Ex-hedge funder buys rights to AIDS meds and jacks up prices 5500% (2024)

A former hedge fund manager has suffered severe backlash after purchasing the rights to a 62-year-old drug used for treating AIDS patients and raising the price overnight from$13.50 per tablet to $750.

Martin Shkreli, 32, founder and chief executive of Turing Pharmaceuticals, purchased the rights to Daraprim - which is used to treat life-threatening parasitic infections - in August for $55million.

Shortly thereafter, the price of the drug, which costs roughly $1 to produce, was increased to $750 per tablet.

Shkreli told Bloombergthat he hiked up the price of the pill because Turing Pharmaceuticals 'needed to turn a profit on the drug'.

Since the announcement, people across social media have criticized the price increase, but Shkreli has backed the decision.

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'This isn't the greedy drug company trying to gouge patients, it is us trying to stay in business,' Shkreli said, according to Raw Story.

He added that many patients use the drug for less than a year and that the price is on par with drugs similar that are used to treat rare diseases.

Since his company acquired the drug, Shkreli has urged the importance of improving Daraprim and said drugs need to be developed for treating neglected tropical diseases.

Shkreli said that the proceeds from the newly high-priced Daraprim will be used to research better treatments and raise awareness for toxoplasmosis.,an opportunistic parasitic infection that can cause serious and life-threatening problems.

The disease primarily in babies and people with compromised immune systems, including AIDS and cancer patients.

As the drug has been passed from one pharmaceutical company to another, the price has steadily increased from $1 to $13.50. But when Shkreli acquired the drug, he increased the price by almost 5,500 per cent.

Fierce Biotech editor John Carroll was one of the first people to ask Shkreli to explain why he chose to up the price.

In the heated exchange, Shkreli first said that it was 'a great business decision that also benefits all of our stakeholders', but didn't provide further information.

Instead, Shkreli insulted Carroll several times, calling him 'a moron', 'irrelevant', and someone who doesn't 'think logically'.

At one point, Shkreli, when referring to Carroll, said he didn't 'expect the likes of you to process' his explanation for upping the price of Darapram.

Even Democratic presidential candidate Hillary Clinton jumped into criticize the price hike, calling it 'outrageous'.

'Price gouging like this in the specialty drug market is outrageous. Tomorrow I'll lay out a plan to take it on. -H,' she Tweeted on Monday.

Clinton plans to unveil a plan this week to cap monthly out-of-pocket costs for specialty drugs. She alluded to her plan in public remarks on Monday and said she will spell it out in more detail at a health-care forum in Des Moines, Iowa, on Tuesday.

She pointed to a New York Times story that focused on Turing that said while prices sometimes rise due to drug shortages, other times prices balloon as a result of a company's business strategy of buying older drugs and turning them into expensive specialty drugs.

On Monday, shares in biotech companies such as Immunogen and Gilead Sciences dropped after Clinton's Tweet.

In an open letter to Turing, ISDA and HIVMA urged the company to rethink the new new pricing structure for the generic medicine, according toHealio.

'Under the current pricing structure, it is estimated that the annual cost of treatment for toxoplasmosis, for the pyrimethamine component alone, will be $336,000 for patients who weigh less than 60 kg and $634,500 for patients who weigh more than 60 kg,' they wrote.

The letter continued: 'This cost is unjustifiable for the medically vulnerable patient population in need of this medication and unsustainable for the health care system.'

Shkreli said in an interview on Monday that the company would not be lowering Daraprim's price.

Shkeli was raised in the Sheepshead Bay section of Brooklyn by immigrant, working class parents from Albania and Croatia, according to Bloomberg Business. He went to Hunter College High school in Manhattan, a secondary school for gifted students, and recently presented his alma mater with a $1million donation. He graduated from Baruch Collge in 2005.

He was a college intern for Jim Cramer, the hedge fund manager and now host of CNBC’s Mad Money. But Cramer, tweeted ‘I just kept hearing all day about some kid who was an intern at my old shop 15 years ago; I don’t even know him. Enough!’

