Reconsider this, Martin Shkreli

In a “Reconsider This” segment, I give you an update on the case of Martin Shkreli, the guy who bought the rights to Daraprim and then jacked up the price. What’s happened to him lately?

And Vic from Memphis calls the voicemail feedback hotline! In response to my despondency over the thought that ObamaCare is forever, he tries to life my spirits. Let’s see how well he does, or even if my spirits can be lifted.

Mentioned links:

Martin Shkreli sentenced to 7 years in prison

Martin Shkreli Sentenced to 7 Years in Prison for Fraud

Episode 123: A Win For the Free Market, and a (Sort Of) Win For Religious Freedom

The GOP Tax Bill Repeals Obamacare’s Individual Mandate. Here’s What That Means for You

House GOP bill repeals ObamaCare taxes — with one exception

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Show transcript

This is a segment I call “Reconsider This” where I come back to a story I’d covered in the past, and give an update on it. In spite of the name, typically it’s not going to be a case where I’ve changed my opinion; just giving some new information. Me, change my opinion? C’mon.

You may remember the name Martin Shkreli. How could you forget it? Back in November of 2015, he made the news because he bought the rights to sell the drug Daraprim, and then promptly raised the price from $13.50 to $750 per dose. Back in episode 123, I noted a couple of things. First, raising the price was not unexpected. The company selling it was going out of business selling it at $13.50, so barring a price increase, nobody would be getting Daraprim. Everyone wants low drug prices, but, generally speaking, the vast majority of those people don’t have to pay to run a drug company. However, $750 seemed rather excessive.

Second, in response to that increase, the free market sprang into action. Another drug company was able to use this situation to get their Daraprim replacement noticed. And for $1 per dose, it was even cheaper than the original. The catch was that it wasn’t FDA approved, so caveat emptor. And another caveat is this; I can’t find any mention of their Daraprim-killer – pyrimethamine – on their website or in the news. Perhaps they, too, needed to price it a bit higher to keep it viable. I don’t know for sure, because searches were most unhelpful in finding current information on the status of that drug. If perhaps the price was too low, well, the free market rewards good decisions and also punishes bad ones, so maybe that was it, or something else entirely. Maybe there’s an opportunity waiting out there.

As for Shkreli, he was recently sentenced to 7 years in prison. No, not for his drug pricing. No, not for being a jerk. He was convicted for fraud regarding his involvement with Retrophin, a pharmaceutical company he founded in 2011, and two hedge funds he ran. I don’t believe in some mystical karma, I just believe that actions, and attitudes, have natural consequences. The attitude he displayed during the Daraprim incident suggested an underlying character flaw, and so this verdict doesn’t surprise me.

Just as I was writing up the script for this episode, I got a notification that someone had left a message on the voicemail feedback hotline. I was thrilled and astonished that someone had called 267-CALL-CT-0 and decided to get his voice on this show. I have received voicemails before, for the special 100th and 200th episodes (and I did appreciate those), but this was the first call I’d ever received for a non-milestone episode. Well, unless you count a couple of wrong numbers early on when some students thought they were calling their teacher.

But anyway, without further thrill and astonishment, here’s the message.

Hi Doug, this is Vic calling from Memphis. I disagree with you on the Obamacare. I think that they’ve taken care of the individual mandate, I believe the IPAB is gone, Cadillac taxes are gone, they’re talking about doing some waivers, which I think HHS can do. I think they’re doing a good job, but I think that Trump is going to cram it down the Republicans’ throat like Newt crammed welfare reform down Clinton’s throat. That’s what I’m hoping, and I think they’ll get it eventually. Some block grants and some waivers to go around some of the Obamacare mandates, and I believe we’ll have it done. Appreciate it. Thanks for what you do.

Thanks so much, Vic! To put this in context, he’s responding to my despondency over the thought that Obamacare is with us for good, and that nibbling at it around the edges is all that Republicans will ever do. So let’s look at the specifics that Vic mentioned.

The Individual Mandate: The mandate itself doesn’t go away until 2019, but that was a very large symbolic change. I say “symbolic” because most people aren’t subject to it, especially if you’re working. However, the people most penalized by this are the un- or under-employed. Those folks also get subsidies, but that’s all part of the Gordian Knot I mentioned last episode, and why costs for everyone have skyrocketed in spite of promises to the contrary. The mandate, however, was part of how costs were (supposedly) going to be kept down; more people insured means lower average costs to everyone. Supposedly. So the repeal happened, but it knocks one of the legs out from under the ACA.

The IPAB or Independent Payment Advisory Board: This was the group labelled the ACA’s “death panel”, where they could create Medicare cost-cutting measures while improving the quality of care. Or at least, that was the “unicorns and rainbows” explanation of how they would work. Now Congress has to do it, like they had to before, and where the responsibility should be; not in an unelected board. I’m good with this going away, but again, ACA proponents considered this another leg of cost savings that would (supposedly) make it work.

Cadillac taxes: They’ve been pushed off until 2025, which is plenty of time to repeal it fully. But again, it’s another leg that would (supposedly) keep Obamacare solvent.

While it’s true that all this has been done, the ACA was always going to be a huge drain on our economy. All these taxes and cost cutting measures were (supposedly) going to pay for it. I rather doubted it, but it doesn’t really matter if it would have or not, and here’s why. I believe Obamacare would have demonstrated itself to be a failure, and Congress would have had to keep propping it up, just like socialized medicine programs have failed around the world. But, instead of full repeal, Republicans have kicked out the economic legs doing that propping. Just removing these measures will hasten its failure, but Democrats can now credibly say, “Of course the ACA failed. Republicans sabotaged it!” And with that battle cry, Democrats can reinstate these measures, or similar ones, because there are always going to be the few for whom this actually made a positive difference. Unfortunately, it won’t matter how it was done. And that’s why, in my mind, Obamacare is forever. I like your optimism, Vic, but unfortunately for this, I don’t see it. But thanks again for your feedback!

Filed under: CapitalismEconomics & TaxesGovernmentHealth Care