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Martin Shkreli Arrested on Securities Fraud Charges (bloomberg.com)
379 points by choult on Dec 17, 2015 | hide | past | web | favorite | 290 comments



The curiosity being gratified here cannot remotely be called "intellectual".

https://news.ycombinator.com/newsguidelines.html


I googled "intellectual" and the first words were:

"An intellectual is a person who engages in critical study, thought, and reflection about the reality of society, and proposes solutions for the normative problems of that society"

You could argue Shkreli's behaviour was a problem of society that intellectuals would be curious as to the solution thereof?


Sure, one can be intellectually curious about anything. But the Dionysian frenzy we actually see in cases like this has nothing in common with that.

What happens when somebody does bad things, especially repeatedly, is that others seize on it as a socially acceptable way to get their anger out. That may be human nature, but it's the epitome of what we don't want here.


It was alleged that Martin Shkreli harassed an ex-employee, including spouse and their children. Quoted: "I will see you and your children homeless"[1], in a sworn affidavit.

Although Shkreli never explicitly denied it, he had implied the accusations were false. Until yesterday, where he bragged about it during an interview with DX:

     I’m definitely the real fucking deal. This
     is not a fucking act. I threatened that
     fucking guy and his fucking kids because
     he fucking took $3 million from me and
     he ended up paying me back. He called my
     bluff. He said, “You’re not fucking going to
     go after me.” [I said] “Yes I motherfucking
     will.” I had two guys parked outside of
     his house for six months watching his every
     fucking move. I can get down. I don’t think
     RZA knows that. I think he thinks I’m
     some powder puff white guy CEO that’s
     got too much money. No. No, no, no.
Not the kind of behavior you'd expect from the CEO of a publicly traded company.

[1] http://mic.com/articles/125657/turing-ceo-martin-shkreli-wan...

[2] http://hiphopdx.com/interviews/id.2825/title.martin-shkreli-...


> Not the kind of behavior you'd expect from the CEO of a publicly traded company.

Threatening people — this I would actually expect... But admitting it on interviews — definitely not.


I guess that Wu Tang album really spoke to him


Wu Tang speak to him as much as Rage Against the Machine speaks to Paul Ryan.


Rage is so against the machine that they've done over $100 million in revenue for Sony. So, yeah, they make lots of money for a big multinational. Sounds like something a stereotypical Republican would like, no?


C.R.E.A.M. by Wu - Tang addresses this. The song is about how they went from being drug dealers to preaching to kids how gang banging and drug dealing isn't the way. They made a lot of money doing that too, deservedly so. Corporations and cash for that matter are not inherently corrupt. My point is if people really listened to Wu - Tang they wouldn't be corrupt drug dealers even if they sold legal drugs.


Point about RATM still stands. Not because "all corporations are evil — of course not — but because RATM preaches exactly that "all corporations are evil".


It's nice how they got to choose between that and being unknowns for the rest of their lives.


Are you making a joke or is the "RZA" that he refers to the same?


He is the purchaser of a Wu-Tang album of which only one copy was to exist known as "Once Upon a Time in Shaolin" [0].

Which has a clause stating that Wu-Tang or Bill Murray can attempt one heist to steal the album back without repercussion [1].

The world is a strange place.

Also sorry about the ad ridden mess that is reference [1], I'm at work.

[0] - http://noisey.vice.com/en_uk/blog/martin-shkreli-wu-tang-cla...

[1] - http://pigeonsandplanes.com/2015/12/wu-tang-bill-murray-stea...


The clause is a hoax. A pretty hilarious one though! http://nymag.com/following/2015/12/wu-tang-wont-actually-ste...


When I heard about the hoax, I felt stupid for falling for this thing about a Wu-Tang album with only one copy that the owner hadn't even listened to.

THEN I found out that only the Bill Murray clause was a hoax, and the actual album thing is true. Christ.


Shkreli is indeed referring to the Clan's RZA. Shkreli recently bought the single existing copy of their newest album.



Or all the cocaine.


Reminds of a rumor about the CEO of a BigCo. He wanted to buy a news paper company, so he went to them and said "Do you want to work for us or against us?"


This is happening right now in Nevada though its political (for the primary season) not business.

http://www.cbsnews.com/news/who-bought-nevadas-largest-paper...


He's a sociopath. Not even a smart one, just a dumb sociopath. A mildly smart sociopath could not possibly be on record with those statements.

Referring to him as CEO of a publicly traded company (which he factually is) is quite generous. His hedge fund was apparently a pump and dump scheme (generally hard thing to prove in court, so he got away with it). He eventually lost all of investors' money, which he repaid by allegedly committing securities fraud that he's arrested for. The two companies that he started (fired from the first one for fraud, then started the second as a carbon copy) were simple sham operations where he would use the equity from public investors to buy life saving drugs and then simply jack up the prices to make it NPV positive. No real research, no science, just media hype and b/s.

Hope that his lawyers jack up the rates at least 5,000%, prosecutors do a good job and, provided charges are proven, a sensible judge puts him away for some time in a real prison, not a country club for white-collar criminals. Just think a place like Sing Sing could be an educational, growth experience for a guy who threatens one's family like that. May just show him how tough and smart he really is.


No, most CEOs of publicly traded companies are at least smart enough not to brag about it.


Yes. I do not know this man and I have no idea of his habits, but we're entering into "You need to stop doing that damned cocaine" territory -- that is, whether the cause is intrinsic or extrinsic, it appears to the casual observer that he is suffering from severe personality problems.

Makes you wonder who made or approved of him being CEO.


He's the CEO of two companies.

In the case of Turing Pharmaceuticals he's the CEO because he founded the company and it's funded by his hedge fund buddies, who like him because they made a lot of money from his hedge fund MSMB, despite the hedge fund being a failure.

He'a also the CEO of KaloBios. In that case he bought, with the same buddies, 70% of the company stock. As the new majority shareholder he simply appointed himself CEO.



I think unless you called it "the fucking cocaine" he would probably not even hear the words coming out of your mouth.


I doubt he'll be a CEO much longer considering that interview and these charges, shareholders will probably want him out pretty quick.


"I think he thinks I’m some powder puff white guy CEO that’s got too much money."

No, you really are a powder puff white guy with too much money. You think because you can hire some goons to watch someone that makes you 'tough'? That's the very epitomization of some powder puff rich white dude that thinks he can buy himself into being a tough guy. Let's see how tough he'll be once he's sharing a jail cell.


This DX interview is CRAZY! I read it before this broke and it pretty much solidified my thoughts about how he must view himself and his actions.


Too crazy. I can't believe any public person, would say anything like that on record. I wouldn't be surprised if the article was revealed to be fake, but apparently he approved it [0]. So, either the article is real, or this [1] twitter account isn't his, which doesn't seem likely.

This must be a case of damage control [2] going haywire.

[0]:https://twitter.com/MartinShkreli/status/677168810432946176

[1]:https://twitter.com/MartinShkreli/

[2]:http://www.dailystar.co.uk/news/latest-news/466231/Martin-Sh...


Given that the complete audio of the interview is available on youtube, it's 100% without question genuine.

(Ah, they took the interview audio down, apparently. I listened to the complete phone interview, and I can vouch for the transcript being accurate, for what it's worth)


Can you share the link and the title of the video? I want to find a mirror.



When keeping it real goes wrong.


I think this is what happens when you believe your own bullshit too hard and for too long. It's one thing to go around acting like you're God's gift to humanity, but if you start actually believing it, large unpleasant men with guns will come and explain how you've got it wrong.


Or they'll believe it too and rally around you. There's being high on your own bullshit, and getting others high on your fantastical bullshit. He wouldn't have got as far as he has if he hasn't at least some knack for the latter.

I suppose the trick is to stay ahead of the wake of your reality distortion field, and being able to maintain such.


Or they will laud and eulogize you as a visionary that forever changed the tech industry.


> Not the kind of behavior you'd expect from the CEO of a publicly traded company.

FWIW, I know from personal experience this happens in private equity and I'm not surprised it does in publicly traded companies. Suffice to say, I stopped working with those people once I became aware they retained a guy and his goons for such a purpose.

The amazing part is he admitted it.


Wowzers! Talk about being lost in the sauce. Dude is stomping on the broken hamster treadmill in temple of his familiar otherwise known as the wilderness of his mind, currently indistinguishable from the streets or the movies. Presumably, his investors/associates have long known and abided by this as long as he was making them money.


> Dude is stomping on the broken hamster treadmill in temple of his familiar otherwise known as the wilderness of his mind

I'll bite. I'm interested in what this means, because I can't seem to get more than four words in together before becoming completely lost. Mind giving me the cliff notes version?