But Bloomberg reports Shkreli recommended shorting a biotech stock - betting the company’s share price would drop. The stock did drop and Cramer’s hedge fund profited and the Securities and Exchange Commission conducted an investigation. Shkreli was 19. and the Securities and Exchange Commission called to ask if there’d been any funny business behind the prescient wager. At 19, Shkreli found himself under SEC scrutiny. The agency found nothing amiss.

Backlash on Twitter has been extreme, with people from across the world calling Shkreli vulgar names and a person who is 'everything wrong' with the United States.

'Martin Shkreli is everything wrong with money, medicine, and politics in America,' Q Allen Brocka wrote, attaching a gif that showed Shkreli telling a reporter that he wouldn't change the drug's price.

'I have dealt with sociopaths in my life. Like @MartinShkreli, theyre good a putting on a mask of charm while engaged in self-centered evil,' Kurt Eichenwald wrote.

'This is Martin Shkreli. He just raised the price of a drug from $13.50 to $750 per tablet. Martin Shkreli is garbage,' Jess Devonport Tweeted, attaching a photo of the pharma CEO.

'Well it's official, @MartinShkreli is the worst person in America. He just raised the price of AIDS medication from $13.50 a tablet to $750,' Stephen Glickman wrote.

'Unless there's some defenders out there (I'm sure there are), I think Martin Shkreli has united every possible group in their hatred of him,' user @firescotch Tweeted.

Shkreli responded to the backlash by Tweeting a link the lyrics to the Eminem song The Way I Am.

'And it seems like the media immediately points a finger at me,' he Tweeted. 'So I point one back at em, but not the index or pinkie.'

He spent much of Monday retweeting messages of support from people who took his side after the price-increase announcement.

He wrote back to some Twitter users, telling some that they 'don't have the facts'.

In an article published on Sunday, Shkreli toldThe New York Times that his company shouldn't be facing the backlash it is.

'This is still one of the smallest pharmaceutical products in the world,' he said. 'It really doesn't make sense to get any criticism for this.'

Since Shkreli made headlines for the massive price change of Daraprim, media sites have scoured the internet for information about the CEO's past.

His OK Cupid accound, which has since been deleted, reveals that he 'started a drug company to find treatments for rare and severe diseases'.

He says on the profile that he couldn't live without cats, music, family, time, hope and good food, adding that he spends a lot of time thinking about 'human suffering'.

He claims on the page to have plenty of spare time and that he's 'excited to build a relationship and share my life with someone'.

Before founding Turing, Shkreli worked as a hedge funder who at one time was accused of trying to manipulate FDA regulations on drug companies whose stocks he was shorting, according toGawker.

He worked with companies including Cramer, Berkowitz, & Co and Intrepid Capital Management before founding his own hedge fund when he was in his 20s.

He was once publicly scolded by Citizens for Responsibility and Ethics in Washington, after writing writing scathing blog posts about companies he was shorting, accusing them of having problems.

Without success, the group urged the Department of Justice to investigate Shkreli after accusing him of 'spreading unfounded and inaccurate rumors about drugs owned by companies he was shorting'.

He was forced out of the last drug company he founded, Retrophin, which specialized in buying the rights to little-known drugs and increasing their prices.

They increased the price of a drug that treats a rare kidney disease by 2,000 per cent, according to Fusion.

Retrophin forced Shkreli out of the company and is now suing the former hedge funder for $65million, after accusations of looting the company.

According to the lawsuit, Shkreli's former hedge fund, MSMB - another company he founded - was left 'virtually bankrupt' after Shkreli made a single trade with Merril Lynch in February 2011.

Shkreli allegedly used Retrophin's funds to pay MSMB investors who had lost money in the trade, Retrophin's board of directors claims.

'Shkreli was the paradigm faithless servant,' the complaint states. 'Shkreli used his control over Retrophin to enrich himself, and to pay off claims of MSMB investors (who he had defrauded).'

On the day the lawsuit was filed, Shkreli gave a shout out to Wu-Tang Clan in a Tweet, writing, 'I am not the one to f*** with #wutang'.

A spokesperson from Retrophin could not be reached by Daily Mail Online.