Martin Shkreli, the 32-year old CEO of a
pharmaceutical start-up, has not had the best of weeks and his attempt to dust
himself off has made everything worse. Resentment within the medical field
turned into public outrage when the New York Times published an article on
Shkreli’s practices this weekend.
I’ll start off with a quick introduction to
Shkreli’s business: Turing Pharmaceuticals. Earlier this year the newly founded
company bought the rights to Daraprim. The drug, developed over 60 years ago,
is used to prevent malaria and treat a parasitic infection called
toxoplasmosis. People with weakened immune systems, such as AIDS patients and
people undergoing chemotherapy, have come to rely on Daraprim.
 |
| Martin Shkreli - Source: Bloomberg |
Before ending up in the hands of Shkreli, a
dose of Daraprim cost about $13,50. But recently his company announced that it
would raise the price to $750 a pill. That is a price hike of over 5000 per
cent. For a critical drug.
Predictably, the internet wasn’t having it.
The
most hated man in America
Shkreli’s private Twitter-account flooded
with strong abuse and death-threats. Today, the BBC even dubbed him ‘the most
hated man in America’.
Shkreli rightly found that he needed to do
something, but what? The entrepreneur tried all sorts of bold “crisis-response
strategies”. Not one of these you would see encouraged in any crisis management
handbook.
Especially the first strategy, that might
be labelled the “Eminem-quote on showing the finger”-strategy, apparently did
not sort the wanted effects.
 |
| Source: Twitter |
His second strategy might be labelled as
“Unapologetically arguing with critics”. This Tuesday Shkreli attended multiple
talk shows to explain his motives. Still the professional field remains very
sceptical to say the very least.
Selling
an Aston Martin at the price of a bicycle
The first argument he stated on CBS this morning was: "If there was
a company that was selling an Aston Martin at the price of a bicycle, and we
buy that company and we ask to charge Toyota prices, I don't think that that
should be a crime".
He argues that it costs a lot of money to
keep a drug company afloat, it is not only research and development costs. Business Insider counters this by stating
that “the difference here is that other companies stick to raising money from
investors the first few years before they bring a new drug to market”. Instead
of charging patients for future research, right away.
Thanks
for the extra paperwork, pal
"Half of our drug we give away for $1.
So I think that shows our commitment to patients", Shkreli said to Bloomberg TV. He argues that his company
will be practically giving away most of the drugs to the people who cannot
afford it. But doctors call this claim frustrating and false when asked by VF.com.
Dr. Armstrong, professor of infectious
diseases, said that even if the company would make the drug more affordable for
patients who cannot afford the full price, this would still cause major
problems. “[This procedure] requires heaps of paperwork, income statements, and
barriers that make it difficult for sick people to be treated”, she said. “When we have to do this for hundreds of
patients, it’s a huge challenge. Our nurses are stressed to the bone.”
PR magic
Shkreli’s third argument for the increased price
tag is that the drug is actually too old and too toxic for its patients and
research is needed for new drugs. "They don't deserve a drug that's 70
years old. They deserve a modern medicine that can cure toxoplasmosis
quickly".
This argument was quickly warded off by Dr.
Armstrong: “We’ve taken a very good drug that was cheap, that had been
effective for years and years, and completely turned things on its head to make
it expensive completely for a profit motive.”
Finally, Shkreli announced on ABC’s World News Tonight that his
company would change its pricing into something that’s “more affordable”, while
still allowing the company to make a profit. Where this new, lower price will
end up, he could not say.
Leaving the public with a drug that could
still cost anywhere up to $749 a pill, a story that surely does not have its
ending and me with a lot questions.
With a policy of blowing up the prices of
important drugs, was this media crisis inevitable all along? Do some forms of
policy leave us with a situation that no PR magic can solve?
Or are there still
thinkable crisis response strategies that could have provided Turing
Pharmaceuticals with a proper way out of this crisis?
I think this is a very interesting article and raises some interesting points. I think it is fascinating that, for whatever reason Martin Shkreli decided to approach the matter in the manner that he did, it was the resounding public outcry that changed the decision. No one can deny that the consumer is empowered more than ever, and this is surely an example of it? If the reaction had not been as a strong as it had been and Martin Shkreli made this decision in the days before social media, his decision would have been final and whatever outrage against the price would have been irrelevant. Instead, we now have a situation where a CEO of a major pharmaceutical company backs down from a major decision due to intense public pressure. It is such a game changer that i find it extremely difficult for this kind of policy to be accepted now via PR as it has to have the tacit approval of consumers before going ahead.
ReplyDeleteAndrei Rydzkowski
I was hoping someone would write about this case :). The hatred for Martin Shrekli has definitely not passed on, with memes of this guy appearing all over the internet, ridiculing him.
ReplyDeleteResearch has pointed at perceived fairness as an important factor in gaining the publics support when increasing prices. This example shows what happens when the public sees a price increase as (very) unfair. And, like Andrei said, back in the days an organization might still get away with it, but nowadays the publics have all means to show their dissatisfaction.
Unfortunately for Martin Shrekli, I doubt there is an easy PR answer that can fix the entire situation for him. After defending this price increase publicly for some time, it will be difficult to seem sincere when making a statement that says something different.
Lotte van der Sijs
What scares me the most is that the pharmaceutical industry has the power to change these prices for drugs this drastically without the government interfering with them. I think the government should play a role as watchdog to protect people against these absurd raises of healthcare.
ReplyDeleteLennart Michels
This is a very interesting case, which really shows the importance of PR strategies in crisis situations. However, this case is raising questions on one individual who is skyrocketing drug prices, whereas there are thousands of these people. In my opinion, questions should not be pointed at this man, but should be aimed at the system of drug pricing. The patent system works for innovative inventions, but seems to be hurting a lot of people when it comes to critical drugs. I hope that the media attention that this case got will ignite a global discussion on changing the patent system regarding the pharmaceutical industry. At least (as Lennart also mentioned) there should be governmental control on these prices, to prevent businessmen from earning bilions over the backs of ill people.
ReplyDeleteAndré Duijkers