The doors of perception have opened wide, the fourth wall of his narrative has broken. :)

In short, his interview suggests that he is having issues distinguishing from his internal and external worlds. This is what happens when you lie so habitually you can't remember what's real and what's not - and a good followup to ensure that you really struggle to remember what's what is to spend as much time as possible coked up.


Basically a non-artist formerly known as merely a conceited dude, had the walls between his "knowledge" of his greatness and the perceived reflections of it from outside (e.g. from movies and others' glam lives) collide. Collision fueled by a rage at everyone else's lack of acknowledgement of his greatness.

madaxe_again's summation is on track. But I don't believe coke was necessarily involved - some people just have higher and growing concentrations of asshole within them.


Ah, that mostly matches the general "feel" I got from what you said, without entirely following your expressions.

As a side, I'll note that while densely chained and encapsulated metaphors, allusions and references to esoteric portions of popular culture can be fun to communicate in, and can be effective when used with a specific audience, but when used to communicate with a wider audience often ends up being substandard in the communication department. E.g. Poems are great for communicating complex emotions and feeling to someone interesting in reading poetry, but aren't the natural medium for communicating on most subjects.

Although it's entirely possible I'm too sensitive to this.


You are too sensitive to this. Consider that sometimes, one engages in tightly layered banter, knowing that only some people will read through all layers. Which is fine because at minimum, the main sentiment (in this case, "this person's off the rails") is conveyed.

So, in this particular instance of individual expression of a common sentiment, universal and uniform reception of message is not crucial. Otherwise, rest assured, I'm well aware of the importance of clear communication.


But this is a discussion forum. There's plenty of places to go to on the internet to express yourself if you want tightly layered banter, such as reddit (which is not meant to denigrate reddit, it's comments just service a slightly different purpose in many cases). Clear communication of a point that furthers that discussion is sort of the point of HN comments, and what makes them a little different (hopefully).

If I had been able to parse your comment enough to be sure it was just an overly verbose joke at his expense along with a disparagement of anyone that's happened to partner with him, I would have just downvoted you and been done with it, as the comment's not really in good taste, but more importantly it doesn't really contribute anything. That's not really meant to be an insult, we all go off-topic at times. You just happened to do it in a way that kept me from even determining whether you really were contributing anything.


Discussion can certainly proceed without knowing every last bit of nuance of my commentary because my key point is clear: the guy's off the rails and his business partners apparently tolerated this as long as he was making them money.

Naturally, you're entitled to your opinion of it, which differs from mine. Hence, we agree to disagree.


> Discussion can certainly proceed without knowing every last bit of nuance of my commentary because my key point is clear

No, your key point wasn't clear, at least not to me. It was so unclear, except for what I assumed based on some general feel and what you were replying to, that I actually stopped and asked you what you were trying to say.

> Hence, we agree to disagree.

Fair enough.


The most confusing thing about this whole Shkreli ordeal is how someone who acts this way and is this young made enough money in the first place to buy out pharma companies. Maybe he inherited it?


"Shkreli started his career interning for “Mad Money” host Jim Cramer while still a teenager. After recommending successful trades, Shkreli eventually set up his own hedge fund, quickly developing a reputation for trashing biotechnology stocks in online chatrooms and shorting them, to enormous profit."


No. Read the article :

Shkreli’s extraordinary history—and current hold on the public imagination—makes the case more noteworthy than most involving securities fraud. The son of immigrants from Albania and Croatia who worked as janitors and raised him deep in working-class Brooklyn...


I've read a bit about him but did not see that. Thanks.

So, my confusion still remains as to how he accumulated that much capital in the first place.

EDIT: Yes, perhaps through greed and malice. But how exactly? To go from nothing to enough money to buy companies is quite a jump and you need several consecutive breaks/perfect opportunities.


If you're prepared to be dishonest it's extremely easy to lay your hands on capital. You can steal, you can gouge, you can trample people and take everything from them, you can pump and dump, you can play financial games, you can lie to investors, you can lie to the media, you can borrow and then re-lend under false pretences, you can play shell games. In short, there are many ways to make a dishonest living in the corporate world.

If I opted to be a lying shit, I could conjure up several £M by dinner time tomorrow, and then leg it - but most of us have ethical norms that prohibit such behaviour.


What evidence do you have that he acquired his wealth this way? You are just assuming so because since he has done some bad things with his current wealth.


I don't know, the court documents that show he's done at least a few of the items on that list?!


What evidence do you have that they are just assuming so because since he has done some bad things with his current wealth? You are just assuming that they are assuming so.


Basically he is smart and has no morals against doing whatever it takes... he has numerous 'black marks on his record' he just never really had to face repercussions...

and he has capital because he has made money for the people who have given him money... that simple.


He is one of the best investors in pharma. Started out as a teenager in hedge funds. Famous for shorting biotech and earning millions.


The article said he had a reputation for getting on forums, etc. and trashing stocks that he was also shorting. Seems like a form of pump and dump to me, if he really had that reputation it's surprising he hasn't gotten into more trouble.


I looked this up, it's actually called 'short and distort'


When he shorted biotech he triggered the price fall by launching a complaint with the FDA I believe.

Sort of the opposite of pump and dump.


The trick is to convince other people to let you manage their money. If you have a good track record, and attract people with a lot of money to invest, you start making a lot of money off the management fees. Half a percent adds up when it's taken off tens of millions.


Life, and especially the capitalism aspect, is a game of imperfect information. As with any other game of imperfect information, aggression plus the intelligence to exploit the information gained from aggression can get you very far in life.


And extreme luck.


Definitely a heavy user of recreational drugs. This crime may have been related to that.


Not necessarily. Bipolar disorder and/or narcissistic personality disorder and/or sociopathy could account for it too. Or all of the above including coke


This is so over-the-top that it could be a Vincent Gigante-style maneuver.


Kinda seems like part of a shtick to me. But what do I know.


Keltner and Piff pretty much settled that enriched people feel entitled to not give a fuck about anyone other than themselves.


Not even borderline! My God, what a clear and distinct admission of having a severe personality disorder.


Or is it?


What a baller.


Quick reminder that he was arrested for SECURITIES fraud - this isn't related to drug prices. Feel free to read the lawsuit filed against him by his former company to understand why Martin got arrested.

The guy is a pure sociopath. I had long ago predicted this day would come and it's quite nice to see. Will be happier when he's convicted and sentenced.

http://www.sec.gov/Archives/edgar/data/1438533/0001193125152...


Sociopath is not a term used in psychology. The term closest to your intended meaning is probably antisocial personality disorder. Sociopath is a term used by the public at large and is pretty much always used as a way to dismiss the possibility of empathizing with someone you don't understand or don't agree with.


Well, let's see here...this is a man that spent $2M on a music album that he admits he didn't even listen to in entirety, but then has a man stalked and intimidated by thugs for 6 months over a $3M dispute. And lets not forget the callous interviews he gave that were nothing more than a slap in the face of the thousands of people whose lives might be shortened by his actions. I think the guy probably has a decent shot at a diagnosis for Antisocial Personality Disorder.


You may be right, and I think a discussion where we match up his behavior to the profile for antisocial personality disorder as listed in the DSM-V would be an entertaining and engaging intellectual exercise. What I take issue with is merely dismissing him with a popular label that excuses us from trying to empathize or understand the man. I think the use of the word sociopath limits and discourages discussion and understanding rather than promoting it.


"Sick" may not be in a medical dictionary, but that doesn't mean it's not a real word.

A sociopath is someone without a conscience. That's the dictionary definition, and it's absolutely applicable in this case.


You are misrepresenting my thesis. Did you really read my post as, "sociopath is not a word"? If you did, I would encourage you to ask an adult to read the post for you and explain it to you. "The term sociopath is used by the public at large and is pretty much always used as a way to dismiss the possibility of empathizing with someone you don't understand or don't agree with." That's a rather large sentence to swallow. Here, I'll break it up for you:

"The term sociopath is used by the public at large" Sociopath is a word, but not a diagnosis.

"and is pretty much always used"

"to dismiss the possibility of empathizing"

"with someone you don't understand or don't agree with."

In this example, you are saying he has no conscience whatsoever. This excuses you from trying to understand who he his, it excuses you from asking a question like, "What values and circumstances led him to make this decision?" You want to believe that no possible set of reasonable values, under any circumstances, could ever lead a man to make these decisions. He must have no values. He must be a "sociopath". A good, normal person like yourself could never make decisions like this. He must not be a good, normal person. He must be something else, he must be "a sociopath". He must be some special label that allows you to put him in a box where you don't have to empathize with him, where you don't have to try to understand who he really is or why he made these decisions.


