Politics. Popular Culture. Petcare. Polymythy. And Pharmaceutical Marketing, too.

Shunning Shkreli: Go Ahead and Loathe the Most Hated Man in Pharma* (*But Only If You’ve Never Shkrelied)

In Uncategorized on November 11, 2015 at 5:16 pm

AP_turing_pharmaceuticals_daraprim_protest_jt_151013  It takes a special je ne se quois to stand out as the world’s most unpopular pharmaceutical executive. It requires more than simply being the worst-behaved child in the detention room, or having the longest fork in the all-you-can-eat buffet line, or possessing the thickest expense-claims file in the Canadian Senate.

It is no small achievement to lay claim to the title of Ultimate Despised Figure in the one business the public most loves to hate: to gain status as, in the critics’ view, the smelliest varmint in the skunkworks.

What does it mean to be worst of the worst? True to typical CEO form, some of the economy’s most successful leaders are known to rankle. (Look, you can’t please everyone.) Others drive harder and become magnets for hostility. (When you cook an omelet, you need to break a few eggs, friend-o.)

That said, there is nothing—but nothing—to prepare anyone for Martin Shkreli.

Mr. Shkreli is the founder of Turing Pharmaceuticals, although it would be wrong to assume that he follows any previously known tradition of drug company entrepreneurship. After all, Dr. Paul Janssen founded a drug company and became revered. Abe Plough started his company and won respect. No one is ever going to confuse Martin Shkreli with Dr. Janssen or Mr. Plough.

Mr. Shkreli is a Millennial, but hardly the sort found living on a futon in his mom’s garage. At 32 years of age, he has been a Wall Street macher for nearly half his life, having learned the trade of hedge fund management early on from mentors such as Jim Cramer, the famed stock-trader/TV presenter. Turing is already the second Life Sciences company Mr. Shkreli has created in four years, after Retrophin Inc. (More about those two organizations in a moment.)

Where Dr. Janssen made his reputation by creating therapies and Mr. Plough by selling them, such fusty, labour-intensive activities are anathema to Mr. Shkreli. He is the kind of opportunistic businessman who will spot and pursue situations that the traditionalist might be inclined to dismiss.

For ex­am­­ple, five years ago, he perfected what we will call the Shkreli Shuffle, a proud­ly braz­en money-making gambit previously uncommon in the annals of Life Sci fin­ance. In this unique procedure, Mr. Shkreli filed statements with the U.S. FDA urging the regulator to reject a new diabetes treatment, and a cancer detection test, apparently for the sole purpose of driving down the share price of the two publicly traded companies tasked with commercializing the wares. His investment house used the lull to short-sell the stocks. This was no service to patients who may have benefited from the timely availability of the products, or to the companies and their investors who suffered financial reverses from the delay. Conversely, Mr. Shkreli and his trusty balance-sheet made out just fine.

No one questions the man’s acumen—although several are investigating his compliance with securities laws. His first company, Retrophin, is suing his subsequent outfit, Turing, alleging trading violations; federal attorneys are reportedly contemplating charges.

Undaunted, Turing made headlines recently after buying the rights to pyrimethamine (Daraprim) from Impax Laboratories. The Rx is a warhorse used since 1952 to treat toxoplasmosis, cancer and AIDS, but Mr. Shkreli aimed to price it like a new biologic, quickly lifting the retail price to US$750 per dose, from US$13.50. Of course, various other drug companies have been quietly raising prices on older medicines for several years, to the accompaniment of muted grumbling from stakeholders. No whispered resentment this time. Nothing about Mr. Shkreli is ever destined to elicit a quiet response.

Patient groups raged at the news. Politicians railed. Chanting protesters encircled the Turing headquarters, equipped with placards. Social media commentators pilloried Mr. Shkreli, who unwisely responded with his own profane Twitter invective. In the process, the entire pharmaceutical and biotech sector was sullied, leading to Turing’s expulsion from the major trade groups, a sharp decline in the benchmark share price index of the entire drugmaking category, and new hearings about pricing, soon to be conducted by the United States Congress.

