The Devil’s Advocate: Martin Shkreli vs. Mark Cuban
A pharma provocateur thinks he’s God’s Gift…but which one is it?
This tract will be subdivided into seven parts, in keeping with the seven deadly sins. In my religiously-themed testimony, I have been called to testify on behalf of the devil— Martin Shkreli— in the matter of the Sainthood of Mark Cuban, blessings be upon him.
Book 1: The Book of Mark (Cuban)
When the Catholic Church is considering a new saint, even in this day and age, they have to go through an ecclesiastic trial. This must include evidence of their miracles. These miracles must be attributed to their divine intervention, after their death. It is worth noting that what counts as a miracle has been adjusted downward over the years. Mother Theresa, for example, is now Saint Theresa, after this “one-two punch”:
…healing an Indian woman's cancer of the abdomen.
The woman, Monica Besra, said a beam of light had emanated from [a locket containing Theresa’s picture], curing her cancerous tumour.
Her second miracle was also oncological in nature:
This was the healing in 2008 of a 42-year-old Brazilian man with a number of brain tumours — moments before he was due to undergo surgery.
With these as the criteria, I think Mark Cuban is in the running! Not only for his Shark Tank appearances, but for his Public Benefit Corporation that’s mission is reducing pharmacy costs: Mark Cuban’s Cost Plus Drug Company (MCCPDC PBC).
The Roman Catholic Church does not immediately promote individuals to Sainthood, dear readers, and neither shall we.
Sainthood has its own “pending” status:
“Beatification” is the step right before sainthood. By beatifying someone, the Church proclaims that the person is a) definitely in Heaven, and b) definitely able to plead to God on your behalf if you pray to him
I think, my own atheism notwithstanding, if Mr. Cuban successfully does something to reduce the cost of unbelievably expensive pharmaceuticals in America, it would be a legitimate heavenly miracle.
Book 2: Martin’s Tweets to the Romans
The term “devil’s advocate” comes from a role in the conclaves of the Catholic Church. In this role, someone is called to advocate for the actual biblical devil’s point of view. For example, this was Christopher Hitchens in Mother Theresa’s case. The role involves calling bullshit.
I contend, dear readers, no one, ever, has called more bullshit and been more hated for it than Martin Shkreli, the Pharma Bro. And ladies…he has a Substack:
The backstory on Mr. Shkreli is humble. In brief, he was born on March 17, 1983, presumably as the result of demonic impregnation fetishism or something, in Brooklyn, New York, to a family of no significant means. He went to Hunter College High School and later Baruch College, which is part of the public CUNY system. These are not fancy schools. Martin is not fancy. He does have that smirk though.
The Pharma Bro has been generative, in addition to sinful and greedy—keep in mind, he’s a convicted felon— in his 39 years on earth he has founded three hedge funds, two pharmaceutical companies, and two software companies. And somehow, he found time to be the most hated man in America. He got himself banned from Twitter, OKCupid, and even Tinder. He even purchased that one-off Wu-Tang record, and despite being jailed and fined $64M—securities fraud— he hung onto the rap record. Let’s review, to make sure he’s as sinful as we think, in “Deadly Sin (Sin Count)” format:
He spent several years in a relationship with the reporter from Bloomberg who was assigned to cover him, while he was on his way to and in jail. She is writing a book on the matter and has a substack entitled “Smirk”.
He has made obscene profits from his work in pharmacy market manipulation. His most greedy act, according to everyone, is when his drug company, Turing, obtained the manufacturing license for the antiparasitic orphan drug Daraprim and raised its price by 5,455% (from US$13.50 to $750 per pill). It is worth noting that the average cost of a drug in the rare disease space is actually significantly higher than that:
The average annual orphan drug cost rose from $7,136 in 1997 to $186,758 in 2017
Orphan drugs (those rare illnesses with only one treatment that exists) are 25x more expensive than non-orphan drugs
For this sin, Mr. Shkreli was publicly crucified for being a jerk. It’s probably time to mention that an alternate perspective on this repricing is what this whole damned1 article is about, that’s some foreshadowing for you!