Your comment was no thesis, it was a halfhearted attempt to derail the conversation by trying to redefine the accepted usage of a word.

His actions were without conscience, therefore he has exhibited sufficient traits for society to treat him as a sociopath. Such social cues are a major part of how humans interact, and your lack of awareness of them probably means your time would be better spent reading up on autism instead of psychopathy.


[flagged]


Please don't post personally abrasive comments to HN, even when you think someone is wrong and annoying.


I apologize and I know it's something I need to work on.


Most of us do. And just knowing that is already a lot.


Also covers Narcissistic Personality Disorder and Borderline Personality Disorder.


Those disorders are not closely related. Especially BPD and sociopathy, the symptoms are polar opposites. BPD is characterized by an inability to regulate abnormally strong emotions, not a lack of emotions.


Sorry I wasn't clearer: I was referring to colloquial use of the word, not what's actually clinically accurate. My experience has been that in everyday use "sociopath" can refer to any of the three, even if (as you mentioned) these are very different diagnoses.


Thank you. I think the sociopath meme is getting a bit tired.


But it's not a meme... it's a word. The word is defined as "a person with a personality disorder manifesting itself in extreme antisocial attitudes and behavior and a lack of conscience." I think that's a very apt explanation of this guy.


For more on sociopathy, check out "The Sociopath Next Door": http://www.amazon.com/Sociopath-Next-Door-Martha-Stout/dp/07...


Most people who imagine themselves to be surrounded by sociopaths ironically end up exhibiting the selfsame tendencies of rationalization, misrepresentation, exploitation of others, lack of empathy, paranoia, and self-righteousness.

This guy is just an overconfident scam-artist who made the mistake of believing his own bullshit.


> "The guy is a pure sociopath."

There is an argument that a far higher rate than normal of CEO's of publicly traded companies are sociopaths/psychopaths.

http://www.forbes.com/sites/jeffbercovici/2011/06/14/why-som...

http://www.patheos.com/blogs/drishtikone/2013/10/are-ceos-an...

etc.

>> EDIT: Changed "most" CEO's to "far higher rate"


I remember reading something a few years ago that criticized the use of the term psychopath because it wasn't defined in a rigid way and the definition basically tracked the general populations general fears. And because we as a society are afraid of corporations now, CEO's become the target, and possibly the baseline, for the definition of psychopath.

I'm sure that many CEOs share a certain personality type, but to claim that most CEOs have a serious mental disorder seems ridiculous to me.


Psychopathy is defined as scoring a 30/40 or higher on the standard psychometric for it, the Hare psychopathy checklist.

Psychopathy is characterized by a number of traits that are sometimes adaptable and sometimes maladaptive, depending on the context. Those traits include impulsivity, irresponsibility, and a lack of empathy.

There are far more psychopaths in prisons than there are in board rooms. Successful psychopathy seems rare, even among psychopaths. But, being a CEO is rare anyway, and since we can agree that many CEO's share a certain personality type, it's not a stretch to think that the personality type they share is trending towards a personality disorder, namely psychopathy.

Where do you remember reading that? I'd like to vet the reliability of the source before I make inferences on it.


I don't know any major CEO's myself but I can't imagine having to fire 100's of people to make my share price go up a few cents. Yet CEO's do that sort of thing all the time. What do you call people that will put others out of work for no better reason than some short term increase in share price, which will benefit themselves, directly or indirectly?


Yet CEO's do that sort of thing all the time.

Citation, please? I mean, specifically, that they don't have qualms about doing it for trivial valuation reasons. There's also an argument to be made for corporations being too reticent to fire deadwood employees. IMHO, that's just as much a problem.

Personal anecdote: I talk to our CEO pretty regularly - she's probably the only billionaire I'll ever meet. I know that she personally feels the responsibility for keeping the business viable, because it's the source of income for nearly 3,000 families.

Of course, my experience is just a single data point. But I don't see that it's any less valid than a viewpoint that, as far as I can see, is based on TV and movie drama.


I have a few data points - I worked in the banking industry for many years and saw this sort of behaviour all the time. People, including entire teams were fired, not because the banks were losing money and had to cut jobs to survive, but simply because they wanted to increase profitability.

If you want citations - there are vast masses out there - here is just one:

http://www.wsj.com/articles/hsbc-unveils-overhaul-of-global-...


If you have an opportunity to increase profitability and you don't take it you _are_ losing money, at least so long as the opportunity is sustainable.


Rational?

It's not a job I'd want to do but it makes sense.


Not "most," but a higher percentage than the general population.



Al Capone was thrown in prison for tax evasion. The charge that sticks is not always what the public is mad about.


I had long ago predicted this day would come and it's quite nice to see. Will be happier when he's convicted and sentenced

Maybe. If he hires Gerald L. Shargel, he will be out on bail and it will be a very long battle.. https://en.wikipedia.org/wiki/Gerald_Shargel


This was his previous company that parted ways with him when they found out that his crazy talk was really him being totally nuts! It is interesting that Turning was about find backing with his past grievances so visible. I will give him credit he is sticking with the batsh!t craziness it til the bitter end...


The entire country is out for Wall Street Banker blood, and he painted a massive target on himself by jacking up drug prices.

Based on this and other stories, he's a world class asshole that's publicly admitted to threatening the lives of children. Right now the feds are looking for people like him to take down and make an example of, so it's likely the Securities Fraud charges will only be the beginning.


People throw around the word sociopath. I have know a few sociopaths. I have been told, I have sociopathic tendencies.

That said, I would never take advantage of the poor, weak, or helpless.

If you have sociopathic tendencies--work on them! Whatever you do, don't cross that line where you think it's ok to take advantage of the aforementioned.

I live among a lot of wealthy sociopaths. They are in complete denial, and actually believe, "Hay it's legal! I did nothing wrong? I'll even go to church, or synagogue!".

I look at them with utter disgust. The sociopaths, I know, haven't done the damage to society like this little puke.

I don't care about his SEC violations. Every trader--strike that--successful traders; cheated on order to get their wad. They all use inside information. Yes, there's some of you who got luckey on this momentum trading these last few years--great. I'm talking about the series 7 boys who always seen to make money.

Raising the price on a drug, a drug that he knew sick patients would be paying "out of pocket" for--that's a true scumbag. The word sociopath is too nice.


Well you're definitely right that people throw around the word "sociopath."


Lack of empathy can be overcome with a rational commitment to adhere to a personal system of ethics.

If a sociopath doesn't actually care what happens to other people, they can still formulate a list of rules to follow that prevents them from appearing to be a sociopath.

I recall reading about a brain researcher who was studying the measurable physiological differences in PET scans between the brains of serial killers and the control group brains when he discovered a brain scan that matched the psychopathic pattern in some other scans done for Alzheimer's screening research. It was his own brain. [0]

Surprise! You have a serial killer brain! Why don't you act like one? Maybe you just have better impulse control. Maybe you prefer to amass your wealth as adoration from fans and acquaintances. Maybe you prefer to humiliate others in video game arenas than to get any real blood on your hands.

So a smirking asshole like Shkreli isn't just a matter of sociopathy. It's being a sociopath so incredibly careless and stupid that he just couldn't avoid inciting the torches-and-pitchforks mob against him. If you make enough people hate you, you're going down for something, even if you have been careful about following all the laws to the letter, or at least covering your tracks.

If Shkreli really is a sociopath, he won't care about getting caught or going to jail. The burr up his butt will be that other people are better at his lifestyle than he is, and can prove it. (You lose! Good day, sir!)

[0] http://www.smithsonianmag.com/science-nature/the-neuroscient...


James Fallon (the researcher) gave a good TED talk[1] regarding this. What was interesting is that everyone around him (including his wife and children) weren't totally surprised by his findings that he was less empathetic, and that, as you note, he found that he could be a better person (and he wanted to be) by making an effort to do the things that come naturally to others.

1: http://www.ted.com/talks/jim_fallon_exploring_the_mind_of_a_...


I wonder why you're being downvoted. Reflexive instinct for someone who admits they have sociopathic tendencies?


Because armchair psychiatry and textbook class hatred is not really an interesting contribution to the conversation. The HN bar is higher than mere handwringing.


But all the comments saying "this guy is a sociopath" or "all big-company CEOs are sociopaths" or "here's a pop-psychology book about sociopaths" are? They're not getting downvoted....


Because the standard of conversation here must be higher than a personal anecdote, sprinkled with class warfare.


I can only speak for myself, but I downvoted him for:

> Every trader--strike that--successful traders; cheated on order to get their wad. They all use inside information.

