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Sunday, March 27, 2016

The Money - Shkreli to Juno

Forbes had an article in their February issue called "Solving Pharma's Shkreli Problem". The subtitle, "The most hated entrepreneur in America did a public service in some ways: he revealed a fundamentally flawed system that threatens an entire industry".

My investors expect me to maximize profits. Not to minimize them or go half or 70% but to go 100% of the profit curve. -Martin Shkreli

This is a logical statement for any C level executive in Biopharma. They are not put in place to make wise scientific decisions. That is the task of lower ranking members of a biopharma company. C level execs are put in place to turn a profit for the investors. On one hand this works. Without profit or the promise or illusion of profit, no one has a job. Gone are the days where we had people like George W. Merck.

We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been.
— George W(ilhelm) Merck

How prevalent are the Shkreli types in biopharma? We know that he did not operate in a vacuum. He had a board of directors. He had investors communicating with him daily. He also had counterparts at Valeant. As the Forbes article points out;

Shkreli had learned about price hikes by watching his elders. In 2007 a mechanical engineer and former defense chief executive named Don Baily took over Questor Pharmaceuticals and raised the price of a drug used to treat seizures in infants, Acthar Gel, from $50 to $28,000 a vial, and then marked it for diseases like multiple sclerosis where there was limited evidence it worked. Quester was sold to Dublin-based Mallinchrodt for $5.6 billion in 2014.

So we really ought to look into theories that don't work, and science that isn't science... Who told Forbes that Acthar Gel had limited evidence that it worked in treating multiple sclerosis? Where is the scientific publication that takes on the scientific claims both positive and negative against a drugs efficacy? It doesn't specifically exist. We have science journals. We have people who work as scientists and communicate much better than the average person. But they do not outrank the likes of Shkreli and Baily. They live perilous lives searching for a livelihood within organizations like Valiant and Mallinchrodt. They cannot rock the boat. Medicine is for the profits.

From Forbes:

In 2005 a banker named Steven Harr pointed out that the only barriers to sky-high prices for cancer drugs were pharma "companies" goodwill and tolerance for adverse publicity" but warned his clients that they risked subjecting the industry to increased regulation and quite possibly price controls. (Harr is now the chief financial officer of Seattle biotech Juno Therapeutics.)

Steven Harrs career is typical of biopharma executives. He was educated in science but quickly turned towards the money. His bio on the Juno website states that he joined Juno in April 2014. Previously he was Managing Director and Head of Biotechnology Investment Banking at Morgan Stanley from May 2010 until he joined Juno. Prior to his investment banking role at Morgan Stanley, Dr. Harr was Morgan Stanley’s lead biotech research analyst and Co-Head of Global Healthcare Research. Dr. Harr received a B.A. in Economics from College of the Holy Cross and an M.D. from The Johns Hopkins University School of Medicine. Dr. Harr was a resident in internal medicine at the University of California, San Francisco.

Johns Hopkins! UCSF!!! Banker?

The likes of Steven Harr could have been a force for good. He could have been one of those looking after our interests in medicine. Instead he is now a top level executive at the Dendreon spinoff Juno. Not as their CSO or CMO but their CFO! Ironically the mistakes of Dendron have proven that Steven Harr was wrong about drug pricing. Dendreon priced their dubiously efficacious product/service way too high and they ended up filing for bankruptcy. While Dendreon lacked the public arrogance of Martin Shkreli, they share his philosophy on drug pricing. They know that the investors want them to go after 100% of the potential profits. Having stumbled badly with Dendreon and the high price of Provenge, they are now ready to take another shot at making money off of their biotechnology.

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