Respond to the questions presented at the end of the Legal/Ethical Challenge: "Martin Shkreli, former CEO of Turing Pharmaceuticals, Exorbitantly Raises the Price of a Much-Needed Drug" on page 542. Be sure to explain your position and justify your responses.

Remember to provide three references. The discussions for the course can be enhanced by outside research to help support your ideas and concepts

Martin Shkreli, former CEO of Turing Pharmaceuticals, Exorbitantly Raises the Price of a Much-Needed Drug

Martin Shkreli was CEO of Turing Pharmaceuticals when it purchased the 62-year-old drug called Daraprim and quickly raised the price of one pill from $13.50 to $750. As a result the average cost of treatment with the drug rose from about $1,130 to $63,000. Experts suggest it could rise to $634,000 for some patients.¹³²

What is Daraprim? According to aVanity Fairreporter, "Daraprim is on the World Health Organization's List of Essential Medicines because it treats toxoplasmosis, a parasitic infection that is particularly dangerous to pregnant women, people with compromised immune systems, and the elderly. In that vulnerable population it can lead to seizures, blindness, birth defects in babies of infected mothers, and, in some cases, death. For decades, there wasn't any competition to Daraprim for the simple reason that there wasn't much money to be made selling it."¹³³

During a CBS interview Shkreli was asked why he raised the price of the drug so dramatically. He responded, "Well, it depends on how you define so drastically. Because the drug was unprofitable at the former prices, so any company selling it would be losing money. And at this price it's a reasonable profit. Not excessive at all."¹³⁴He went on to say that he was being altruistic because other pharmaceutical companies have not focused on this drug. He indicated that the profit would be spent on research into curing toxoplasmosis.

Dr. David Argus, an oncologist and CBS News commentator, disagreed. "Patients shouldn't be taxed for and charged for future research and development. Patients should pay for the drug they're getting and what they need in the situation that they are in," he said. Argus believed Shkreli was using a "predatory practice" that was "inappropriate."¹³⁵

The US government's House Committee on Oversight and Government Reform studied this case and concluded that Shkreli "purchased it [Daraprim] for the purpose of increasing the price dramatically and making hundreds of millions of dollars by exploiting monopoly before any competitors could enter the market."¹³⁶

Shkreli told the board chair at Turing that "Turing was making big progress toward acquiring Daraprim." Shkreli was ecstatic, writing, "$1 bn here we come." In another e-mail he wrote, "I think it [the acquisition] will be huge. We raised the price from $1,700 per bottle to $75,000. . . . So 5,000 paying bottles at the new price is $375,000,000almost all of it is profit and I think we will get three years of that or more."¹³⁷

What Would You Recommend if You Were a Member of the US Government's Oversight Committee?

1.The price rise is legal, but I don't like it. It's price gouging and needs to be stopped. I would advocate for a national policy that regulates the pricing of specialty drugs like Daraprim.

2.Our economy is based on capitalism and Shkreli is not breaking any laws. The government should leave market forces to operate on their own.

3.I think Shkreli is trying to maximize profits while also being a servant-leader. After all, he says he wants to reinvest the profits into additional research and development. I think we should establish a policy that allows makers of specialty drugs like Turing a reasonable profit. This can be computed by considering the average levels of profit obtained at other drugmakers.

4.Invent other options.