Crony capitalism: How the Retrophin CEO’s ruthless business model has cost him his reputation
Until a week or two ago, most people would have been forgiven for not knowing who Martin Shkreli was. An American-Albanian with humble beginnings, Shkreli has a vast entrepreneurial background within the healthcare sector. However he has recently drawn the ire of the press and the public alike, after announcing that he was going to increase the price of Daraprim, a vital drug for those with weak immune systems. So this bears the question; at what point does savvy business practice become so ruthless and immoral that it tarnishes a business owner’s reputation?
The drug in question, Daraprim, has been used for decades by people with weakened immune systems, such as AIDs patients, in order to improve the quality of their life. For a long time it’s been reasonably priced in the US, selling for roughly $13.50 per pill. However Shkreli’s company Turing Pharmaceuticals bought the rights to the drug last month, and since announced plans to increase the price of the drug to $750 per pill – an increase of over 5,000%.
This has led to outrage from those in the medical field as well as from the general public, and with good reason. Many who rely on the pill during their day to day life will now face racking up medical bills in the hundreds of thousands or alternatively go without, which could cause an extreme amount of pain. As Dr. Judith Aberg, chief of the division of infectious diseases at the Icahn School of Medicine puts it, “What is it that they are doing differently that has led to this dramatic increase?” the price hike could now lead to hospitals using “alternative therapies that may not have the same efficacy.”
Shkreli has since vowed to reduce the cost to a more affordable fee after the furore, which has seen him lock his Twitter page, most likely to stem the tide of abuse from disgruntled members of the public. The problem for Shkreli now is that whatever decrease he now makes, it will appear to be not out of principal or his own belief, but because he simply has to. His brash, unapologetic approach to the situation has also done little to help his reputation both in the business community and across the world.
It’s perfectly understandable, and expected of, businesses to increase product prices to boost revenues. However when that increase leads to costs being 50x higher than they were before, in an industry that was created to provide aid to the weakest, then very few people are going to believe it to be a very shrewd business decision. Indeed, regardless of any reductions Shkreli makes in the near future, he’s going to have a very hard job restoring his now heavily tarnished reputation.