One Jerk != Systemic Failure
So by now you’ve heard of this stellar example of humanity…
Tirrell concluded by asking if Shkreli would consider lowering the price because “doctors and patient groups are saying they can’t access this drug.”
Shkreli responded with one word: “No.”
Now of course in a complicated question regarding the pharmaceutical marketplace the natural result of such an odd outlying case is for everyone to approach it with the subtle nuance we should have when examining outliers in public policy…
No, seriously, instead let’s all cram this story into our favored narratives! It is so much more fun that way.
It would appear the villain, at least in this case, is not the non-existent free market, but the controls imposed by the FDA granting a regional monopoly.
No, the villain is still Martin Shkreli, who is the agent of action here.
The existing system worked just fine for years to provide this drug at a reasonable profit to a small company with some subsidy from the government to cover the fact that the positive externality of the drug’s availability is not reflected in its market price (an awful lot like most vaccinations.) The “Orphaned” status granted by the FDA is explained here.
In the specific case of Daraprim (aka pyrimethamine), the drug was granted orphaned status in 2011. So, for four years, the drug was produced by Tower Holdings, Inc, at a price of less than $14 a pill, and Tower Holdings, Inc. made money off of that price point. Then in March of 2015, Tower Holdings, Inc was purchased by Impax Pharmaceuticals, which then turned around and sold the rights to Daraprim to Turing Pharmaceuticals in August.
The *exploit* is the fault of the FDA, that is certainly true (and Shkreli is backpedaling furiously today because he certainly doesn’t want the FDA to patch the exploit).
It should be fixed, no argument there.
But there is a category error in this article, with the underlying assumption that these sorts of exploits are a feature of regulated markets but not unregulated ones.
For example, earlier in the article:
It appears that Mr. Shkreli is one of those regulatory “entrepreneurs” using the power of the state to manipulate things in his favor. It has been alleged his investment fund shorted various pharmaceutical stocks and then filed complaints against the companies with the Federal Drug Administration, thus causing an investigation. The investigation would then negatively impact the price of the stock, and Shkreli would profit.
Yes, and this tactic is also used and employed in deregulated or industry-regulated problem domains. Manipulating the reputation of a company to cause a change in its stock price is not something unique to a regulated market… and it’s implied here that it is… which is bananas.
You can call it a loophole if it’s in a tax code, or an exploit in a software system, or a failure in the regulatory mechanism if it’s a government regulated market, but they’re all basically the same thing:
Some folks find a gap where actual value can be manipulated on one end, and jump in there and manipulate it to profit. This is a baked-in aspect of the profit motive, the negative side to the positive force of the profit motive.
The agent is still the villain.