It’s never enough, is it? Is it Martin?
And lo, he was prideful and vainglorious about his upcoming album which, I kid you not, is going to be called “God’s Gift”:
And just one more look of what must surely be the photo next to the word “vainglorious” in any responsible illustrated dictionary:
And yes, if you are wondering, I did have to look that word up to make sure I didn’t face plant that joke:
After he wrote his Substack article, he made an additional video exposing the lack of transparency in Mark Cuban‘s drug pricing, which seems like an wrathful thing to do?
Also, violent by his own admission:
Sloth (0 points)
Honestly I can’t find any real evidence that he is slothful, but six out of the seven isn’t bad. Or is bad, cause it’s sin.
Book 3: Sodom and Gomorrah and Pharmacy Benefit Managers
As a Very Wealthy Man, Mark Cuban has chosen to disrupt the naming conventions of pharmacy companies. His “miracle” is called—and for those who have not been paying close attention, this the actual name of his company, not word play— Mark Cuban’s Cost Plus Drug Company. Yep. MCCPDC for short. Pro tip: for your branding firm, maybe get the people who did the crisis line 988 rebrand? They lean in to shorter alphanumeric character count hard.
I’m being playful. It’s not just naming conventions Mr. Cuban is looking to disrupt—it’s Pharmacy Benefit Managers (PBMs), which are the largest segment of healthcare spending. PBMs are currently being investigated by the federal trade commission. I did a podcast about how obscure these financially huge parts of the healthcare industry are:
But the TL;DR in this case—or, let’s be honest, the TCLTAL;DL (Too Clever Like This American Life; Didn’t Listen) — is that no one knows what these companies do and it’s a boatload of money. Here is a graphic:
We will learn what PBMs do however, at least enough to judge Mark, lest we be judged.
Book 4: Song of Songs…From The Early 1990s
Although I usually find myself quoting Shakespeare in these pieces, and that could still happen— there’s always room for the bard—in this case I will frame the narrative tension with the help of The Spin Doctors’s 1991 classic “Two Princes”:
Marry him, marry me
I'm the one that loved you baby can't you see?
Ain't got no future or family tree
But I know what a prince and lover ought to be
And, spoiler alert, I think we picked the wrong Prince, from a social opprobrium standpoint- at least when it comes to civic mindedness in pharmacy costs.
Book 5: The Book of Judges (of Pharma Executive Behavior Apparently)
I don’t know that Martin ever fell from Grace—he would have had to have some presumptive grace to begin with, and he’s a Brooklyn native, so, honestly, what the fuck are you looking at?
But at least after his drug-price-hike-hijinks he’s generally considered to be a lake of fire denizen. And that’s before he went to actual literal federal prison for unrelated transgressions.
The thing is, if we look a little bit more closely at the world of pharmaceuticals and their costs, which have, it turns out, precious little to do with their price, it may be that we were a little confused about which of these two princes we should have been spending time adoring, as a culture. For what it’s worth, the New Yorker suspected there was something up with Mr. Shkreli:
A truly greedy executive would keep a much lower profile than Shkreli: there would be no headline-grabbing exponential price hikes, just boring but reliable ticks upward; no interviews, no tweeting, and absolutely no hip-hop feuds.
In the biblical recounting of the banishment of Lucifer from heaven, doomed to spend the rest of his endless days in Hell, we are told the following, with all of the subtlety one would expect from the Bible (and, although I kind of can’t believe I’m saying this, I’m going to take the liberty of editing God for brevity. He tends to go on and on about his smiting activities):
You were blameless … till wickedness was found in [your tweets]. Your heart became proud …and you corrupted your wisdom because of your splendor. I made a spectacle of you before kings. … I reduced you to ashes on the ground in the sight of all who were watching. – Ezekiel 28:15-18
Mr. Shkreli is many things, but uninformed about the mechanisms of pharmaceutical pricing is not one of them. His repricing of life-saving medicine at +5000% more than its prior price, was paid by insurance companies. Approximately 65% of the drug was, per his accounting, given away free to those without insurance by his company. I suspect this was intended as a wake up call, but not understood as such. At this crucial moment, like his patron Saint the Prince of Lies, he decided to peace out of heaven, so as to rule in hell.
