Today's New York Times carries a blood-boiling story about Turing Pharmaceuticals, a young startup that acquired Daraprim, a critical drug used to treat parasitic infections in cancer and AIDS patients—among others with compromised immune systems—and immediately raised the price of the drug from $13.50 to $750 per pill. (A more than 5,000% increase!) The steep price hike for Daraprim, the Times found, has brought the the annual cost of treating these diseases "to hundreds of thousands of dollars" for some patients, and put the drug out of reach of some hospitals in low-income neighborhoods. According to medical experts quoted by the Times, there's no change in what the drug does, or how it works—the increase in price is simply attributable to Turing's desire to make more money.
(Update: Following a backlash, Turing CEO Martin Shkreli has apparently reversed his decision to hike the price of Daraprim to $750 per pill.)
The man at the center of the Daraprim fiasco is Turing's founder and CEO, a 32-year-old former hedge fund manager named Martin Shkreli. Shkreli is not a stranger to controversy. In fact, a closer look at his investing career reveals a brash, hyper-ambitious finance bro who quotes the Wu-Tang Clan, bashes his enemies on Twitter, and will seemingly do almost anything to get rich.
According to a 2014 Bloomberg Businessweek profile, Shkreli began his Wall Street career as a 17-year-old intern for CNBC's Jim Cramer, where he impressed the boss by recommending a savvy short trade, betting that the price of a biotech stock would fall. (Maybe too savvy—the SEC would later investigate whether he'd made the bet based on inside information, although the agency never pursued any formal actions.)
After his stint with Cramer, Shkreli then opened up his own hedge fund, and began betting against biotech and pharmaceutical companies, a practice known as short-selling. He often accompanied his bets with scathing blog posts on financial blogs like SeekingAlpha, accusing the companies he was shorting of having major problems. This behavior led to his public scolding from groups like Citizens for Responsibility and Ethics in Washington, which accused Shkreli of "spreading unfounded and inaccurate rumors about drugs owned by companies he was shorting" in order to increase the value of his short positions. (The group urged the Department of Justice to investigate Shkreli; no charges were ever filed.)
Following the implosion of his hedge funds, Shkreli styled himself as a pharmaceutical expert and started a company called Retrophin, which specialized in buying up the rights to little-known drugs and jacking up their prices. For one drug, Thiola, which treats a rare kidney disease, Retrophin hiked the price by 2,000%.
At Retrophin, Shkreli developed some odd habits. Despite the fact that he'd never attended medical school, Businessweek says, he took to "wandering around [his office] in fluffy slippers with a stethoscope around his neck." He raised eyebrows when he tweeted "this is one of the best days of my life!" to his followers, a day before Retrophin boosted its revenue forecast. And he got in trouble when it was discovered that multiple Twitter accounts with IP addresses matching Retrophin's headquarters were tweeting pro-Retrophin messages in "ghetto slang," a seeming violation of both securities law and general good taste.
Shkreli's behavior at Retrophin made him a lightning rod. He has been sued by multiple former Retrophin shareholders, who alleged he practiced insider trading to get rich off the company's shares. (One of those lawsuits was dismissed; others are ongoing or have been settled.) TheStreet named him the "Worst Biotech CEO of 2014," saying, "Someone thought a smart but attention-addled man-child with a Don Bailey obsession and a Twitter account could be a biotech CEO. They were wrong." And Retrophin eventually fired him from the company he'd founded, after accusing him of disguising legal settlements as "consulting fees."
Last month, Retrophin filed a lawsuit against Shkreli, asking for $65 million in damages. According to the lawsuit, Skhreli's former hedge fund, MSMB, was left "virtually bankrupt" after he made a single disastrous trade with Merrill Lynch in February 2011. Retrophin's board of directors allege that he used the drug company's funds to pay back angry MSMB investors who had lost money.
"Shkreli was the paradigm faithless servant," the complaint states. "Shkreli used his control over Retrophin to enrich himself, and to pay off claims of MSMB investors (who he had defrauded)."
Shkreli (who didn't respond to a request for comment this morning) responded at the time that the suit was “baseless and meritless." On the day the lawsuit was filed, he tweeted: "I am not the one to fuck with #wutang"
Indeed, Shkreli's Twitter account may be the oddest thing about him. It's a mixture of geeky biotech jargon, cocky trader talk, and idle finance bro chit-chat.
Publicly, Shkreli has stated that he has philanthropic aims. (“I want to cure many diseases and save children’s lives,” he told Bloomberg Businessweek last year.) But in his decision to jack up the prices of life-saving drugs to exorbitant levels, he's putting his own profits well ahead of any public good.
Shkreli doesn't seem concerned about the Times article on his newest drug controversy. Last night, after the story went up, he tweeted lyrics from Eminem's "The Way I Am."
And in response to one Twitter user's accusations this morning that his decision to raise Daraprim's price to $750 a pill would "cost people their lives and bring people to financial ruin," Shkreli tweeted a simple rejoinder: "aint my fault."
When asked on Bloomberg TV this morning why Turing had raised the price of Daraprim by 5,000%, Shkreli replied, "We needed to turn a profit on the drug."
Additional reporting by Casey Tolan and Rob Wile.