Martin Shkreli’s Free-Market Fetish: How the Drug Profiteer’s Pathetic Excuses Reveal a Dangerous Ideology
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26 September 2015
“There’s no doubt — I’m a capitalist, I’m trying to create a big drug company, a successful drug company, a profitable drug company. We’re trying to flourish.”
So said Martin Shkreli, the former hedge fund manager and founder of Turing Pharmaceuticals, who has recently come to be known as “Big Pharma’s Biggest Asshole.” (And, truth be told, he sounds very much like a character out of an Ayn Rand story.) Shkreli is perhaps the most detested man in America at present for boosting the price of a medicine used by some of the most vulnerable people in society — AIDS patients and babies — by over 5,000 percent. According to court documents, he may be more than just unscrupulous.
There have been many good articles discussing how all around unethical this was. A chief scientific officer at a biotech company told Salon’s Mary Elizabeth Williams, for example:
“I’m not a pricing expert. When I first entered the business I thought a bunch of guys would sit around in a room and whoever could say the highest number without giggling would set the price. [But] this is a guy who genuinely doesn’t give a shit.”
There is no doubt that Shkreli was “price gouging,” and he has since given in to public pressure and will be lowering the price (by how much is currently unknown). What was particularly interesting to hear, however, was Shkreli’s defense of his price hike, which, fortunately, the American people didn’t buy. It’s a defense that has long been used by capitalists; in fact, Donald Trump has been using a similar defense during his campaign.
“I’m a capitalist.”
It’s as if “being a capitalist” or a “businessman” excludes one from having to act ethically (which is certainly not to say that all businesspeople act this way, but it does seem to be a great excuse when someone is under fire for something that is generally frowned upon). Shkreli even went so far as to say that he was being altruistic: “I can see how it looks greedy, but I think there’s a lot of altruistic properties to it.” Of course, he was discussing research, a common defense made by Big Pharma to justify huge profits.
(And there are huge profits. Pharmaceutical companies have profit margins similar to those of the banking sector.)
Research always sounds better than price gouging. And while drug discovery is undoubtably an expensive and risky endeavor, drug companies never seem to mention that much more of their spending actually goes towards marketing than research. Good for television networks, but not so good for people paying outrageous prices for their medicine.
(By the way, the United States and New Zealand are the only countries that allow direct-to-consumer drug advertising.)
According to a peer-reviewed study reported by the medical journal The BMJ, for every $1 spent on basic research, $19 goes toward promotion and marketing. In 2013, one of the biggest drug companies, Johnson & Johnson, spent $17.5 billion on sales and marketing compared to $8.2 billion on R&D overall.
This reality, along with other factors, such as the incentives built into our healthcare system, have made some drug prices in America up to 10 times those of the same exact drugs in other developed countries. Furthermore, while the price of drug development has been estimated to be in the billions, a study from 2011 found that that price was much exaggerated, and that a great deal of funding comes from the government and private universities (84 percent for basic research). In the case of Shkreli, it is obvious that profiteering is the goal, and research is an excuse to defend the indefensible.
Of course, profit is an important incentive for innovation, and a business must make profit to operate. It is the invisible hand, as Adam Smith called it, that fuels human innovation, and a market is necessary for this to happen. This is not to say that all innovation comes from a desire for material wealth, which is a silly assumption that right-wingers seem to always make. Jonas Salk, for example, developed a vaccine for polio in 1955, and his research was funded by a nonprofit founded by FDR. Salk later said to a journalist, who asked about a patent: “There is no patent. Could you patent the sun?”
In the United States, of course, the profit motive is considered holy, which may be why capitalists can simply say that they are businessmen when confronted about unethical behavior, and that their single-minded goal of profit will ultimately help everyone and rise all tides. In the infamous words of Gordon Gekko: “Greed is good.”
Self-interest is a part of human nature, but human beings are also social animals. In a society (and there is a society, contrary to what Margaret Thatcher believed) there is a kind of collective understanding of what is ethical and what is not — a social contract of sorts. Attempting to eliminate self-interest would be a futile endeavor, but when one’s selfishness plainly hurts other members of society, it is a violation of the social contract.
Being a businessperson does not give one the excuse to act immorally, and the American people should not accept such excuses. There is a limit to how much greed one can act on without being shunned by society, and fortunately, Martin Shkreli just found that out the hard way.