Which is unprovable, and almost certainly untrue. It's the financial version of anti-intellectualism.


Sociopathy is probably a varying scale. Unless it is actually severe enough to cause problems for you or others it doesn't fit the definition of a mental disorder. I'm sure everyone has at least little bit, but that's just how humans are.


Shkreli is a total asshole but let's not forget that large pharmaceutical companies use the exact same strategies on many drugs only with prices lowered just enough to stay this side of outrage. Life is 'priceless' and people will pay anything to extend their lives so if all that stands between you and the grim reaper is a patented molecule you can bet that that molecule is an expensive one. Whatever the market will bear is not always something reasonable.


Lets also not forget that if you can't make money off lifesaving drugs, you also won't bother to invent any new ones. It seems to make people angry that greedy folks make money by saving lives, but lets remember that one likely alternative to this is greedy folks don't make money by not saving lives.

Putting my investor hat on, I generally believe that making rich people pretty is a far less risky investment than making sympathetic sick people healthy - I won't become public enemy #1 by charging a fortune for Botox 2.0.

(None of this is meant as commentary on the specifics of this guy - the media has decided he's a villain, prosecutors can boost their career by targeting him, and I have no way to determine the truth of the matter.)


>Lets also not forget that if you can't make money off lifesaving drugs, you also won't bother to invent any new ones.

Let's not forget that there are people who invent stuff and do research outside of monetary concerns too. Not to mention state funded research, which is how we got most of the foundations of the core science/technology we have now (either that or heavily subsidized "private" research, including pharmas).

And let's also not forget that by several accounts, the costs of research for most of those life saving drugs are dwarfed by the costs of marketing and other BS the companies spend their money on, and not even for them (as life saving drugs practically advertise themselves anyway) but for non life-saving drugs like Viagra and co...

>the media has decided he's a villain

And for one, in this particular case, nobody can blame them!


Yes, although the cost bottleneck isn't the primary research to find drug candidates, but the clinical trials needed to see which of the hundred drug candidates i) works and ii) is safe. And public funding of medical research is nowhere near what would be necessary to fund current levels of clinical research, let alone expand to meet the enormous unmet demand. For instance, UK government medical research funding is significantly less than £1bn, and estimates are the the cost of clinical trials to demonstrate the safety and efficacy of just one drug costs £0.2-1bn. So the UK could divert all pure and early-stage research and develop only 1-5 drugs each year.

Agree about marketing, I think most people agree the purpose of the pharma industry is finding objective treatments for objective diseases, and not generating spurious demand. I think we could potentially optimize strongly for the first part if we heavily restricted the latter part.


as life saving drugs practically advertise themselves anyway

Ummm.... no, they don't. I have a friend who works in the industry and you'd be surprised how cautious some physicians are. The decision to treat a patient with a new drug isn't "oh! it's better, let's use it!", it's much more complicated than that. Even great drugs need to be promoted.

Also, you can't compare the costs of marketing and R&D. You don't spend marketing dollars unless you think the return is greater than 1 (you make back more than you spent). If drug companies stopped marketing their drugs, they'd end up in a worse financial situation rather than a better one. That extra revenue means more R&D spend!


For one thing, you're conflating marketing to consumers and marketing to physicians. There is no value in patients demanding a drug because of some contentless, sunshine-and-rainbows advert. The value in drug companies talking to doctors is arguable, but I think that doctors' very limited free time in general would also be more effectively spent talking to independent analysts, or reading independent comparative research. See the National Institute for Clinical Excellence in the UK, or the Cochrane Centre.


There is no value in patients demanding a drug because of some contentless, sunshine-and-rainbows advert.

Really? I've talked to a handful of physicians that think advertising to patients is actually a good thing. They've talked about patients who haven't seen a doctor in years coming in to have their cholesterol checked because they saw an ad on TV.

I don't know about you, but I'd prefer it if patients were more proactive when it comes to their health, not less.


> Ummm.... no, they don't. I have a friend who works in the industry and you'd be surprised how cautious some physicians are. The decision to treat a patient with a new drug isn't "oh! it's better, let's use it!", it's much more complicated than that. Even great drugs need to be promoted.

And yet somehow the word on new drugs still gets to doctors in the rest of the world where public advertising of drugs is illegal. Any ideas on how this miracle occurs?


Huh? The answer is in your question. Non-public advertising. Medical sales.


> you'd be surprised how cautious some physicians are

I'd be a fuckton more surprised if there weren't hundreds of companies trying to sell drugs regardless of efficacy.


The FDA won't approve a drug unless it's efficacious. Are you inferring that it's not?


So, so many companies have been caught promoting drugs "off-label", for uses that the FDA hasn't approved. So many. Johnson & Johnson paid $1.4 BILLION to settle a suit alleging that they heavily promoted the use of antipsychotics on dementia patients.

https://en.wikipedia.org/wiki/List_of_off-label_promotion_ph...


Correct. It's illegal in the US to promote drugs for off-label uses. That doesn't mean the drugs don't work.


If J&J thought their drugs worked, I'd naively think that they could just invest a (perhaps significant) fraction of the eventual settlement to prove as much to the FDA. It would boost sales and allow them to promote them indefinitely, out in the open.

Either they couldn't be bothered, or in fact they tried to prove it, and failed. If J&J can't prove a drug works, the odds that it does actually work seems... low, given the amount of resources J&J have.


Lets not forget too that Martin Shkreli took no risk inventing this drug. He bought a monopoly - a necessary lifesaving drug with no alternative - and jacked up the price by thousands.

Either a free market fundamentalist (ie no explotative patents) or a dyed in the wool regulator should be able to agree this is not how the market should work.


Daraprim is out of patent. He didn't buy a monopoly right, he just bought a drug that nobody else thought was worth making.

Anyway, the distinction between inventing the drug and buying the patent is an artificial one. If you're going to allow creating monopoly rights--and that you can debate--then making the rights tradable will make the market more efficient.

With drugs in particular, acquisition of promising drug candidates is a major input to the pipeline at the big drug companies. It enables separation of concerns: small startups to develop the drugs and big experienced companies to bring them to market. Creating an artificial distinction between inventors and acquirers precludes that efficient division of labor.


the FDA grants a de facto monopoly right to anyone bringing a drug that is unpatented but out-of-testing standard to updated fda safety standards, by preventing competitors from advertising.


Genuinely curious... does the world actually work like this? I strongly suspect not.


Yes, it does. For example, the recent Hep-C breakthrough drug was created by Pharmasset, Inc. Pharmasset was founded by the inventors of the drug--two professors at Emory University. It was purchased by Gilead, who commercialized it.


I'm curious how you came to have strong suspicions that this kind of thing wouldn't work.

Google buys innovative startups all the time. Why should pharma be different?


I just noticed this attracted some downvotes and comments. I should have been clearer. My curiosity was piqued by this:

> acquisition of promising drug candidates is a major input to the > pipeline at the big drug companies. It enables separation of > concerns: small startups to develop the drugs and big > experienced companies to bring them to market. Creating an > artificial distinction between inventors and acquirers precludes > that efficient division of labor.

I wonder how many small pharma startups are successful. Is this really "effective separation of concerns"? Seems more like standard capitalist market dynamics: allow small-fries to take all the risk -- those that sink disappear; those that succeed might get bought out.

Is this really the best way to drive innovation in pharma? But... that's a discussion about markets.

Also, without researching the history of every drug produced by any major pharma corp, I can't blithely accept whether acquisition of "promising drug candidates" is or is not a "major input" to their pipeline. I'm not denyingwhether this happens, just asking to what degree -- just saying "citation needed" for that particular point.

I'm certainly not denying that some small pharma companies are successful, and that some get bought up by large pharma companies. That wasn't my question, and I should have been clearer.


It does. Big pharma constantly acquires research-focused junior companies to input into its pipeline for regulatory approval / commercialization.


But the existence of folks willing to buy up drugs/drug companies creates a liquid market. This makes creating new drugs more profitable and induces people to make more such drugs.

If we want to claim that folks buying up drugs don't help, do we also believe that tech startups getting exits doesn't promote the creation of more tech startups?


Well I mean yeah, that is an argument that floats around lately (one that I support). Namely, that the idea of every startup getting acquihired encourages low-quality startups with no purpose except getting eventually bought out. People need to be attached to their venture personally for it to get their full dedication, and if you just plan on selling it in the future anyway, that won't happen.


There are many people who have a philosophy of "Anything's Fair Within the Rules". There is no law against buying up the only manufacturer of a lifesaving drug and squeezing out as much profit as you are able, so there are many who would say it is fine to do.


