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Martin Shkreli is the symptom, not the problem

Shkreli will probably have this picture blown up into wallpaper soon enough.
Shkreli will probably have this picture blown up into wallpaper soon enough.
Photo by Andrew Burton/Getty Images

I don't exactly want to defend Martin Shkreli. But I'm a bit taken aback by the force of the internet's hatred for the man. And it makes me want to treat the allegations against him — and they are, still, just allegations — with caution. A few thoughts:

1. Martin Shkreli is an unbelievable asshole on Twitter. But being an asshole on Twitter is not a crime. If it were a crime, America's mass incarceration problem would get much, much worse.

2. The hate for Shkreli comes from the time he increased the price of Daraprim, a generic medication for a rare illness, by 5,500 percent. Or so goes the argument.

3. But really the hatred for Shkreli comes from how unapologetic he was about the price increase. Other companies have pursued similar pricing strategies without stoking so much backlash.

4. As Forbes's Matthew Herper wrote, "Questcor Pharmaceuticals raised the price of its drug, Acthar Gel, from $40 to $28,000 a vial. The reward? It was one of the best-performing stocks in America until Mallinckrodt bought it for $5.6 billion last year. Valeant Pharmaceuticals has done big price increases on numerous drugs. The stock’s up 740% over five years and its founder, Michael Pearson, is a billionaire. Only Shkreli has drawn the American public’s rage."

5. The anger over this kind of price gouging is an example of personalizing a policy failure. Either drug companies should be able to charge what the market will bear or America should — as every other developed country already does — directly set drug prices. But it's strange to say the government shouldn't set drug prices and then lose our collective shit when drug companies decide to set prices that will maximize their profits. Read Sarah Kliff for more on this point.

6. People also hate Shkreli for buying up the only copy of the Wu-Tang Clan's latest album. But it was the Wu-Tang Clan's decision to produce only a single copy of their newest album. If Shkreli hadn't bought it, someone else would have. Here, too, Shkreli was simply playing by the rules of the market in which he was operating, and people who don't like the rules of that market are taking their anger out on him.

7. All that said, Shkreli's arrest has nothing to do with the things that have made everyone hate him. He's not being arrested for jacking up the price of Daraprim, and he's not being arrested for being an asshole on Twitter, and he's not being arrested for refusing to share the Wu-Tang Clan's latest album.

8. He's being arrested for securities fraud. In short, the allegation is that he used $11 million in money from a new company he had created to settle debts from some old companies he had created. This graphic does a nice job explaining which parts fit together and which don't:

Shkreli's companies

9. Is he guilty? I don't know. But I know everyone wants to believe he's guilty — hell, I kind of want to believe he's guilty — and that makes me a bit more skeptical. If Shkreli hadn't made himself into such a target, would he have been arrested this morning?

10. But as a general point, Shkreli is someone — a bit like Donald Trump — who has correctly, and cynically, identified the weaknesses of the areas in which he operates.

11. He realized he could get notoriety by being an asshole on Twitter — and notoriety might help him raise the profile of his companies. He realized he could make more money by jacking up the prices of badly needed pharmaceuticals if he was the only producer. And he realized he could make a huge splash — and own a genuinely coveted piece of art — if he spent a few million on the new Wu-Tang album rather than on a pricey painting.

12. Shkreli definitely doesn't strike me as a good guy. But the hatred for him seems more about our hatred for the downsides of Twitter, pharmaceutical pricing, and patron-supported art than anything else.

13. Shkreli is unusually public and brazen about his operations in these markets, but if he didn't exist, other wannabe masters of the universe would be doing the exact same things, with the exact same effects, but with much less public knowledge. In some ways, that makes me prefer someone like Shkreli, who at least publicizes the problems he takes advantage of, to his quieter, classier colleagues.

14. If Shkreli committed securities fraud, he should go to jail. If he does go to jail, a lot of people are going to feel really good about that outcome. But insofar as our collective Shkreli hate goes, all the rules he took advantage of to unite America against him will still be in place, and his successors may use them more aggressively, even if they also approach their PR strategies more wisely.

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