The infamous Martin Shkreli is “Pharma Bro” no more. On Jan. 10, Shkreli received a lifetime ban from the pharmaceutical industry.
You may recall that Shkreli exploited lax enforcement to corner the market on a lifesaving drug (Daraprim) and then jacked up the list price more than fortyfold. This went on for years, with Shkreli directing the operation even while serving a prison term for a prior financial fraud.
Considering his actions were a life-and-death matter among those who needed the drug, we’re all in favor of shutting the door on any repeat performances.
Companies and industries routinely complain that a few lousy actors can make the rest look bad. So, when you catch ’em red-handed, ban ’em.
It behooves any industry to crack down on the worst of the worst, and lifetime bans send the right, no-nonsense message. The worst lawyers should be disbarred, the worst telemarketers shut down for good and the worst financial-industry crooks banned as a matter of course.
As the exhaustive 135-page ruling on the Shkreli case illustrates, his misconduct was as rotten as it was intentional. It’s easy to imagine him doing it all again if he had the chance.
Shkreli, who currently resides in federal prison, started by researching the pharmaceutical industry for a drug that fit specific requirements. It had to be the sole, gold-standard treatment for a rare but life-threatening ailment, so that patients, hospitals and insurers were at his mercy and had no choice but to pay any price.
The drug he chose also had to be produced from only one source, so its distribution could be closed off to any would-be competitors. That created a barrier to entry and extended the period of maximum pricing power.
Shkreli settled on a drug used for a potentially fatal disease that results from infection with a parasite. The federal government estimates that tens of millions may be infected in the U.S., but a healthy immune system keeps the parasite from causing illness.
Most at risk are those being treated for HIV, cancer or organ transplants, as well as babies born to mothers with active infections during their pregnancies. To save these patients suffering from the active disease, the drug must be administered within hours. It was this small but vulnerable population that Shkreli sought to milk, according to the recent ruling.
He and his gang bought Daraprim from its previous owner at a premium in 2015, then increased the list price from less than $18 per pill to $750, prompting headlines, but no immediate action from regulators: Taking advantage of the slow-moving Food and Drug Administration was part of Shkreli’s plan.
This man was not some pure capitalist hero, as some absurdly have suggested, but the exact reverse. His crime was all about prohibiting free-market competition.
Locking up supplies of the drug was crucial, and the anti-competitive behavior continued even after Shkreli was imprisoned for securities fraud at a previous company he ran. At times using a contraband phone, Shkreli worked through a stooge he installed as chief executive of his drug company to keep the pills and their active ingredient inaccessible to competitors who needed them to produce generic versions.
At one point, the ruling says, Shkreli’s henchman drove to a Starbucks parking lot to repurchase five bottles of Daraprim from a pharmacy owner for $750,000, twice what the pharmacy had paid. That’s one way to keep the pills away from competitors.
In her ruling, U.S. District Judge Denise Cote noted that Shkreli’s lifetime ban was well-deserved for his “egregious, deliberate, repetitive, long-running and ultimately dangerous illegal conduct.”
Shkreli expressed no remorse and said no one had proven his scheme was egregious because no evidence had been introduced showing that patients had died. The judge wasn’t having this absurd line of defense. “This is an egregious case; death is not the only relevant metric,” she wrote. “If a court sitting in equity is powerless to impose a lifetime industry ban to protect the public against a repetition of the conduct proven at this trial, then the public could rightfully ask whether its well-being has been adequately weighed.”
One common argument against lifetime bans is especially weak: Some claim that barring bad actors from their chosen fields hurts the economy, depriving industries of “innovators” who happened to make “mistakes” and got caught. This nonsense typifies the thinking of some white-collar criminals who remain amazingly arrogant even after being brought to justice.
Exhibit A is Shkreli, who in 2020 had the nerve to seek release from prison in part so he could use his skills to find a cure for COVID-19. Presumably he meant skills other than defrauding investors and profiteering.
Shed no tears for entitled grifters.
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