Monday, March 28, 2016

Discussing the Four Views of Martin Shkreli

The Main Stream Media's Four Views of Martin Shkreli

To continue from my last blog post, I've analyzed the four generalized views that the main stream media holds on the Martin Shkreli Daraprim price-gouging scandal and will list them again here:
  1. Raising the price of Daraprim is unjustifiable
  2. Patients in need of treatment for toxoplasmosis won't be able to afford the new price of Daraprim, and many will suffer from their inability to receive medication.
  3. Martin Shkreli used the money that he has gained from the price increase of Daraprim to purchase the $2 million Wu-Tang album "Once Upon a Time in Shaolin."
  4. Martin Shkreli is guilty of the charges brought against him, and will also lose his lawsuit against Retrophin.
In order to prove that the main stream media adjusts its narrative to fit it's own bias, I will now attempt to argue against these four points.

Raising the Price of Daraprim is Unjustifiable

In order to understand the justification for the price increase of Daraprim, one must become acquainted with the history of the drug. To begin, Daraprim isn't actually the drug that Turing Pharmaceuticals purchased but is actually the brand name of the drug pyrimethamine. Pyrimethamine is a drug that was initially developed by an American scientist named Gertrude Elion to combat malaria and was first available in 1953. The chemical structure of pyrimethamine hasn't changed since it's original developement and is no longer used to treat malaria due to malaria's natural genetic evolution that has caused the disease to become resistant to different treatments, but in some rare cases a combination of pyrimethamine and sulfadoxine is used to treat infants with malaria (infants being those under the age of five years) and is sold under the name Fansidar. Pyrimethamine was first demonstrated to be able to combat toxoplasmosis by combining the drug with another chemical called sulfadiazine in 1953 by scientists Eyles and Coleman
The motivation for the initial purchase of Daraprim has been stated by Shkreli, as he told CBS News reporters that "We're now a company that is dedicated to the treatment and cure of toxoplasmosis." Unfortunately, due to the natural evolution of organisms, the parasite behind the toxoplasmosis disease has been showing signs of resistance to pyrimethamine, and the efficacy of normal treatment for toxoplasmosis when using pyrimethamine and sulfadiazine has been lower than before in isolated incidents. Another problem with pyrimethamine is that extended use of the drug can cause serious side effects, and a patient being administered treatment for toxoplasmosis through use of pyrimethamine must discontinue use of the drug after an allotted period of time. Martin Shkreli and Turing Pharmaceuticals is a company that operates by finding old and rare drugs, researching better alternatives for said drug, and developing newer treatment options for its customers. When Shkreli learned of Daraprim, a 63 year old drug that treats a disease that is slowly gaining a resistance to it's only available cure, he decided to purchase the drug for $55 million from a company called Impax who wasn't doing research on a new cure for the drug at the time. 
Now that the history of Daraprim and the motivation behind Turing's purchasing of the brand has been brought to light, I can attempt to explain the reasoning behind the price increase. Since Turing purchased Daraprim for $55 million, Shkreli's investors are going to expect a profit from their investment. On top of the $55 million, Turing had to take into account the cost of developing a new drug, which the Wall Street Journal claims costs $2.6 billion and Forbes even claims costs near $5 billion. Even though researching a new drug costs an incredible amount of money, the business model used by Impax was not profiting off of Daraprim sales, and regardless the price would have to increase for Turing to survive and continue production of the drug. 
The justification of the price increase comes from the huge $55 million dollar investment made by Turing; all of that money had to be regained so that the investors behind the purchase can make a profitable return. If the price had stayed the same, Turing would have gone under, and there would be no company that continued to make Daraprim. 

Patients in Need of Treatment for Toxoplasmosis Won't be Able to Afford the New Price of Daraprim, and Many Will Suffer from Their Inability to Receive Medication

