Business

Martin Shkreli’s greed hides biotech’s bigger problem

Former Turing CEO Martin Shkreli, who has become the poster child for unfettered ambition and greed in the pharmaceutical space, has struck a nerve with increasingly frustrated Americans about the sometimes astronomically high cost of drugs. And the latest chapter in the Shkreli saga, Thursday’s congressional hearing, has only made matters worse. The investigation has brought the sector’s drug-pricing practices into the public consciousness at perhaps the worst moment possible - during presidential campaign season.

Tactics are not limited to a few ‘bad apples,’ but are prominent throughout the industry. Rep. Elijah Cummings (D-Md.)

In the rush to peg companies like Turing and Valeant as representative of the larger biotech sector, investors and commentators have lost sight of the complexities of the industry’s warped incentive structure. In truth those two have turned the entire biotech and pharma model of research & development investment on its head. The drug pricing system in our country needs reform, but focusing on the Shkrelis of the world misses the point. While the issues at Turing need to be addressed, it’s the pricing incentive structures at pharmaceutical companies more broadly that need attention.