Thursday, June 21, 2018
Business

Congress unites in scorn for Shkreli, but gridlock remains

WASHINGTON — A smirking Martin Shkreli briefly united Democrats and Republicans on Capitol Hill this week, as lawmakers took turns blasting the price-hiking former drug company CEO who has become the new poster child for corporate greed.

But the gridlocked state of Congress virtually assures federal efforts to lower drug prices will remain in limbo for years. And even then, experts warn that the options available to Congress would not stop companies like Turing Pharmaceuticals, where Shkreli engineered a 5,000 percent price increase of a critical anti-infection drug.

For now, experts say the most lawmakers can do is give price-gouging executives a verbal lashing before their committees. Richard Evans, a pharmaceutical analyst for SSR, says that won't be enough to deter some companies.

"If you're willing to take a public shaming … then you can take the price increase," he said.

Lawmakers from both sides of the aisle took their best rhetorical shots at Shkreli on Thursday, but he was mostly mum. The 32-year-old entrepreneur repeatedly declined to answer questions, citing his Fifth Amendment right to avoid self-incrimination. When lawmakers suggested that legal defense shouldn't stop him from talking about his tenure as Turing's CEO, Shkreli retorted: "I intend to follow the advice of my counsel, and not yours."

Shkreli faces securities fraud charges in New York unrelated to Turing.

Concerns about sky-high drug prices have been building for years but boiled over this fall after stories about Turing and Canadian drugmaker Valeant Pharmaceuticals hiking prices for previously low-priced medicines for patients with heart problems and other life-threatening conditions.

Many pharmaceutical companies increase prices annually as a matter of doing business. But the staggering size of the hikes by Turing and Valeant drew congressional interest. Valeant bought two lifesaving heart drugs last February and promptly hiked their prices, tripling one and raising the other sixfold.

It's an approach that's attracted unprecedented media coverage and seemed to confirm the public's worst fears about pharmaceutical companies: that they are more Wall Street-driven investment vehicles than actual developers of medicines.

But industry analysts have repeatedly reminded investors that the chances for real action to curb prices is low.

"Congressional Republicans, the majority in both houses of Congress, oppose regulating drug pricing and will stop all attempts by congressional Democrats to do so," Evercore ISI analyst Terry Haines advised clients recently.

Even with major changes to programs like Medicare, analysts say there would still be little to stop companies from hiking prices of drugs when they are the sole provider, as in the case of Turing and Valeant.

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