Pharmaceuticals for rare diseases like toxoplasmosis are sold in a static market. What this means is that no matter the supply or the price, the demand of the product will always be present until external forces collapse the market. It's similar to how gas stations can slowly increase the price of gas as much as they want, yet Americans will still fill their tanks since our society's system of travel revolves around planes, trains, and automobiles. This is a scary idea since it means that pharma companies can raise prices as much as they want since people suffering from debilitating diseases such as toxoplasmosis have no other alternative treatment available to them. The way our society has counteracted against the moral integrity of pricing drugs outside of the sick and dying's affordability is by creating health insurance companies that provide a certain amount of coverage for a monthly fee so that in the event that one becomes ill and cannot afford treatment, the health insurance company will help pay or even pay for all of the cost of treatment. This is a flawed system.
The first flaw is the natural capitalistic instinct of the insurance company. When they structure their coverage programs, they're thinking of two basic corporate principles that every company thinks of when designing their product: they want to know how they can provide the cheapest product yet charge the highest price that still provides a steady demand. When these ideals transfer over to the structure of insurance companies, they translate to "how can we provide as little coverage as possible yet still charge our customers as much as possible?" What this means is that the insurance companies try to provide as little coverage as possible, and when the price of a service from a medical practitioner or the price of a drug or treatment becomes too expensive to be covered by the insurance company, the patient has to pay out of pocket through copay systems. So since insurance companies have the natural instinct to provide the cheapest product, the customer of an insurance company might be inclined to not purchase monthly health insurance if he or she cannot afford it and risk paying out of pocket for future medical expenses. 
This brings upon the second flaw of the health insurance system. Since hospitals and pharmaceutical companies now expect that an insurance company will pay the cost of a patient's treatment and services, they set about to charge as much as they can so the insurance company has to shell out as much money as possible. This is why some hospitals will charge their patients close to $100 dollars for using an overhead lamp or $8 for an unneeded box of tissues placed in a patient's room. To counteract this kind of gross overcharging that plagues the health industry, insurance companies also take on the responsibility of going over medical bills and negotiating prices with hospitals and pharma companies so that they, and the patient receiving the care, don't have to pay outrageous fees like $2,229.11 for only three stitches
So at $750 a pill, Daraprim looks like the kind of drug that is trying to reap profits from insurance companies at the cost of those who are uninsured or those who cannot afford the copay. Turing Pharmaceuticals and Martin Shkreli have both revealed statements that the price a patient pays out of pocket for Daraprim will be discussed on a case by case basis. According to Turing Pharmaceutical's official website, if a patient has private or commercial insurance, he or she is not obligated to pay more than $10 out of pocket. Also, those that are uninsured will receive Daraprim at no cost, provided that the patient meets the certain requirements to be eligible for the discount. To continue with Turing's attempt to make Daraprim affordable to its customers, the company sells the pill for one dollar per one hundred tablets to the AIDS Healthcare Foundation pharmacy through the federal government's 340B Drug Discount Program making it easier for patients on government assisted healthcare programs to purchase the drug. Shkreli has even been quoted saying that "If you cannot afford the drug we will give it away for free." So far, I personally have yet to see a news report on someone who hasn't been able to receive Daraprim due to the price increase.
In conclusion, the overall goal of the price increase was for Turing Pharmaceuticals to try and get as much money from private insurance companies as it could, and for those that would be required to spend money out of pocket would be given the drug for no more than $10. Deciding whether or not it's right to try and gouge prices to force insurance companies to pay as much as possible requires a much more detailed economic discussion, but it's a system that Shkreli is trying to take advantage of in order to fund research for better treatment or even a cure for toxoplasmosis. 

Martin Shkreli Used the Money That He Has Gained From the Price Increase of Daraprim to Purchase the $2 Million Wu-Tang Album "Once Upon a Time in Shaolin"

Turing Pharmaceuticals is losing money fast. In September, the company posted that in its third quarter it had already lost $14.6 million for the year. Although there have been documents released proving that certain employees received healthy raises in their salaries and that Turing spent thousands on chartered yachts and fireworks and other extravagant expenses for a corporate event, there hasn't yet been any clear evidence suggesting that Shkreli has increased his own salary or that he has pulled $2 Million from the company for a private purchase. What the media isn't considering when it makes this allegation is that Shkreli was already a successful businessman before he started Turing Pharmaceuticals and had enough personal money to spend on a $2 Million album. One could also argue that the expenses listed in the corporate event were purchased for a private investors' event (which would be considered a normal action taken by a small and underfunded company like Turing) that may have encouraged unnamed benefactors to raise $90 million for the company, but so far there hasn't been evidence released to prove or disprove this assumption.
So far, we don't know whether or not Shkreli used Turing's money to purchase the album, but it would be considered unlikely since he made $8.2 million while working as CEO of Retrophin and had an E*Trade account that was worth over $45 million before his arrest. 

Martin Shkreli is Guilty of the Charges Brought Against Him, and Will Also Lose His Lawsuit Against Retrophin

So far there has been too little evidence reported on the security fraud charges and the lawsuit against Retrophin for me to make a statement in this blog post about it. All that I have seen reported is the document that shows Turing planned to have spent hundreds of thousands on a private event that included yachts, private cigar rollers, fireworks, and celebrity appearances, and that witnesses have released statements saying they feared the media backlash of raising the price of Daraprim to $750. I would like to dig a little more for available information and wait for more evidence before commenting on the situation any further, and hopefully would like to speak with Martin Shkreli during one of his live-streaming events to ask him about the situation. Until then, all I have personally seen about the events is that he has been charged, and other than the allegations, he has yet to be proven guilty of anything. 

Sources Listed in Order of Appearance

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