Last month the left was in a tizzy over a hedge funder, Martin Shkreli (32), who bought Daraprim, an AIDS drug, and jacked up the cost.
Shkreli hiked the price by 5,500 percent, from $13.50 to $750. From the New York Times to the Daily Beast (whose headline labeled Shkreli an “asshole”) liberal media found their caricature of the week to prove the evils of capitalism. (At a website called SheekyForums, things took an even darker turn on the totalitarian continuum, with readers played guess who’s the Jew, concluding that even though Shkreli is reported to be Albanian, he’s really, you know, after all…a hedge fund manager!)
There are only two problems with this narrative: 1) Shkreli is a major donor to mainly left-wing Democrats, and 2) his monopoly was a product of government control of the economy, not capitalism.
Earlier this month Shkreli donated the legal maximum, $2,700, to the socialist presidential campaign of Senator Bernie Sanders, explaining to the Boston Globe that he didn’t like Hillary Clinton; “I don’t think she really stands for anything. At least Bernie’s passionate and really kind of provocative,” Shkreli said. “I met Hillary years ago. I didn’t like her then, I still don’t like her now.” (FEC records at OpenSecrets reveal that Shkreli donated $2500 to Mrs. Clinton in 2006).
Sanders refused to accept Shkreli’s money, re-gifting the donation to D.C.’s Whitman Walker Clinic, a very politically connected clinic named after gay poet Walt Whitman, with a staff of over 200 and a budget of around $30 million. (WWC focuses on serving those in D.C.’s gay community and other urban populations who are HIV positive.)
Shkreli then appeared on Maria Bartiroma’s FOXBusiness show and denounced Sanders as a demagogue who doesn’t understand the drug industry, and pointed out that he donates $5-10 million to charity annually. Shkreli is also a major donor to the Democratic Party, having given it $34,000 this July. (Though criticized by Donald Trump – “That guy is nothing. He’s zero.” – Shkreli shares his bipartisan donor history – he’s donated thousands more to independent Joe Leiberman, to John Kerry and many Democrat candidates, and to a few, mainly establishment, Republicans, including Mitt Romney, former Congressman Jim Kolbe, and Senators Mitch McConnell and Mark Kirk.)
But maybe Sanders does understand the drug industry — it’s a semi-socialized system where socialism creates shortages and other problems, and then socialists like Sanders can call for expanded government control to fix the problems they’ve created, in a downward spiral toward increasing state control of society, diagnosed in 1929 by economist Ludwig von Mises in his book Interventionism, as he watched Europe collapse into fascism.
Like most of of healthcare in America, government regulations create monopolies and reduce competition – Shkreli’s company, Turing, was the only one licensed in the U.S. to produce Daraprim, even though the patent for it expired long ago, and importing the drug from abroad was not legal.
According to Cato analyst Walter Olson “…under the distinctive food and drug laws of the United States you can’t just start turning out pills in your factory to compete with Shkreli, at least not without compiling and submitting a huge pile of regulatory paper with the U.S. Food and Drug Administration. This calls on the services of lawyers and scientists, costs a lot of money, and takes time, and you might or might not be able to recover the costs from the relatively small pool of users.” In other countries generic Daraprim sells for almost the price of aspirin.
Oxford based libertarian economist Jock Coats writes:
A little bit of poetic, and drugs, licence, going on here.
It hardly needs marketing. It is not really an AIDS drug. It is, in fact, on the WHO’s list of 50 essential drugs for any working healthcare system.
The problem is that in the USA in particular, the FDA has only licensed this one firm. There is no intellectual property protection on it – the woman who invented it retired in 1988 and died in 1999 and she invented it decades ago.
“Toxoplasmosis is the thing most of us will be familiar with in the west as what kids get from cat feces in parks [and it]… can make them blind. But in the west about a third of people carry it and in some parts of the world about 95% of people carry it.
I’ve found an Indian drugs price comparison site that shows about 45 manufacturers make generic versions of Pyrimethamine- Sulfadoxine, including GSK [GlaxoSmithKline] (it was probably invented there – Gertrude Elon worked for Burroughs-Wellcome), selling for about 30 rupees (maybe 50 U.S. cents) a dose. If you read the press release from [Shkreli’s] firm from when he bought it in August, it even appears as if he, as the one licensed producer in the USA is actually responsible for regulating it in future – i.e. recommending to the FDA whether competitors should be licensed to compete with him – talk about turkeys and Christmas.
It’s no wonder their [the U.S.] healthcare system has so many problems if pharmcos are allowed to get away with this. One US drug buying website warns about imitations because nobody else is licensed and may be dodgy (i.e. GSK for a start!).
I have no doubt that someone taking advantage of this glaringly corrupt system is himself dodgy, but it is clearly down to an agency of the US government and its effective ownership by the pharmaceutical industry itself that he can get away with this.
Real solutions eliminate these licensing monopolies, which pervade the medical system.
It’s common for advocates of free market medical reform to point out how Lasik surgery prices have dropped steadily for years, because as an elective procedure it has been freer of government control than most medical treatments.
But Bernie and Hillary may understand this, contrary to Shkreli’s belief that they are just ignorant. Their world – a world of corporations that donate to the Clinton Global Initiative for special regulatory dispensations – depends on the existence of government barriers to entry that reduce competition and raise prices for everyone.
Hillary can then buy votes by playing Lady Bountiful, denouncing the hedge funds and Big Pharma companies even while they fund her campaign, and she delivers occasional relief to the voters/consumers she has impoverished, by means of Hillarycare welfare programs that shifts the cost of the monopoly pricing to the taxpayers.
Well-informed socialists have known for decades that the regulatory structures created by “progressives” function largely to protect big businesses from competition, famously articulated by York University socialist historian Gabriel Kolko in several books including The Triumph of Conservatism. Mrs. Clinton is a profiteer off this system, and Bernie Sanders, Elizabeth Warren and most Democrats may be oblivious to this reality, with mainly only libertarians and some free market economists heeding Kolko’s work.
Despite thinking he is heads and shoulders smarter than Sanders, Shkreli and other millennial multi-millionaires in Silicon Valley and elsewhere are also oblivious, financing the predatory political class that will eat them, often just because these corporatist politicians will promise to let them have whatever sex lives they wish–as long as they don’t threaten the politician’s government funded lifestyles, insider trading on legislative proposals, and fundraising from cronies to whom they give government contracts and other benefits. Shkreli’s superior intellect was called into question this weekend–rival company Imprimis Pharmaceuticals found a way around the FDA regulations and will be selling a generic Daraprim for $1 a dose.