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Martin Shkreli is low hanging fruit

frances-mcdormand-marge-olmstead-gunderson-fargoSo, Martin Shkreli has been arrested, but not for being the biggest parasite on sick people “all for a little bit of money”.  It was for sucking a startup dry in order to cover up his hedge fund losses.

There’s a reason why I’m not in pharma anymore. My options were limited and one of them was to go into a startup where the nature of the work is the same, the overhead is very high, the money is super tight and there is always the possibility that the vulture capitalists will treat the company as an object and not composed of real people. With real lives. And real careers. And real children.

But Martin Shkreli’s “Mine, Mine, All Mine!” business model is not unique. Before I explain what currently drives the drug industry, let me make two things clear: 1.) it wasn’t always like this and 2.) the lab rats are not to blame.

Basically, the drug industry has moved away from small molecule drug discovery. The industry is moving towards biological drugs for cancer and orphan diseases. There are a couple of reasons for this. They are easier to get through the drug approval process. If there are major side effects, the patients are the last people in the world to sue or complain. And the patients are desperate. They will pay whatever it takes.

Now, I’m all for biologicals for many good reasons. They have a good chance of working in the case of cancers and metabolic diseases. But while  all of the capital has flowed to these types of therapies, the stuff that most people suffer with on a day to day basis have gone without funding, and the people who used to work on those therapies have been out of a job.

So, if you have high blood pressure, schizophrenia or need an antibiotic, you are SOL.

The thing about Martin is that he’s just the most visible and egregious example of greed. And I’m not letting the left off the hook for this disaster. If it hadn’t been for the notorious class action lawsuits (please, don’t even start, you know what I’m talking about. We’re not talking criminal negligence here) we might not have ended up here.

I’ve written about what I think is going to happen to the cost of drugs before and one of these days, I’m going to properly tag and categorize my previous posts on the subject. But let me recap it here. Drug prices of all types are going to continue to rise. The new biological drugs are going to start off being astronomically expensive. The cost of generics are going to go up and up and up. Here’s why: brand name drugs and blockbusters are going off patent rapidly. Ohhh, you say, that means the generics that they turn into will be cheaper. Ha! Say I, you forgot your basic economics 101 course section on supply and demand.

The supply of new drugs with fewer side effects is going to go down. New small molecule drugs get approved rarely and the patent time left for them is short. So to recoup the cost of research, which is substantial, the cost of the drug will be high. Meanwhile, the brand names that have become generics are going to become the play things of people who are much more sophisticated and low profile than Martin Shkreli. The drugs still need to be made in FDA inspected and regulated facilities. That costs money. That money can’t be recouped from a cheap generic. And without blockbusters to keep the lights on, the cost of the generics will need to increase.

I’m just picturing a series of rolling blackouts on some of these drugs in the future. You need a blood pressure med? Darn, that production facility needed to be taken offline for maintenance. It might not be maintenance but there will be some excuse for why there is a shortage and the price needs to go up. And up. And up. They’ll start blaming it on regulation. Hey! A Twofer. If the shortage of your blood pressure med is caused by the federales, why not make it easier to get that drug made in China? It’s generic, after all. You’ll never know the difference. And besides, what would you prefer? Some outdated federal regulatory process on a brand name drug that has gone generic or a stroke?

I don’t know about you, but I want my drugs regulated.

This is the financialization of the pharma industry. Twenty years ago, we wouldn’t have been concerned about hedge funds getting involved in pharma to the same degree that they have. That was before the MBA’s moved in ad decided that R&D staff had it too easy, they weren’t working hard enough and luxuriated in spacious labs instead of cramped cube farms like the accountants and marketing people in the business unit down the road. (yes, I have actually heard this childish and clueless complaint from the MBAs) It should be against the law for petty selfish people to run an industry as important as the drug industry. But you can be sure that the big players are glad for Martin Shkreli to take one for the team so they can get back to business in peace and quiet.

They don’t need the attention.

Well, until the bacterial apocalypse arrives

2 Responses

  1. Superbug resistant to last-resort antibiotics now found on multiple continents – STAT

    >

  2. curious that the feds went after his ponzi-scheming not his loudmouthed part in the ongoing big pharma multi-bazillion$ criminal enterprise…

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