Pharma has never been a beloved industry among the public, but Mr. Shkreli has found himself tagged as the embodiment of each of his predecessors’ and competitors’ past and current sins. As a parvenu and a Wall Street guy new to the ways of the life sciences environment, he is not at all well positioned to contextualize, and his clumsy efforts to explain things have brought considerable disrepute and discredit to the biopharma industry and all within its orbit. Quoth he: “Dozens of drug companies have done what I’ve done.”

No, Mr. Shkreli. No, they haven’t.

ap_damien Martin-ShkreliIt’s too easy to further demonize this fellow (not least because he physically resembles the actor who played Damien in the 1976 film, “The Omen.”) Thing is, if his flawed understanding, near-complete lack of judgment and unfortunate personality had not lit the fuse, another drug company executive likely would have been cast in the role of cartoon-villain. And when certain business practices relating to supply and pricing are indefensibly crude and ill-considered, it seems convenient to have a prima facie miscreant, a fraternity-brother approximation of J.R. Ewing, to serve in the capacity of human lightning rod.

That may be the logic behind PhRMA’s unprecedented disavowal of Turing, and BIO’s abruptly having tossed the company from its membership roster. More practically, though, they and we must owe a small measure of gratitude to Mr. Shkreli for his foolhardy pricing model, which served to define the outer limits of responsible behaviour by capitalists who make and sell medicine.

By rushing to undertake patently unacceptable actions, he has inadvertently performed a roundabout service to his industry peers, by encouraging each of us to assess and purge our more Shkreli-like impulses, and to come to terms with that unworthy inner voice that sometimes whispers dangerous entreaties. His contribution to our cause is as negative role-model, instructing us to disregard the little Shkreli that might sometimes stir inside the best of us.

Inversion Insanity: Drugmakers form a herd, try to run away from home

In Uncategorized on October 2, 2014 at 3:15 pm

Six generations ago in a German town called Ingelheim-am-Rhein, a man named Albert Boehringer started a small chemical company. It grew, and became a global pharmaceutical group. To this day, the company thrives as a privately held enterprise known in acknowledgment of the founder, and the place of origin, as Boehringer Ingelheim.

BI is not the only pharma company that succeeds while maintaining its roots, and continues to carry out its mission in or near the locale where the founder set up shop. Think of the eponymous Laboratoires Pierre Fabre, the two-billion-euro enterprise which, since its beginning in 1962, remains nestled in the Midi-Pyrénées locale of Castres, population 43,000. Among other distinctions, Monsieur Fabre oversaw the town’s cherished rugby team, Castres Olympique. Since his death last year, the company is owned by a foundation that was established for the admirable purpose of providing safe drugs to the developing world.

It’s reassuring to think that the pharma industry was built by visionaries such as Herr Boehringer and Monsieur Fabre, and that there are still viable locales where the industry flourishes, such as Ingelheim-am-Rhein and Castres. And it seems especially important to take note of these names in 2014, which may go down as “The Year We Learned About Inversion.”

The word “inversion” may have several meanings: the anatomical (as in toenails, nipples), the chemical (referring to hydrolysis of carbohydrates), or the rhetorical (“You say what?”)

To be clear, the inversions that have made recent headlines have little to do with linguistics, and everything to do with international corporate tax codes.

Spearheaded by precedents such as the rock-bottom tax rate the multinational Valeant Pharmaceuticals group enjoys by maintaining its headquarters-of-record in the Province du Quebec, U.S.-based drugmakers earlier this year began a stampede to merge with foreign domiciled competitors. This was done for the purpose of tithing less to Uncle Sam, who demands a 35 per cent slice, and preserving profit for more appropriate purposes. (Here you might imagine Scrooge McDuck in his money-counting room, throwing stacks of currency up in the air because he likes the sensation as they fall back and land on his head.)
112faca[1]
The flurry of inversions and attempted inversions reads like a roster of the most familiar names in our sector.

Pfizer, the industry leader, hoped to unite with AstraZeneca, and move its headquarters to the UK from New York City, where they’ve been ensconced only since 1849.

AbbVie proposed to buy Shire and transfer its charter from Chicago to Jersey (that is, the Isle of Jersey; not the place where Chris Christie, pictured below, governs.)
26f349d[1]
Mylan of Pennsylvania somehow figured that by buying Abbott Laboratories’s generics business, it could begin filing tax returns in Holland.