Obviously, that only works if you don't _ALSO_ create a public relations disaster by doing so.


And end up in jail.

I'm still waiting for someone to explain to me the difference between a limited-oversight hands-off free market and a competitive criminal oligarchy.

Because variations on the criminal/sociopath thing keep happening so often when you get limited regulation and religious regard for profit at any social cost that they seem to be an inevitable outcome - a kind of moral Gresham's Law, where the crazy assholes always drive out more reasonable actors.


I'm still waiting for someone to explain to me the difference between governments and stationary bandits.


  > There are many people who...
Argumentum ad popularum. There are also many people who believe the Nazis passed good laws.

Yes, there are many people who are Lawful-Evil. That has no bearing on whether Evil is acceptable, provided it is Lawful.


In order for it to be a fallacy, he has to be basing his argument off the fact that people believe this fact. I do not see him basing any argument on his first sentence. In fact, he mainly seems to be using it as an introduction mechanism. "Many people believe A. Proposition B about A." He states it as fact, and you may disagree with that fact, but that fact is in isolation from his actual argument.


Except in this case the patents had long expired and there was no legal monopoly involved. This was pretty much free-market business wheeling and dealing.


There was no monopoly per-se, but there is considerable cost getting a new pharmaceutical company's production spun up and FDA approved.

For limited application drugs (so annual sales smaller than Prozac... which is most of them), this effectively means there will only be one supplier.

I don't know a way to fix this that will satisfy most interested parties.


Another side note is that he was also impeding the FDA approval process.

In order to get your generic approved you have to prove that it's biologically equivalent to what's on the market. Shkreli's distributor would only sell directly to end-users and would refuse to sell it to anyone doing equivalence studies on it. Thus it was effectively impossible for anyone else to prove bioequivalence and bring a competing product to market.


Shkreli aside, it's ridiculous that the FDA would require such tests but not require that all approved drugs provide samples for further testing.


Also, any other company spending money to spin up production and get FDA approval would face its incumbent competitor suddenly dropping its price to cost. This lasts until the new entrant goes bankrupt or stops selling, and then the price jumps right back up to gouging territory.

The only way to eat the incumbent's lunch in a worthwhile way would be to start out larger, so you can absorb the startup costs, and find a way to produce at lower marginal cost.

The FDA approval process for generics is part of the problem there. It should be enough to do a chemical analysis showing that the molecules are the same. The current FDA requirements are akin to having to prove that your new vodka can get someone drunk just as well as vodka from other vodka makers. The active ingredient is ethanol. Ethanol made by you and ethanol made by AB InBev is chemically indistinguishable. As long as you can accurately report concentration, for the purposes of dosing, you shouldn't have to prove that ethanol still gets people drunk when you are the one making it. You should only need to prove that the amount of ethanol in your vodka matches the amount printed on the label.

So if your doctor prescribes 9.3 g ethanol, taken orally, once daily, your "compounding pharmacist" can give you a 1 oz. shot of any 80-proof beverage. It doesn't matter if it's name-brand top shelf or generic rail, so long as it's 40% alcohol by volume.


I'm going to have to disagree that you shouldn't only need to show chemical equivalence. You need to show biological equivalence.

A few years back the FDA approved a generic version of Wellbutrin. They didn't ask for bioequivalence testing and as a result, the formulation dumped all the drug into the body, drug levels spiked and patients got sick. The FDA eventually made the company reformulate the drug so that it was truly interchangeable with the branded drug.


There's more to the buproprion HCl fiasco. The active ingredient produced by the generics manufacturers was the same. The delivery mechanism was different. The approval for the 300 mg XL version of the pills was extrapolated from 150 mg XL pill data, rather than compared with the Wellbutrin XL 300 mg. There wasn't even a check for chemical equivalence there.

You could have dropped the pills into an artificial stomach and measured concentrations at 20 minute intervals. That tests chemical equivalence. You don't need to test bioequivalence until after that. If your synthetic stomach setup does not show chemical equivalence, that's when you need to get the animal test subjects.

Part of the problem here is that the FDA bundles several different tests into one.

  - Does the molecule do harm to a human body?  What are the side effects?
  - Is the drug effective for a specific medical condition?
  - How does a higher or lower dosage affect the observed results?
  - How effective is a given delivery mechanism?
Those questions should really be answered separately, and in that order, for initial approval. Generics would then only need to re-answer question 4 if the delivery mechanism was different.

Take a look at this article about how manufacturers extend exclusivity by tweaking the delivery mechanism: http://www.pharmaceuticalcommerce.com/index.php?pg=manufactu...


Huge costs related to creating a generic version of the drug, unless it gets fast tracked.


See my reply here for a possible approach: https://news.ycombinator.com/item?id=10577132


This was pretty much free-market business

No, it wasn't free-market at all. Much of Shkreli's strategy relied on the barrier to entry created by FDA regulations. He priced the drug just low enough that it wouldn't be worthwhile for another manufacturer to get approved.

Nothing free market here. It's rent seeking, pure and simple.


There's a fundamental flaw in that thinking. Greed is far from the only motivating factor in humanity. As a matter of fact, I'd argue that it's precisely the belief in this status quo, that causes sociopathic a-holes to run sociopathic companies. The solution is not necessarily to make everything government run, but perhaps to simply not accept such behavior/thinking as having any place in our society.


Greed is not the most motivating factor, but it certainly is a key one. If you adopt the rule that greed has no place in "high minded" stuff like saving lives, then all the smart people who are nonetheless greedy will go into areas other than saving lives. There is no correlation between intelligence and selflessness. You give the best and brightest a choice between earning millions on Wall Street or never breaking $150k in science (after 7 years of low-paid doctoral and post-doctoral work) then you'll cut yourself off at the knees.


You are assuming that the greedy Wall Street folks are actually contributing some of their smarts to improve the product of the industry in some way, and not just sneaking in and extracting value from the medical industry as Shkreli does.


I'm not saying that the Wall Street folks are improving the products of the drug industry. I'm saying that a lot of very bright folks go to Wall Street instead of into science because of the opportunity to make a lot more money.

And they're not even really greedy people. We live in a country where even a PhD making $150k still has to stress about saving for college and faces potential bankruptcy from medical expenses. You don't have to be greedy to want to stave off that risk by getting a high-paying Wall Street job.


> if you can't make money off lifesaving drugs, you also won't bother to invent any new ones.

Someone call NIH -- I think they believe that part of the annual $30 billion they hand out in extramural research grants is being used just for that.


I think you're actually supporting the point. The people actually doing the research don't care whether they're being financed by VCs, or by NIH. As long as they're getting the money, they're happy.

Moreover, if you're advocating pushing private investment even farther out, there are undesirable side effects. It means that the decision about what to pursue stops being driven by what there's actual demand for, and becomes a matter of political policy.

We can already see the effects of this. Government investment in medical research is not proportional to the number of sufferers, or the expected gain in QALYs (Quality-Adjusted Life Years). It's clear that the investment is strongly slanted toward research on maladies that have distinct demographics - i.e., that are represented by organized voting blocs. Thus, you'll find far more money spent, proportionately, on research for HIV than for something that's pretty widely distributed like colon cancer. I believe it's wrong for politics to drive this so strongly.


Of course, in the other direction, private spending has it's own problems. Most of the money is spent on recurring conditions where you have to take the drug forever rather than one-time cures. Additionally, things like hair loss and impotence draw far greater funding than actual life-threatening illness, because the only motive is profit.


More than half of the costs of biomedical research ( https://en.wikipedia.org/wiki/Medical_research#Privately_.28... ), and ~75% of clinical trials ( http://undsci.berkeley.edu/article/who_pays ) is paid by industry (ironically it seems the public can't (easily, freely) read the original sources of those figures, as cited by the linked webpages, because they in for-profit journals).

My impression is that the cost of the final clinical trials account for a large part of the expense of bringing any single drug to market (but on the other hand a lot of other drugs fail before clinical trials) (some people think clinical trials are even 90%: https://www.manhattan-institute.org/html/stifling-new-cures-... ; see https://news.ycombinator.com/item?id=10752639 for some disagreement with this figure). My impression is that the general tendency is for the government to focus more on funding the less expensive but more risky earlier stages of research, and for companies to focus more on funding the more expensive but less risky (but still rather risky) clinical trials.

So the conclusion is that in order to do without private funding for drug discovery, the government would have to either (a) massively increase government funding for this, or (b) greatly lower the standards for how much evidence is required before permitting a new drug to be sold to patients (that is, to be content with companies selling a drug to patients, and billing patients/insurance companies/the government, without solid evidence that the drug actually works). Imo either or both of those may be a good idea; but those would both be huge systemic reforms and hence are unlikely to occur, and in the meantime we do in fact rely a lot on industrial funding to bring new drugs to market.


