Shkreli resigns as CEO after arrest in fraud

23 Dec 2015 | Author: | No comments yet »

Is ‘Wolf of Pharma Street’ a mirror of industry?.

New York: He’s the enfant terrible of pharmaceuticals, a 32-year-old CEO who unapologetically raised the price of the only approved drug for a rare disease from $13.50 to $750 per pill. A news conference announcing federal securities fraud charges against former hedge fund boss Martin Shkreli took an unusual turn on Thursday with a question about a $2 million (Dh7.3 million) copy of a Wu-Tang Clan album he bought in May.When Hunter College High School announced in March that it had received a $1 million donation — the largest ever in its century-long history— from a member of the Class of 2001, many graduates were stunned to learn who the young donor was: Martin Shkreli, a multimillionaire pharmaceuticals executive. Shkreli, 32, had bragged to Bloomberg Businessweek about buying the only copy of the popular New York-based hip-hop collective’s Once Upon a Time in Shaolin, drawing ire from music fans around the world when he said he had no plans to listen to it.

But his strategy of finding an old drug, raising its price, and taking the profit is one that’s increasingly common among a new breed of drugmakers. He’s an unabashed self-promoter who livestreams his daily life and boasts he’s “the world’s most eligible bachelor” and “the most successful Albanian to ever walk the face of this Earth.” And he’s an equally unabashed provocateur who jousts online with his critics.

Disdaining a business model dependent on expensive research and development, companies like Shkreli’s Turing Pharmaceuticals, Valeant Pharmaceuticals International, Rodelis Therapeutics and others have taken advantage of inefficiencies in the U.S. health-care system. The company announced today that Shkreli has resigned as CEO. “Shkreli has become the Wolf of Pharma Street — he’s basically come to represent everything that was bad and wrong with pharma,” said Art Caplan, a medical ethicist at New York Universitye.

On Thursday, US Attorney Robert Capers told reporters, “We’re not aware of where he got the funds that he raised for the Wu-Tang Clan album.” Capers’ comments immediately spurred hopeful posts on social media from music lovers that the album might be forfeited by the Turing chief executive officer during his federal prosecution. The aspiring emo and punk musician who had ultimately been kicked out for poor grades and poor attendance? “I never really thought about him as a ‘Most Likely To’ type of person,” said Geoff Gresh, a classmate of Mr. He pleaded not guilty Thursday to charges that he looted Retrophin, a pharmaceutical company he founded, of $11 million to pay back disgruntled hedge fund clients. And while Shkreli may be reviled, said Caplan, “he’s not doing anything in terms of prices that other companies haven’t done.” The company took two heart drugs, Nitropress and Isuprel, and raised their prices by 212 percent and 525 percent, respectively. Rodelis was working to ensure “long-term availability” of the tuberculosis drug, and planned to maintain patients’ access, the company said on its website.

It treats a rare parasitic disease that strikes pregnant women, cancer patients and AIDS patients. (The criminal case doesn’t involve Turing or Daraprim. The drug’s rights were returned to the nonprofit Purdue Research Foundation, who sold it to Rodelis earlier this year, in September after an outcry over the price increase.

Shkreli resigned as Turing CEO on Friday.) But it sparked outrage that resounded from medical centers to the presidential campaign: Hillary Clinton termed it price-gouging, while Donald Trump called Shkreli “a spoiled brat.” Shkreli grew up in Brooklyn, the son of immigrant parents who worked at janitorial jobs. Shkreli are true, his flunking out of Hunter, the prestigious Upper East Side school known for its Ivy League-bound students, was just the first in a series of failures that he would try to overcome with money, his own or other people’s. He has said he stopped going to class and didn’t graduate, though he evidently bears no ill will: His foundation recently gave the school $1 million.

Classmates describe him as always offering to pay for nights out during their college years, giving the impression that he wanted badly to prove that he had made good. By his early 20s, Shkreli had his own hedge fund — and had a reputation as an outspoken short seller, or investor who bets a stock’s price will decline. Big price increases are just business, Shkreli has said. “I think health-care prices are inelastic,” he said at an event in New York this month. “I could have raised it higher and made more profits for our shareholders.” Shkreli has previously said that his goal is to use his financial gains to develop new drugs and that he gives much of his company’s medicine away for pennies. And then on Monday, in the days before his arrest, he drew more attention to his Hunter connection by chatting online with a female Hunter student during a live stream on YouTube. Undeterred, Shkreli launched a new fund — it also collapsed, prosecutors say — and launched himself in 2011 into the pharmaceuticals business as CEO of Retrophin, which also has drawn scrutiny over sharp drug price increases.

And he’s taken pains to distance himself from Turing and Shkreli. “To compare us to Turing is ridiculous,” Pearson said during a Dec. 15 interview with CNBC. “That is a single-product company.” Valeant declined to comment for this story. Some complaints about his management were oddly personal: An ex-employee at one of his hedge funds has said in civil court papers that Shkreli sent his wife and sons such messages as: “I hope to see you and your four children homeless and will do whatever I can to assure this.” The disclosure came in a suit — against the ex-employee, whom Shkreli had accused of theft.

Yet Pearson has criticized Big Pharma companies for overspending on research, and the company has said that it looks for products that can be sold better and more profitably by Valeant. In Daraprim, and other drugs, Shkreli may have seen the same opportunity. “If you talk to anyone in pharma, maybe I don’t have the same resources as Pfizer, I may not have the same experience as Merck, but I’m crafty as f—,” Shkreli said in a Dec. 16 interview with the publication HipHopDX. These alumni were appalled by his aggressive strategy, as the chief executive of Turing Pharmaceuticals (a post from which he resigned Friday) of snapping up companies that produce inexpensive, little-used drugs, then marking up the prices by a factor of thousands. It said in September that Turing doesn’t represent its values, and in October that Valeant’s strategy “is more reflective of a hedge fund than an innovative biopharmaceutical company.” “It’s becoming a new financial model, it’s not just Turing — Horizon does this, Valeant does this,” Steve Miller, chief medical officer at drug-benefit manager Express Scripts Holding Co. said by phone. Miller has been a frequent critic of drugmakers, and he sits at the other side of the negotiating table, managing pharmaceutical costs for health insurers. “We have a new class of leadership at these organizations that no longer feels encumbered by the social contract that had previously existed,” Miller said.

Still, Shkreli mused to HipHopDX about delving further into the rap world: bailing out up-and-coming artist Bobby Shmurda, who is jailed in a drug-gang case, and even writing raps of his own. In particular, he thanked a math teacher, Linda Aboody, telling The Daily News that she was “just a wonderful teacher — her logic class was unbelievably helpful.” Ms. Last month, he acquired a majority stake in a floundering drugmaker, KaloBios Pharmaceuticals Inc., sending its shares soaring, and named himself CEO. Companies like Turing and Valeant that acquire drugs instead of developing them are the “exceptions and not the rule,” said Robert Langer, a professor at MIT and co-founder of more than 25 biotechnology companies. Shkreli had bonded over their fondness for music, and because both were uninterested in the fast track to law and medicine and academia that obsessed so many of their classmates. “In order to really succeed there, you had to put in an amazing amount of effort and I think we both decided it wasn’t worth the effort because we wanted to do other things,” he said.

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