(see Part I for the more substantive, if still cynical, point of view on the Turing battles)
Sometimes, things get so bad, they’re good. At least, that’s one possible explanation for the battle for affordable pricing that Turing Pharmaceuticals and its CEO, Martin Shkreli began.
Mr. Shkreli might be crazy, but he can’t be as crazy as the news reports might suggest. Hedge funds wouldn’t have hired anyone straight out of the loony bin. Surely he didn’t want to open a Pandora’s pill bottle of investigations into healthcare economic policy in a monopolistic supply chain. So, I’ve been trying to pull together what he might hear if Dr. Phil were his personal doctor – WHAT WAS HE THINKING?
I’ve got an idea so ridiculous, so far out, so offensive, that it might just be worth pondering.
You might recall “The Producers.” Plot: unsavory Broadway show producer, after several money-losing plays, decides to pit the Broadway capital market against itself. Sell a Ponzi scheme full of ownership rights in the next play, then produce a flop and walk away rich with other people’s money.
The plot almost works. Investors flock to their door, the stars get to work producing the worst flop ever, and wait eagerly for opening night when the show might close after the first reviews arrive and the unspent funds jingle in their pockets all the way to Rio.
Even if you forget the movie itself, you might remember the offensive-to-all-sectors musical number, “Springtime for Hitler and Germany,” complete with a chorus of goose-stepping dancers.
Focus now on that one small moment kept them from outrageous fortune: their play turned out so over-the-top bad that the opening night audience thought it was a farce. In the “play within the plot,” the audience laughed its way to the final curtain, the reviews lauded the comic genius, and each of the dozens of owners demanded a share of the huge profits.
Sometimes, a production can be so bad, it’s good.
So here’s a possible remake of the Mel Brooks “The Producers.” The PHARMA Producers. Perhaps you can imagine…
Some young, cocky Wall Street type starts out in a hedge fund. Likes it enough to create his own, and fails. And again, and fails again (perhaps even with a string of IOUs). Moves out of pharma investing and into the CEO chair of a little drug company, where he fails yet again. At which point the plot can begin.
The star (villain?) makes a partnership, and perhaps even a side bet, with some other hedge fund friends. He’ll get another CEO job at another drug firm. (He only has to hope his Ponzi-like habits from the old job don’t catch up to him, or he could go to jail for reasons unrelated to the pharma industry.) He’ll do the dirty work, and they’ll run the back-end investment operations.
While he mugs for the cameras, his friends will scrape up every penny possible… and SHORT THE PHARMA STOCKS. ESPECIALLY THE BIOTECH STOCKS. Any drug company sure to lose if the pipeline for expensive drugs starts dropping as fast as the pipeline for Brent Crude. Once the investments are in place, simply leave everything to The Producer.
His plan: buy a drug that helps vulnerable but vocal populations like AIDS patients. Jack the price up high enough for nosebleeds. Publicize your efforts. Stay silent about pricing safeguards like Medicaid rebate formulas that claw back any price hikes beyond CPI. Ignore the industry’s discussions of successful innovation saving lives and lowering overall healthcare costs. In short, don’t let any good news out the door. It’s the rank opposite of any normal crisis control plan.
The CEO can make things look very, very evil. And then, all he needs to do is… wait.
Wait.… Wait for industry to disown you. Wait for Congress to subpoena you. (Could you ever muster the contempt to call Congress morons?) Wait enough that you’ve got nothing else to do besides putting your daily life on an online webcam. Act non-repentant and even proud. Spotlight how the whole pharma industry must be unsafe at any speed. If you want a nice plot twist to make the script more believable, let your friends from your old funds bring securities fraud suits against you in the middle of this, while you still show no remorse.
Watch the scene play out, while the CEO becomes the poster child for every bad aspect of our healthcare system. But while the script unfolds, the CEO’s buddies are shorting the strong-pipeline pharmas and making more easy money than Eddie Murphy in Trading Places. Let’s assume that CEO Shkreli is smart enough to demand a nice share of the dough, because he’ll need it to pay for his defense team.
A nice plot premise for a movie, of course. The product of an over-vivid imagination, obviously. But whether the story is any more plausible than alternative explanations for the Shkreli tale… hard to say. This plot might as well swap out the politically-incorrect “Springtime for Hitler and Germany” for a cover of Billy Joel’s warning, “You may be right, I may be crazy, but it just might be a lunatic you’re looking for.”
I bet his hedge fund buddies would be laughing all the way to the bank. Even after Shkreli’s cut.
This makes a better story than the story as spun through today’s headlines, or at least a more humorous one. It also allows us a moment’s repose in a very busy Washington open season across a range of medical treatments. Grab some popcorn and let’s all see how it unfolds.