I'm curious which drugs the NIH has launched? Can you list them?


The media has decided the is a villain? I do not think so. It is quite evident he made that decision himself, look at the interview linked in the top comment, or at his actions.


Well, actually, this whole discussion IS about Shkreli and your comments are within the context of the discussion so don't disclaim that.

Shkreli has foolishly attracted attention to himself by comically absurd price-gouging. Whether it is illegal or not, it was dick move and in the end probably not even likely to net much profit. It also has understandably destroyed the good-will of anyone other than Ayn-randian maniacs.

Now he's been arrested for what sounds like illegal and extremely irresponsible financial shenanigans that happened before all this stuff. Greedy, amoral business people that break the law are usually able to maneuver themselves around getting jail-time. Shkreli's going to have a much harder time with that (because as you noted the media has decided he's a villain) and its his own dumb fault.

Personality defects have consequences.


>Lets also not forget that if you can't make money off lifesaving drugs, you also won't bother to invent any new ones

Citation needed. Extremely needed.

Counter-anecdote: https://en.wikipedia.org/wiki/Jonas_Salk

edit: wording


If you can make exploitative profits from old drugs why risk your money making new ones?


Are you saying I'm wrong, and that that pharma companies and others will donate hundreds of billions of dollars to drug development purely out of altruism?

Or are you simply claiming that a small number of examples exist, therefore my claim doesn't follow as a hard and fast rule but merely as a trend?


It's not exactly a fine line between altruism and price gouging, there is a huge scala of options in between. I find your comments in this thread hard to rhyme with your recent post about medical tourism. After all, if not for generics and your ability to move temporarily to a country where medical care is affordable you'd be out a very large amount of money over and beyond what you paid for your treatment. Clearly - for you - medication and care where you live is too expensive and you too would have benefited from more affordable medication and care.


I'm not sure why you find my comments hard to rhyme.

In this thread I'm claiming that if you make it harder to make a profit off lifesaving drugs, people will probably invest their money elsewhere and produce fewer such drugs. Reduced demand (or price ceilings) lower quantity produced.

In the other thread I claimed that if you consider alternate sellers of medical labor, you can get a lower price. Increased supply lowers price and increases quantity provided.

Both of these claims are just classic Econ 101.

If medical tourism was not an option for me I'd have paid full price in the US and considered myself extremely lucky to have the option to trade money for the ability to do sex positions besides "girl on top, me not moving". I hardly think I'm alone - how many people would be willing to give up all medical procedures invented since 1970 in return for lower prices?


But the problem lies in the fact that for 'medical tourism' to be an option at all you first have to achieve a certain amount of wealth and your social situation has to be one where you can just pack-up-and-leave for an x amount of time without your life ending up in disarray upon your return. For many people these are not options because of money in the first place so they would not be able to pay the full price in the US to begin with.

It's just another wealth-begets-more-wealth story, your jump off point is already one of considerable privilege, one that relatively few people in the US have.


If I bought a round trip US->India->US ticket (I didn't, I stayed in India), that would have been about $1000 at most. Hotel + food another $1000. Surgery $2000. Lets round up to $5k.

$5k is not a lot of money even for lower middle class USians. (Lower class USians have medicaid.)

It's true that many Americans live up to the limit of (or beyond) their means. Even if someone earning $25k cuts his consumption down to $20k, he'll still be living a vastly better life than almost everyone in India. It's true that being born in the US, and being able to trade 20% of your income one year for the ability to walk again, is a massive privilege.


Wealth inequality may be a problem broadly but it doesn't invalidate his argument about incentives in drug production.


I don't agree with this false choice, re. "how many people...since 1970 in return for lower prices". To extend the ridiculous analogy to you and medical tourism, by not supporting the medical industry in the US and paying exorbitant prices, you are choosing to give up all US medical advances since 1995.

It can't be this drastic. Remember, the medicines are being invented by people who I believe to some significant extent are motivated by the desire for research and to improve the human condition. Witness all of the smart doctors who join, voluntarily, organizations such as Doctors Without Borders and go to the harshest places in this world to provide medical treatment for all.

I am not attacking you or your enjoyable write-up earlier but I had to comment on this false choice. I observe this same dogmatic behavior when people compare agile vs "waterfall" - it just makes no sense to me because I just don't think the world is ever this black and white.


The point I'm making is that prices are high but we are getting valuable things in return for high prices. I.e., we pay 5x the cost for 10x the value. Prices are high not due to inflation or someone getting ripped off, but because we want to buy awesome yet expensive things.

I.e., what I'm disagreeing with is the contention that "medication and care where you live is too expensive".

(Jacquesm is also assuming I lived in the US last year when I had my surgery, but in fact I was homeless and spent most of my time overseas.)


That assumption was based on the data in your article.


vdaniuk wrote and then deleted: "'Lets also not forget that if you can't make money off lifesaving drugs, you also won't bother to invent any new ones' Citation needed. Extremely needed. Counterfact: https://en.wikipedia.org/wiki/Jonas_Salk"

Here: http://www.investopedia.com/university/economics/economics3....

NB: the higher the price, the higher the quantity supplied


Not sure why you're seeing it as deleted. It was edited

s/counterfact/counter-anecdote/

https://news.ycombinator.com/item?id=10751262


You mean "counter-anecdote"?


Yes...and...no

One of the biggest costs is getting a drug approved and then sold

The FDA will prioritize Orphan drugs and other high priority drugs, and the US government will help pay for drugs that haven't even gotten full clearance through the FDA if they are considered high priority.

Sovaldi (the Hep C drug that cures 90% of cases at over $1000/dose) and Harvoni (94%) you can apply your argument to. And there is a reason why the FDA and US government supports the pricing even over patients screams.

Meanwhile, while the FDA did approve Zaltrap, it was not considered a priority drug, and they did not say a thing when Memorial Sloan Ketterring publicly announced they would refuse to perscribe because the clinical data made Zaltrap out to be as effective as many other off patent drugs, and at $11000/month, Zaltrap would bankrupt patients. In the end, Zaltrap's maker, Regeneron Pharmaceuticals, Inc., brought down the price.

(http://www.nytimes.com/2012/10/15/opinion/a-hospital-says-no... , https://www.advisory.com/research/oncology-roundtable/oncolo... )

if Tomorrow you were to invent a new antibiotic that would work against drug resistant bacteria (this is considered to be a high priority research area and any drug that is ready for approval will be fasttracked), you could charge whatever you want, no complaints, and the media will not consider you a villian as much as part of the spectacle of medicine.

If you re-invented botox for no reason, or stop others from being a provider in the market, then you get to be a villian


This particular rights purchase and price hike was just foolish. A compounding pharmacy responded to it by offering the same medicine for ~$1 per pill.

http://bigstory.ap.org/article/c1264e78de574d869519f169d5a1a...


This is only if you believe in a private market which works for drugs which I believe is not possible unless for really simple basic meds. I beleive the research should be public on this case, no legal incentive can really fix the drug market. This is one of those markets where the interests of both parties will likely never align.


Keep in mind that most new drugs are discovered and developed in the US. If you take a look at the countries with strict price controls, you'll see a lot fewer new drugs being discovered.


Why can't we have the government fund pharmaceutical research?


The question is: what's cheaper in the end? Having the government develop these drugs, soup to nuts, or giving private industry do it and having medicare/medicaid pay for those who can't afford it? If private industry is more efficient at bringing these drugs to market, then the latter option might be cheaper, even if it creates "unseemly" profits for private companies.


In theory this might work. In practice, the US is truly terrible at running big projects.

Consider the 2nd avenue subway in NYC. We've been building it since 1972. It's still under construction and is the most expensive subway ever. Compare to the Delhi metro: https://en.wikipedia.org/wiki/Delhi_Metro#/media/File:Delhi_...

What big projects of any sort have we done a good job with lately? The closest we've had to a success might have been our second attempt at building an ebay for health insurance.

When we run our current crop of big projects well, I'd think about expanding into more. Until then, lets not take chances with something as important as pharmaceutical research.


https://en.wikipedia.org/wiki/List_of_megaprojects#North_Ame... suggests: CityCenter in Las Vegas, Brickell Key in Miami, and Battery Park City in NYC as recently completed megaprojects in the US. (The last has been in development for a long time.)

It also lists the Hudson Yards Redevelopment Project as an on-going $20 billion megaproject, which broke ground in December 2012 and appears to be doing well. It's the largest real estate development in U.S. history.


