Martin Shkreli: The Downward Spiral of Fraud and Greed

Martin Shkreli, former CEO of a pharmaceutical company is known for buying up old drugs and immediately raising the price to consumers by as much as 5,000% overnight. He recently raised the price of one drug that treats a devastating infection in babies and people with AIDS from $13.50/pill to $750/pill. Mr. Shkreli has often spoken out against critics, and has become known as the “bad boy of pharmaceuticals,” portrayed by his excessive greed. On December 17^th, Mr. Shkreli was arrested for securities fraud and wire fraud charges, not because he raised prices so quickly in his current company, Turing Pharmaceuticals, but because of fraud he committed in two prior hedge funds and a previous biopharmaceutical company, Retrophin.

Mr. Shkreli lied to investors for both of his hedge funds while losing millions of dollars. He then paid them off by using funds from Retrophin without consent from the board of directors. Throughout the process, he and a partner fabricated consulting agreements so that external auditors would not be suspicious of the transactions taking place between Retrophin and the investors of the two hedge funds. This article from The New York Times and the video below (posted by the Associated Press) give more information about what Mr. Shkreli did and what he has been charged for.

Uncovering Pharmaceutical Fraud

In a previous post, I mentioned a research paper that was published in The Lancet that made claims that a certain vaccine caused autism. The idea went viral, and the amount of vaccinations decreased, which resulted in many children suffering needlessly with the measles and other preventable diseases. Claims in the paper were eventually proven false, and The Lancet retracted the paper. However, although there may not be a causal link between vaccines and autism, there does appear to be alleged fraudulent activity occurring on the side of the pharmaceutical companies to cover up and enhance the results of their vaccines.

A recent Huffington Post article discusses three court cases filed by whistleblowers against Merck, a pharmaceutical company, saying that they “fraudulently misled the government and omitted, concealed, and adulterated material information regarding the efficacy of its mumps vaccine in violation of the FCA [False Claims Act].” One of the court cases describes Merck’s misconduct as follows: