often vented on social media. He was banned from Twitter for harassing a female journalist. He faced backlash for auctioning a chance to punch him. (There was probably a long line of takers!)

Perhaps his most notable social misstep involved Democratic presidential candidate Hillary Clinton. She criticized the company for the drug price increase, calling it “price gouging.”

In response, Shkreli asked his Facebook followers to get hair from Hillary during her book tour. He offered $5,000 per hair.

A judge then revoked his bail, pending sentencing for securities fraud.

Shkreli wore bunny slippers and a stethoscope in the office. He slept there in a sleeping bag. He was eccentric, to say the least.

His colleagues called him names such as “nerd,” “odd duck,” and “mad scientist.” In the industry, he became known as the “Pharma Bro.”

He discredited the industry and sparked an investigation into its price hike. Unfortunately, he was convinced his actions were completely ethical and legitimate.

Shkreli now earns $2,500 per month and lives with his sister in Queens, as per his probation.

He is still up to his old tricks.

In June of last year, he was barred from streaming or sharing a $2 million album he had purchased in 2015.

Shkreli, ordered to surrender it as part of his fraud conviction, made and kept copies of the record tracks to release to the public, against the terms of his conviction.

Shkreli is currently banned from the pharmaceutical industry for life.

A Worthy Member

Shkreli made $64.6 million from his price hike of the drug Daraprim; who knows how many lives he ruined?

His story reveals someone so despised for his actions that he is merely a “bad apple,” and a member of the Dirty Dozen (revisited). What do you think?

Till next time,

Calvin