Because you'd ultimately have politicians direct research, based on what makes the best photo-ops up to the next election as well as the inevitable old-boys-club/revolving-doors "corruption-light" that quickly infects expensive government programs.

Whatever the aesthetics of people getting rich from treating sick people, on the evidence, it's actually very effective.


Well, we do have an example of a governmental agency that is free from political control, i.e. the federal reserve. We could have something like that for research, can't we? After the appointment of a governor, the organization could function on its own without politics. Other examples include supreme court of the United States, BBC in the UK etc.


The problem is that the price system is the best resource allocation scheme that humans have ever attempted at scale.

When you sever the external link between the product going out, and the money coming in, you destroy some of the positive or negative feedback loops that take into account what people actually want and what they can do.

There has to be a hard external link between the outputs and the inputs, or you end up with a situation where rent-seekers charge in and gum up the works, absorbing resources without doing anything economically useful in exchange. The instant you guarantee a cash flow independent of actual results, you create sinecures, and those offices fill up and never go vacant again.

You could end up with situations where the agency cures a disease, but spends 100 times more doing that than it would cost to develop an acceptably effective treatment and also create a foundation that could pay to produce and distribute that treatment to everyone who gets it any time within the next 5 billion years.

Yay, woo, we cured it. But our inability to effectively prioritize resources meant that 99% of that cure budget was not spent on researching diseases that have a far greater economic impact. Oops.

Someone has to decide whether the money is well spent. And if that someone isn't everyone, then there is an agency problem, and rent-seekers scramble over each other to be the someone, so they can easily profit from that decision-making power.

Now, before anyone goes shaking their pompoms for the free market, I should mention that we haven't actually had one in medicine for a long time, thanks to the godawful market distortions that currently exist in the healthcare sector of markets where most treatments are researched. But at least that market-side link in the feedback loop still exists to some tiny extent, no matter how weak or tenuous it may be now.

So an independent research agency would be great for about 15 years. After that, it will start to become a gigantic black hole of waste and inefficiency.


a governmental agency that is free from political control, i.e. the federal reserve

I'm not sure how much it affects the argument, but the Fed is not a governmental agency. It's a stand-alone corporation whose officers are appointed by the government.

https://en.wikipedia.org/wiki/Federal_Reserve_System


The NIH and NSF funding doesn't appear to have that much in the way of low-level decision making by politicians looking for election day limelight.

Of course there is some, such as disparaging attacks on why we should put shrimps on treadmills, to the other extreme where the government, following public demand, funded a lot of HIV/AIDS research.

Also, as counter-example, the US government funds research in tropical diseases, not because it's a great photo-op for the next election, but also not completely altruistically - the military wants to be able to go into tropics and not have many of its soldiers die.

So the evidence so far says that your supposition isn't the whole picture by far.


The cost of research and development per approved drug comes out to around $1-2 billion, while the cost of developing a single drug if it's successful is about $300 million. The vast disparity in prices here is the cost of pursuing failed drugs.

It's really not clear that government could develop drugs more cheaply. If you want to bring down the price of drug development, the primary thing you need to do is to discover which of your candidates is not promising and kill them much earlier in the pipeline. This sort of task is not one of government's core competencies (particularly if the legislature decides it wants a say in things).



Yes, but often the government research money doesn't pay for the goverment-mandated clinial trials. See my comment at https://news.ycombinator.com/item?id=10754886 for details. So the parent's proposal to have the government entirely fund bringing drugs to market, including paying for 100% of clinical trials, would indeed be a (large) change to (and possibly an improvement upon) the status quo.



In any case, the government would have to increase funding by some amount in order to fund 100% of the costs of bringing drugs to market, including all clinical trials, so as to remove the need for any private investment. If the study cited by the Slate article is correct, then this proposed increase would not have to be as large as some people expect. My person approach when evaluating the cost of proposals for the government to do something new, however, is to be pessimistic and lean towards the larger cost estimates.


Don't know why you're getting down voted, it seems like the best way to go about it. Share the cost of this research among all of us, just like we (in some countries) do with education, healthcare, police, etc.


He's getting downvoted because, as the adjacent wall-of-text reminds us, there are only two countries in the world: the US and the USSR. Since they have diametrically opposed ways of doing things, any change to the US system would instantly turn it into the USSR.

/s


TLDR; No. See Soviet Union.

Why should it? The free market is the most powerful incentive there is. Government control of the pharmaceutical industry has been tried before, in the Soviet Union and it was a mess.

Here's an excerpt from Michael Binyon's "Life in Russia" (1983)

"How often are foreigners asked by Russian friends to bring back drugs for sick relatives, and how often does the press complain that cheap, effective Soviet drugs are simply unobtainable! Take the case of a researcher who discovered an efficient drug to stimulate growth and spent fifteen years trying to get it on the market. In spite of repeated clinical tests, scientific endorsement and an urgent demand from people with deficiencies in growth hormones, the drug was unavailable. Instead manufacturers were producing a less effective foreign product which first came on the market twenty-two years ago.

What is on sale in the shops or in special kiosks is so outdated or so general in its effects that few people buy the product. Packets of good pills are so valuable that they are sold at special foreign currency counters in tourist hotels. Doctors issue prescriptions even if the hospitals have no supplies, leaving it to hapless patients to use their wits in trying to get hold of what they need. There are plenty of stories of dentists working without adequate supplies of anaesthetic, of polyclinics unable to supply a full course of treatment, of chronically sick people living from month to month, never sure whether their prescriptions can be renewed.

The drug industry suffers from none of the failings its Western counterpart is accused of: there is no risk of profit-taking at the expense of safety, no aggressive marketing of unnecessary drugs, no costly duplication of research laboratories. Instead, research, development, testing, approval, manufacture and promotion are organized as a public service. But the links between each stage are so weak that the time lag between research and retailing may be up to seven years. Responsibility for pharmaceuticals is divided between the Ministry of Health and the Ministry of Medication Industry. Everything used to come under a subdivision of the Ministry of Health, but because of poor results a separate ministry was created in 1967. The Health Ministry is still responsible for resarch, testing and licensing of new drugs. The new ministry deals with production and quality control. Most research is carried out in state laboratories, and if an effective product is discovered it is sent to the Ministry of Medication Industry which finds a suitable factory to try it out. Test batches go back to the Ministry of Health for clinical trials, and often, if approved, to another plant for mass production. A separate agency handles distribution and marketing, and quality control is the responsibility of an independent state inspectorate.

Theoretically each stage leads to the next with no waste or duplication. In practice the chain becomes a bureaucratic nightmare. The institutional separation means that each body operates according to its own terms with little concern for the total process. By the time the product gets to the chemists' shelves, it has often been rendered obsolete. Research institutes have no real leverage to press factories to put their results into production, and have little incentive to do so. As for the manufacturers, they cannot get back their initial production costs because of a rigid pricing system, and find it cheaper and easier to stick to the older and tested lines for which there is already a market.

The lack of advertising means that doctors are often unaware of what is available. Sometimes they prescribe drugs that have long been withdrawn from the market. Similarly, since brand-names play little part in the pharmaceutical industry, a factory manager is not too concerned about the name and reputation of his plant, and this breeds indifference.

The Russians have tried various remedies. The simplest is to import drugs."

Gilead spends almost a billion dollars PER QUARTER on R&D expenses. Amgen spends over a billion per quarter, Celgene spends 1.3 billion per quarter. Most of those discoveries that come from those expenditures will never see the light of day. So how else are they to recoup their costs? If the government started funding pharmaceutical development at the tune of 25 billion per year, how would that infrastructure suddenly be created? Would they also need to get into the manufacturing side as well? Manufacturing many drugs is not a trivial process. Then there's the marketing expense -- doctors would need to be aware of the new drugs. There's distribution involved. Getting the government into the pharmaceutical business would be a massive, massive expenditure and still result in lower quality than the private sector could produce because the competitive forces would be eliminated. See the success of pretty much any Iron Curtain industry compared to the US and Japan for examples of how this goes bad and ultimately results in lower quality. Can you name a single Russian electronics manufacturer that you can buy in the Frankfurt Duty Free shop?

Of course the argument would be "we can do it more efficiently than the Soviets" -- sure. That's the same argument Communists use to suggest that "this time it'll work." I'd rather trust my life to someone that will profit from my survival than to a government that is influenced by whatever political forces are at play. Then you have the issue of what drugs deserve public funding and what drugs do not. That becomes a political decision and not a market decision. That's very dangerous.


  Lets also not forget that if you can't make money off lifesaving drugs, 
  you also won't bother to invent any new ones. 
This is not true.


