So, Martin Shkreli, eh?

Arrested by the FBI on federal charges. And reading the charges themselves, a reasonably classic tale.

No idea whether they’re true or not, they’re only charges.

Not unusual: someone goes deep in the hole and they concoct ever more extravagant plans for Hail Mary passes to get them out of it. And that KaloBios one, on paper and in the short term, did manage that. But it’s unlikely to persist given these charges: it’ll take some time either way on federal charges and the stock won’t stay elevated while it all works out.

Don’t admire or condone Shkreli, but got to admit that the exploitation of the bureaucracy was clever. And it really was exploitation: if the FDA wasn’t such a cockheaded organisation there never would be the arbitrage on getting the priority review voucher.

Shit, if it was just a competent bureaucracy then there wouldn’t be that arbitrage.

And the strange thing is, if it were done by someone not likely to face charges on earlier issues, it’s an arbitrage that not only would work but would return very large profits, 5x to 10x in fact.

The lesson of which is burn down the FDA, obviously.

15 thoughts on “So, Martin Shkreli, eh?”

  1. What’s the FDA got to do with the fact that he was a crook from way back?
    Their licensing system is wide open to gouging – so change the law not the Agency. Congress is to blame.
    I shouldn’t normally dream of defending FDA but I don’t reckon that the FBI’s failure to arrest a securities fraudster for six years is the FDA’s fault. SEC’s supervision of his Hedge Fund failed to spot that it had lost $millions. Who were its auditors?

  2. Can somebody explain how increasing the price of 50-year-out-of-patent drugs hurts anybody but brand-councious idiots? Just buy generic. 8p no-brand paracetamol vs £2 Panadol.

  3. jgh – Exactly

    The stupidity of people paying £3 for Nurofen vs 48p for unbranded Ibuprofen (same drug) is staggering… and apparently limitless.

    Damn you Einstein…

  4. There wasn’t a generic version of the drug he was selling. Or maybe it was the generic, but there was nothing else on the market. He bought the patent and had a monopoly.

  5. The stupidity of people paying £3 for Nurofen vs 48p for unbranded Ibuprofen (same drug) is staggering… and apparently limitless.

    I don’t know about in the UK, but brands hold their value well in shitholes where you can’t trust the unlabeled stuff.

  6. So Much For Subtlety

    I think it is a little coincidental. Who wants to bet that they started looking in to his business affairs because he made the FDA look stupid? They may or may not have found anything but the motivation was simply that he made them look bad.

    Anarcho-tyranny at work. You can do what you like, except you can’t because everything is a crime if those in power want it to be.

  7. @ jgh
    Because no generic drug was licensed by the FDA – hence Tim’s complaint.
    Shrkeli was targetting drugs where the volume of demand was so small that no-one had set up a generic production line. In one case the company he bought was just importing the drug from the UK and distributing it but it had a monopoly in the USA because no-one else had applied to the FDA for a licence to distribute it.

  8. I’m with SMFS.

    He may or may not be a scumbag, but chances are the authorities wouldn’t have given a toss about whatever he may or may not have been up to previously if he hadn’t become public enemy No 1 by exploiting the loopholes in the State’s regulation of the drug industry. Can’t let people highlight how the State is in fact one of the major reasons why people are paying through the nose for drugs, better bang him up for something sharpish. There is more than a whiff of 1984 about these sort of arrests. Public see a man ‘bad things’ but within the law, then suddenly he’s arrested for something else. Its all rather convenient.

  9. So Much For Subtlety

    Well in fairness it could be because he dissed Taylor Swift.

    In modern America either seems about as likely.

  10. But if you’ve licensed N-(4-hydroxyphenyl)ethanamide branded Panadol, you’ve licensed N-(4-hydroxyphenyl)ethanamide generic paracetamol – it’s the same thing!

  11. The FDA is an extremely competent bureaucracy staffed by eggheads who make the commentariat here look average. They don’t make their own rules, the politicians do.

    I’m actually amazed it’s taken as long as it has for his plays to be exploited, but perhaps it simply never occurred to anyone. Now the rules are going to change. While that’s because the rules are obviously wrong, it’s not been a problem thus far. I see no honour in testing every system to destruction and, in this case, diverting resources away from the inspection of drug applications to wondering how the fuck you stop the next unscrupulous scam-artist.

  12. The FDA are scum whose antics kill thousands of Americans every year, Either by approving drugs they shouldn’t (after all they have to approve some–can’t stonewall ’em all to stay career safe) or failing to approve drugs they should–because their careers might suffer if a new Thalidiomide was let thro’. Altho’ old Thal was to have been a replacement for barbiturates and if it could have been taken by anybody other than pregnant women for the last 40 years might well have saved tens of thousands from death by barbiturate addiction/overdose.

    Shutting the FDA down should be a top priority in a free society. And punishing the boss pricks who have run it would not be a bad idea either.

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