Join us, as we take a journey into the through the looking glass world of pharmacy pricing, rebates, and general legal scamming that is drug pricing in America, and we will find which of these two princes, in the end, oh, god, I just can’t anymore with this Spin Doctor’s joke.
My thesis as to how healthcare hides eternal torture at demonic expense is that information is obfuscated—like a snake pitching suspiciously red apples— using misleading language. Crunch, with me, into the fruit of Lucifer’s orchard:
A PBM is in the business of controlling pharmacy costs in much the same way that the Snake was in the business of scaling healthy snacks for cofounders in hominid horticulture. It turns out that a very special feature of pharmacy benefit managers as companies in the US is that they benefit from a safe harbor law around kickbacks.
A safe harbor law states that some thing that would be illegal – a kickback for example — is not illegal because the law says so. We will usually do some thing like rename that illegal thing with a different word. So instead of kickback, which would imply what is in any other field of endeavor without the legal protections of Congress to keep its kick backers out of the pokey, instead becomes rechristened as a rebate. Rebates sound like savings. Everybody wants a rebate. Hell, I’d take a rebate right now. The other nice thing about rebates? You don’t go to jail for rebates. You go to jail for kickbacks. Only rebates here.
So pharmacy benefit managers are allowed to move rebates around. Who gets rebates? Well, a shocking array of companies and individuals can have rebates provided in order to incentivize their participation in this system.
Rebates are Kickbacks. There are plenty of explanations for this graft’s legitimate role in healthcare. None of them are accurate. Kickbacks increase cost.
Spend goes up and health insurance profits go up. Rebates are coming out of the PBM coffers—they are an expense. They are subsidiaries of payers. Or even own them! They decide to charge themselves fees that they pay to themselves as rebates. So they can afford the drugs. Drugs they, as PBMs, determine the price of.
PBM’s business model is vicious-cycles-as-a-service. What Mr. Shkreli did in the increase of Daraphim by 5000% was both obnoxious and under-ambitious. Other companies do that so it compounds annually. He was perhaps just making a point about it because he enjoys attention. In fact, the only reason people generally know this kind of price gouging goes on, is because Martin made it a household topic. Then, he was sent to jail for fraud, but this wasn’t the fraud in question. He did some other 💩, and screwed rich people out of money, or made them less money than they might have otherwise made. I’m not crying for Martin Shkreli’s accredited investors, to be honest. I’m not a fan of securities fraud, so I’m satisfied he went to jail. But to be very clear, everything Shkreli’s pharmaceutical company did with relation to its drug pricing is not only standard, it’s completely and utterly legal for everyone in the industry to do exactly the same thing. It’s why healthcare gets more expensive and that’s part of the plan.
Economically, the best that can be said of Turing’s pricing strategy is that it is a lot like RobinHood: robbing from the rich and giving to the poor. The conceit, at least per Martin, was that by gouging the price of a very old drug with a lot of side effects, the profits could be used to actually develop a better drug for the rare disease it is used for. The most accurate thing that can be said, is it’s a hell of a lot more like RobinHood the financial application, which offers free trades/free drugs to the uninsured. But, RobinHood generates a lot more for the rich Citadel at the same damn time. It’s not like UnitedHealthcare is lamenting $1000/pill drugs.