Auxilium Pharmaceuticals wants to merge with QLT of Vancouver — although Endo Pharmaceuticals now has its sights set on Auxilium. Endo inverted earlier this year through acquiring Paladin Labs of Montreal, at which point it shifted its head office to Ireland.

This most recent rush to beat the traffic out of town may have been touched off earlier this year when that wily old inverter, Valeant, began its takeover moves against Allergan. Currently Allergan hopes to head off the unwanted advance by linking with Salix, which is merging with Cosmo Pharmaceuticals SpA, an Italian drugmaker that maintains a tax address in Eire.

Head spinning? You’re far from alone. As Prof. J. Richard Harvey Jr., of Villanova University’s law school tells the New York Times: “There is likely a herd mentality going on where pharma companies are afraid they will be put at a competitive disadvantage if they don’t find a suitable foreign merger partner.”

Of course, as the professor might have added, part of the problem with a herd mentality is that the herd often plunges over the precipice, or else slams into a solid object. In this case, the collision came in the form of a to U.S. Treasury Department rules, just announced by Washington. To interpret the legislation: President Obama isn’t about to allow the inversion tactic to continue depleting his federal tax coffers, at least not when Congressional mid-term elections are only weeks away.

Regardless of where this issue now stands, it’s impossible to experience, without feeling cheapened or queasy, the spectacle of Life Sciences organizations anxious to make tracks from their communities, solely for the purpose of putting a slick move on the taxman.

We know the arguments on both sides. For C-level management of publicly traded companies, value creation for investors is, and must be, Job One. We all get that — just as we get that capitalism continues to create and bring to market many wonderful things that have enhanced human health, and therefore capitalism is to be entirely encouraged.

But the Inversion Insanity of 2014 shone a light on the unacceptable face of capitalism, just as it displayed the least lovely side of our industry. For, you can turn your back on your community through a simple directors’ resolution, and you can always reinvent yourself in a distant terrain. But, as Messrs. Boehringer and Fabre likely concluded back in the day, all you’ll leave behind is your soul.

Inversion begs the question: If you’re prepared to abandon your roots and identity just because it seems momentarily to be the prudent thing to do, what else are you prepared to abdicate? One traditional defence often issued to justify drugmakers’ high margins is, “Profits fund important research.” Now several of the companies that have championed inversion are also devaluing the importance of R&D programs. They may be likened to farmers who don’t care for the work of planting, regard harvesting as a sweaty and unpleasant chore, and see agriculture as a demeaning sideline to their main business, which is… what, exactly? Chasing away trespassers? Watching the Weather Channel?

What would you tell such rusticated connivers? Exactly what we now say to those of our friends who followed the herd of inverters:

Look. Why don’t you quit screwing around, and just do your damn job? And, while you’re at it, you may as well just pay your damn taxes.

Kevin Trudeau, Big Pharma and their weird cycle of co-dependency

In Uncategorized on July 11, 2014 at 1:30 pm

Is it wrong to take pleasure from learning that Kevin Trudeau has finally landed in jail?

Those familiar with the man’s exploits may conclude that such feelings may only be, ah, natural.

Mr. Trudeau is the American author responsible for the perennially best-selling medical guide, Natural Cures ‘They’ Don’t Want You to Know About. The book is described on its dust-jacket as “an amazing journey through the behind-the-scenes world of corporate-sponsored health.” A more accurate account would be “an amazing attempt to convince gullible patients that it’s okay to not take their prescribed meds.”

The author expounds upon many unusual theories, among them: Botanicals cure diabetes. Suncreens are the cause of, rather than a means of preventing, melanoma. AIDS isn’t real.

Any skeptic who might wonder why those notions aren’t given greater credence in the scientific literature has unwittingly provided a straw-man to the canny Mr. Trudeau. The reason why natural cures aren’t better known is because ‘They’ Don’t Want You to Know About them. Or can’t you read the book title?

‘They,’ of course, are we — the minions of Big Pharma.

Observing that it’s much more lucrative to offer expensive lifetime treatments for chronic conditions, as opposed to providing a cure, Mr. Trudeau contends that drug makers “don’t want us to get well.”

