So if you’re at all connected to the internet, you’ve likely heard of Martin Shkreli. He’s the guy who’s been widely vilified for buying the the rights to the generic AIDS drug Daraprim and hiking the price 4000% from $13.50 to $700. You may also know him as the guy perfectly resembling a weaselly super villain in a constant state of self-satisfaction.
Quickly, Martin became the most hated man in America. Critics cited his background in hedge fund management to paint the picture of clear, opportunistic villainy systemic within the healthcare industry, and it boiled over the public’s rage against for-profit pharmaceuticals.
Still, not everything added up. Daraprim is a generic drug, it should be trivial for a rival manufacturer to produce their own. Sarah Kliff speculated that with only 8-12k prescriptions filled annually, “There simply isn’t a big enough patient population for a competitor to sell a ‘good amount’ to.”
So, clearly, this monster finds the most vulnerable people in the country and bends them over a barrel for profit. Well, the internet got to work!
I mean, really, the nerve of this guy! Has there ever been a clearer picture of the 1% harvesting the pain of the rest of us? The asshole even starts commenting on television, Reddit, and Twitter saying it’s all been blown out of proportion, and that several similar drugs are all sold at that price.
Even Hillary Clinton voices her disgust.
And then, like David overthrowing Goliath, our collective zeal either warmed or overwhelmed cold heart of this monster above us, and he announces that they’ll be lowering the price to allow the company to break even or make a smaller profit.
So, Sunday the NYT breaks the story, the world rages, and Wednesday he changes his mind. And the internet prevails to the betterment of all.
The story may not end here, though. After the celebration, Reddit user BlueGold chimed in with some speculation of his own from his “legal securities transaction experience and a little SEC regulation fluency.”
The Master Plan
“I’d like to state first that he’s a total cunt, and that this is a theory, but it’s becoming more and more convincing that he intended for all of this to happen, and it’s been a fun idea to play with,” says BlueGold.
BlueGold then describes a decently elaborate short-sale scheme. It starts with him borrowing $4 – $15 million in stock and I can’t find a source for that. Ultimately the whole thing rested on the entire internet collectively freaking out.
In bullet points, the plan was:
Step One: Borrow millions in stock.
Step Two: Sell borrowed stock for cash.
Step Three: Outrage the public with evil price change, dropping the stock price of several pharma companies.
Step Four: Buy all the cheaper pharma stocks, ending up with much more than initially borrowed.
Step Five: Undo price change, wait for market to stabilize, return loan, and cash out.
Step Six: Profit. So much profit.
And it all went according to plan. Thanks to us meddling kids.
The funny thing about all of this is that nobody actually got hurt. AIDS patients aren’t getting gouged and the public feels like a winner for taking down a monster. In the end, it’s just a few investors who got cold feet when the news broke and sold their pharma shares cheap. The only real victim is Martin Shkreli’s reputation. And you can tell from that diabolical face that he’s glad you hate him; it’s your hate that landed him his latest payday. Great job, internet.
Funny enough, Bloomberg may have called this whole fiasco a year ago:
“Shkreli skipped grades and landed his first job as a 17-year-old college intern for Jim Cramer, the hedge fund manager and host of CNBC’s Mad Money. Restless in his clerical role, Shkreli recommended shorting a biotech stock—betting the company’s share price would drop. Sure enough, it did. Cramer’s hedge fund profited, and the Securities and Exchange Commission called to ask if there’d been any funny business behind the prescient wager. At 19, Shkreli found himself under SEC scrutiny. The agency found nothing amiss.”
Looks like he’s just up to his old tricks.
BlueGold’s final reflections
“This guy is a master at short selling tactics. He would get in a run of the mill short sale position, but then encourage the FDA via filing of “citizen petitions” to stall the release of certain corporation’s he was short selling stock of’s product. In doing this, is where his real mastery lies:
“Dr. Hayflick, of OHSU (an outstanding medical research facility), ‘got a call from him in 2012, suggesting she try a different molecular modification to remedy pantothenate kinase-associated neurodegeneration, or PKAN. ‘Damned if it doesn’t do what he thought it would do…It’s impressive. It’s humbling.’
“This isn’t a new thing, at all. I think this outrage is situational discontent with the pharma industry at large, and the for-profit nature of its governance. This, unfortunately, is a product of our privatized medical production realm that happens constantly. He just happened to make a noisy cunt out of himself, but really is one of many players, and still a small one at that.
“Gylbera costs 1$ million buckeroos for annual treatment.
“Acthar gel was marked 7000% for years.
“Cinryze runs 3 times as much as his proposed value.
“Short selling, multi-thousand percent mark ups from production-to-sale on drugs, constitutionally-protected systematic deflation of competition, reverse mergers…. These are all well established market practices, just usually employed by undeniably smart, exploitative market players and CFOs who keep their mouths shut. This kind of noisy behavior has potential to create a PR nightmare that influences shareholder’s reactionary tendencies. Alas, it’s going back up!!! like our little asshole here has done. http://www.bloomberg.com/quote/RTRX:US
“This dude is a cunt. And if this hypothetical situation is on; a really smart cunt.”