> Lets also not forget that if you can't make money off lifesaving drugs, you also won't bother to invent any new ones.

Well this is the smartest thing I'll hear today. Context, context, context. The story goes that the drug was already around, already invented, already profitable. Some rich people came along and bought the product for billions of dollars because they realized they could resell it at a much higher price. So yes, let's not forget that if you can't make money reselling AIDS medications at an inhumane price, you won't bother to. And let's also not forget how easy it is to come across as capitalist sheep when we ignore the basic facts of the story in order to support our own ideals.


I thought the article read he was arrested for Securities Fraud, not something to do with pricing drugs.


True, but it is through drug pricing that he became widely known.

At the time of the price hike, someone, somewhere suggested that it looked like market manipulation, intended to drive down the stock prices of other small generic-drug makers by creating bad news for that sector, so as to profit from short positions in those stocks. That is what I was expecting when I first heard he had been arrested.


Keep in mind that in this specific case the patents on the molecule had long expired.


Indeed. To take an example close to my own pocket book, consider the epipen (400%+ price increase in recent years) : http://www.bloomberg.com/news/articles/2015-09-23/how-market...


Is it not possible for some big philanthropists like Gates, Buffett etc to buy some of these drugs and release the patent so others can manufacture cheaply? What is stopping them from doing it?


The patent on this specific drug has already expired. It is just that the demand is low so that it is not cost effective for a competing manufacturer to get FDA approved. However there are FDA exceptions for compounding pharmacies to make the medicine to order and a particular one has been willing to do it cheaply since they don't need full FDA approval.


Money? These drugs and the companies don't come cheap.

Take Gilead for example, which created Harvoni/Sovaldi for treating Hep-C. It's currently valued at about $150B. Before the release, it was a quarter of the price, so the value of Gilead's Hep-C franchise is in the order of $70-$80B at the very least. That's about the entire net worth of Bill Gates.


Good point. Also "can't the rich just help us" is a terrible narrative. If your regulatory and economic system is broken then a few handouts won't fix anything. The numbers when it comes to pharmaceuticals ,or healthcare in general, are astronomical. No, a rich person can't just fix everything by buying something.


Its possible but not a cost effective philanthropic strategy...


Given this guy's character, it's not too surprising. Not only is he greedy, but he seems to take a lot of joy in trolling people. If you look at his twitter feed, he gushes about buying the only copy of Wu Tang's previous album and talks about putting holes in the discographies of other artists. Last week he had a public poll about who he should solicit for a private album. It seems like he takes a lot of glee in riling people up.


>gushes about buying the only copy of Wu Tang's previous album

Seems like people should be a lot more pissed at Wu Tang than this guy. Private album sales from groups with millions of fans is just an asinine idea. Why do they get a free pass here?


Speaking as a performer myself, what Wu Tang Clan did basically amounts to giving a private performance. They're not allowed to do that? Why not?


Convenient.

To have the guy that abused the system to such extremes that the people and media noticed it, pressuring government to regulate, be taken into custody for something unrelated to this. As if they couldn't have found this a year ago.

It really sounds like "let's find some dirt on this guy".


Yeah it does, which is not surprising and while pretty fine in this case can be pretty horrible in others.


> Prosecutors charged him with illegally taking stock from Retrophin Inc., a biotechnology firm he started in 2011, and using it pay off debts from unrelated business dealings. He was later ousted from the company, where he’d been chief executive officer, and sued by its board.


That's a swell business plan if you pay less in fines and settlements than you can steal.


Is it not illegal to not report a crime? How can all the parties involved in public trading have not noticed something they had to report.

Aren't parties who are having a debt paid to them interested some diligence the money is legitimate? I mean it's my problem if I unknowingly by a stolen car.


Is it not illegal to not report a crime?

Pretty sure this only applies to the ethics standards of psychiatrists, et. al. I don't think a normal citizen is required to report crime.


In France it would be the end of their career for a professional bound by secret (doctors, lawyers etc.) to report a crime confessed during a session. But they have pretty persuasive power, I know some lawyers advised some people to confess very gritty crimes to the police.

But normal citizens could go to jail for not reporting.


I don't know the answer to your question, but the authorities arrested Shkreli's lawyer as an accomplice.


We're not meant to cheer this as a win for financial fair play. It's meant to evoke our self-righteousness. It's prosecutorial discretion with the same logic that this community decries when applied to other people whose violations of law or social mores we find more sympathetic.


I don't understand your argument. "meant to evoke our self-righteousness"- meant by who? What prosecutorial discretion? Sounds like he pretty clearly broke the law, and didn't even try to hide it.


My gut is that prosecutions for financial market misdealings are about as selective as the issuance of speeding tickets, i.e. most of the time those who can enforce the law look the other way. They do so in part because it's trifling and in part because there's so much of it and so few of them.

To put it another way, the amounts involved are rounding error and the article doesn't list any serious effects of the charged misdeeds. Instead it's all about comeuppance for something that was legal. The outrage is over raising the price by a bit player. The big players simply charge a lot to begin with for life saving treatments such as chemotherapy drugs...a lot more than a few hundred dollars a dose.

YMMV.


He was live streaming last night on YouTube from some hotel. Even gave out his cellphone number and was taking questions about investing and whatnot. Was he arrested this morning? He was streaming at around 3am, 5 hours ago.

https://www.youtube.com/watch?v=I-4D6yj-cR4


I believe that is his apartment, unless you meant that he maybe lives at a hotel (?).


am I the only one bothered by this? As a bit of a disclaimer, I am disgusted by what Shkreli is doing in the pharma business (if anyone doubts this, I run a nonprofit dedicated to the opposite of what he's doing).

But what it says is that the SEC is motivated by sometimes petty reasons to go after people that are indirectly related to actual commission of SEC violation. Which of course, every CEO makes pretty much every business day. If the SEC were neutral, why didn't they find and eliminate Shkreli before social media got all hot to trot on hating him? The SEC is basically saying, well, he's unpopular, we have the power to take him out, let's do it.

Something about that seems wrong to me.


No, it's not about that. Apparently an interview was published only yesterday, where Shkreli was trash-talking and threatening the RZA.

And as we all know, Wu-Tang Clan ain't nothin' to fuck with.

QED.


What kind of person would think that they could get away with such blatant extortion and embezzlement? In this day and age?


Basically everyone on Wall Street?


Sorry, but I get really sick of this kind of low quality knee jerk. "Everyone" - really?

And no, I don't work in the financial industry.


Well, if you look at how the big banks got fined in the last 10 years, it's "Everyone" as in "every big bank".


But that's not everyone working at the big bank.


Hopefully this makes Bill Murray's job a lot easier: http://www.theverge.com/2015/12/11/9890908/rza-bill-murray-w...


Best news of the day! Glad that little dipshit has some justice coming his way. But lets not forget, there are many, many more people just like him


The system is biased toward drug monopolies. He merely exploited it.


Pretty sure some Feds were looking to pin him after his story broke earlier this year. Protip: Be a quiet or unknown capitalist oppressor


The price of flying too high, there's a reason big pharma executives rarely show in the front media.


"flying too high" or acting like a complete, arrogant scumbag?


You can act how you want behind closed doors. This guy did it on TV, on Twitter, on reddit etc. etc. That was his mistake.


Jacking up the prices of those drugs was a pretty public act even if he decided it behind closed doors...


How will his arrest affect the price of the drug? That is really the only I care about.


There's a senate committee currently investigating the common theme of companies buying out-of-patent drugs that have a small market and marking them up immediately after purchase. His arrest might add a bit of fire to the argument, but I suspect it won't have much effect in the long run.

For the record, though, they are looking at the industry as a whole, not just his company and the few drugs he did this with.


when is he running for president?


"The password is...schadenfreude".


They only arrested him because he was about to bail out Bobby Shmurda and the feds don't want Bobby Shmurda out.


Wait, so he bought a million dollar record and then stole money that he gouged sick people for to pay it off? If he just kept the drugs at the same price and didn't buy the record the world would be a better place and he wouldn't be going to jail. I thought he said he did the price gouging for the shareholders, not for WuTang.


I wonder if he will be able to afford Daraprim when he gets out of jail...


Couldn't have happened to a nicer chap.


What goes around comes around


I agree that if the allegations are true, Martin Shkreli is an immoral person to say the least, but I wonder about one thing:

The whole conduct of the prosecutors doesn't look impartial to me. It seems as if someone was vilified by the media and next thing you know he is arrested and charged with fraud in an unrelated case.

As if this was still a society where you had to slaughter the occasional sacrificial lamb to appease the anger of the people.

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