‘They’ also appear to include the U.S. Food and Drug Administration, which he depicts as a corrupt band of villains that conspires with Big Pharma against the public interest. Continuing this theme, he posits that ‘They’ are enabled by licensed medical practitioners, each a willing dupe who, to quote the author, “[is] taught only how to write out prescriptions.”

It would be convenient to dismiss the purveyor of such unconventional views as a fringe crank shouting jeremiads to an alienated audience. Not so. In the 10 years since Mr. Trudeau’s book first emerged, he has sold 5 million copies, at 30 bucks a throw. He has also written a half-dozen sequels, each offering similar ideas.

Lest it be thought that a background in the lab or clinic be required in order to write a medical bestseller, Mr. Trudeau’s CV stands in stark contrast to the norm. His knowledge was gained in the automobile sales-lots and the neighborhood porches of suburban Boston, where he hustled sedans, and pitched vitamins door-to-door through a multi-level marketing scheme. His later disdain for doctors notwithstanding, he once pretended to be a physician, in concert
with some 1991 check-kiting and credit-card fraud incidents.

These youthful indiscretions resulted in two years behind bars in a federal lockup. For Mr. Trudeau, this provided a welcome opportunity to re-calibrate, to reinvent himself, and to reflect upon the future.

Let’s see, now. Future, future… Infomercials!

Slippery Kevin

The future, he quickly came to see, was pitching products through the airwaves. After all, he may have reasoned, why yap one-on-one about mini-vans to meat-plant workers in the snow, or sweet-talk pensioners and hausfraus on their grubby doorsteps, when you can reach millions of anxious suckers instantly through the miracle of television?

And so, sprung from his cell, during the next two decades he unloaded an estimated 32,000 infomercials, providing hope for the balding, the obese, the forgetful, the pain-ridden, the impotent and the addicted. His remedies were either nostrums, or else vague descriptions of cures that could only be further explained once an additional payment had been received.

On the occasions when Mr. Trudeau was pressed for evidence to back up his claims, he followed the longstanding tradition of itinerant elixir vendors, and simply made stuff up on the spot. He insisted to a prominent TV journalist that his natural remedy for diabetes was validated through a 25-year research study by the University of Calgary. “Eh? What study?” responded the Canadian institution, to the inevitable flood of media inquiries. “You sure you want the University of Calgary?”

Undaunted by the denial, Mr. Trudeau was quick to deploy the bamboozler’s ultimate gambit, the triple lutz of flim-flam. He explained that the university must have knuckled under and shredded their disruptive findings, following the usual intimidation and threats from Big Pharma’s gunsels: “Nice little campus youse got here; too bad what might happen if youse was to publish dat resoich.”

In other words, there “They” go again, doing what they always do; that is, trying to shatter the dreams of the balding, the obese, the forgetful, the pain-ridden, and so on.

When the authorities, including the Federal Trade Commission and the Securities and Exchange Commission, stepped up their warnings, Mr. Trudeau became emboldened. “They” can’t silence me, he proclaimed, even as he paid millions of dollars to settle litigation brought against him by Washington and state agencies.

Finally, in late spring of this year, the jurisprudence system determined it had enough of Kevin Trudeau. Further to a district attorney’s comment that he is an “unrepentant, untiring, and uncontrollable huckster who has defrauded the unsuspecting for thirty years,” bailiffs accompanied the author to his new accommodations at the federal prison camp in Montgomery, Ala., where he is registered for an eight-year stay. He has filed a judicial appeal of his conviction.

This leads us to the point in this narrative where the minions of Big Pharma (a.k.a, “They,” or we) should exchange high-fives to celebrate the elimination of one particular scourge. However, the fall and rise and fall — and perhaps rise again — of Mr. Trudeau should present the Life Sciences sector with a valuable lesson.

For all his chicanery and gift of hornswaggle, this fellow is undeniably a gifted communicator who was able to speak compellingly and inspire overlooked segments of the public to form opinions on important health issues.

And, without question, a large part of the reason why Mr. Trudeau, and others, time and again are able to mislead and deceive tens of millions of people is because Big Pharma can’t be bothered to either learn or apply similar skills of persuasion. Industry’s disinterest and ineffectiveness when it comes to engaging the less sophisticated elements of the public is not a sin comparable to Mr. Trudeau’s serial hoodwinking. It only establishes the conditions under which quackery will always thrive.