Why Martin Shkreli's arrest won't take the heat off the biopharma industry
Update: Martin Shkreli has resigned as CEO of Turing Pharamceuticals. The current Chairman of the Board of Directors, Ron Tilles, will take his place as interim CEO.
There hasn't been much love lost between Shkreli and the pharmaceutical sector. Following his enormous price hike for the toxoplasmosis drug Daraprim, the two largest industry trade associations, BIO and PhRMA, wasted little time in taking him to task.
BIO kicked Shkreli and his firm Turing Pharma out of the group. "Unlike Valeant and Turing, innovative biopharmaceutical companies have R&D at the core — and the numbers prove it," wrote PhRMA SVP of Communications Robert Zirkelbach in a blog post slamming both companies while defending the sector at large.
This turn of events wasn't too surprising for a number of reasons, including Shkreli's penchant for stirring the pot and apparent relish of his burgeoning notoriety. However, it also underscored how much the industry has wanted to cast Shkreli as an outlier who doesn't represent the values of an innovation-driven business, in a clear ploy to avoid being painted with the same brush.
But if biopharma thinks that Shkreli's indictment on securities fraud charges related to his time at Retrophin will take the heat off of the industry, it's in for a rude awakening.
And it's not just Alnylam. As BioPharma Dive and other media outlets have previously reported, flagship firms like Pfizer, Johnson & Johnson, and many others have employed the exact same acquire-and-hike tactics that served as Shkreli's modus operandi (albeit rarely to the same extreme). And Shkreli's arrest had nothing to do with his price hikes, which are perfectly legal under U.S. law.
. @ldtimmerman Your point is spot on. Big mistake if drug/biotech industry believes Martin’s arrest makes the drug pricing issue go away.— Adam Feuerstein (@adamfeuerstein) December 17, 2015
In a year when the spotlight on biopharma's pricing practices is brushing up against a presidential election cycle, the industry has to prepare for a continued deluge of public scrutiny and an increasingly contentious relationship with payers that have become far more willing to push back on prices and strike exclusive deals that pit pharma firms against each other.
Congress won't be slowing down inquiries into the hikes, either. The U.S. Senate's Committee on Aging, chaired by Sens. Susan Collins (R-ME) and Claire McCaskill (D-MO), has been holding hearings on generic drug price bumps and openly contemplating big reforms such as an expedited approval pathway for generics in therapeutic spaces where there are few available options.
The same committee is investigating the pricing practices for four firms in particular: Valeant (which is trying to bounce back from a number of controversies over distribution models); Turing; Retrophin (the company that was a victim of Shrekli's alleged schemes); and Rodelis Therapeutics.
And it doesn't plan on easing off the gas in the wake of Shkreli's arrest.
"Today’s development with Martin Shkreli will not affect the Senate Aging Committee’s bipartisan investigation into the sudden, aggressive price spikes of some decades-old drugs, which is not limited to one person or one company," wrote Collins and McCaskill in a statement Thursday. "As we have said from the beginning, these price spikes have raised questions that are critically important to the American public—and we will continue our investigation until we’ve found answers to those questions.
"We are proceeding with our investigation into the practices of the four pharmaceutical companies: Valeant Pharmaceuticals, Turing Pharmaceuticals, Retrophin Inc, and Rodelis Therapeutics."
The industry might hope that with Shkreli potentially out of the picture, it might become easier to defend price hikes and the high costs of new specialty medications by pitching a kinder, gentler biopharma sector that is truly driven by R&D.
But if recent evidence is any indication, that's going to be a hard sell. And Shkreli's legal woes may actually wind up raising even more scrutiny on an industry that's already under fire.