Book 6: Lamentations
Soon to Be Saint Cuban… interviewed by Guy Raz:
His company is entirely cash pay and outside the insurance system but cuts out the go-betweens and offers transparent pricing. When customers look for medications they need—they can see the costs of the company and the across-the-board 15 percent profit, which is used to invest back into MCCPDC for future manufacturing.2
In the case of these sainthood hearings, the devil’s advocate is basically there to call bull-plop. And, similarly to Christopher Hitchens—he of the bombastic and devastating review of Saint Theresa’s sadism — proceedings of the church are allowed to completely ignore this testimony.
Mark Cuban himself was pretty direct regarding the problems with drug pricing on his own blog on March 8, 2017:
No stakeholder is willing to take less.
…the free market shows itself every day in the profits of insurers and healthcare providers. I have yet to see a single public company in these spaces make an announcement that they are willing to or expect to take less because of changes to Obamacare. Have you ?
I haven’t, and that includes Mark Cuban.
The press is glowing for media darling Mark Cuban. Hark! Is that an astute and well educated observer of the pharmaceutical space? Yes, I am talking about the most sinful Martin Shkreli. He, he has not been seduced:
Many people have reached out to me for comment on this “drug company”. This is not a drug company, by the way. It is simply an online pharmacy, similar to DiRx, GeniusRx and GoodRx . I was intrigued by the claims of remarkable cost savings. I’ve found these claims to be largely false.
However, unlike some of Mr. Shkreli’s unsubstantiated claims regarding his fighting styles or lyrical skills when it comes to rapping, his pharmaceutical pricing assessment game, he’s got that on lock (again, from Martin’s Substack):
I was beginning to get suspicious that this pharmacy has a few cherry-picked “loss leaders” to gain attention ... Reselling generic medicines isn’t exactly a fat margin business.
MC Pharmacy’s Lipitor at $3.60 for 30 10mg is the same price as some retail pharmacies when including shipping costs. Wegman’s and Price Chopper are actually cheaper, while CVS and Walgreen’s are a bit more ($10) expensive.
Including shipping, MC Pharmacy’s metformin is more expensive ($8.90) than most retail pharmacies.
Claimed savings: substantial
Actual savings: none
Sick burn. Shkreli’s not done:
This business model is not new, and it sucks. On a percentage basis, most Americans are insured and pay nominal copays for most medicines. Paying cash for generics has been possible through several competitors of Cuban’s for some time now. I don’t see any special sauce or any special prices relative to those players
Book 7: Genesis
As Saint Cuban himself avers, MCCPDC PBC is making a 15% Profit Margin. It’s only 5% over tithe!
From whence is the market opportunity to SELL meds to the uninsured? The demon spawn Big Health companies who have:
a minimum Medical Loss Ratio (MLR) of 85%.
Yes, that means the big insurance companies have an identical profit margin to Cuban.
He has the same 15% profits and 85% loss ratio. Then he’s upcharging you for shipping.
For everybody priced out of the health insurance market or with high copays and deductibles on the plans they do pay for, Mark Cuban is there for you. There to make exactly the same profit margin as Big Health.
As a reminder, Martin Shkreli’s profit margin was 5000+% at the expense of Big Healthcare, not the uninsured or underinsured.
Shkreli’s pharma company profit margin on the uninsured was negative. Martin gave the drug away, and at least ostensibly planned to use any profits to finance better orphan drugs for a condition that primarily impacts individuals with HIV.
Mark Cuban, in turn, is making his industry standard 15% profit margin—only on people who can’t afford the medication.
Can some people buy their medication more cheaply thanks to Mark Cuban? I mean, maybe.
But they shouldn’t have to.
The that workaround allows insane markups hidden from the rest of us and buried in our insurance premiums to go on even longer.
Sometimes, the Devil needs someone to speak up, so that we can hear things we might not want to hear.
—O. Scott Muir, M.D.
The Frontier Psychiatrists is a reader-supported publication. I have received no kickbacks or rebates. Please consider becoming a rebate subscriber.
This was also Martin Shkreli’s self-professed rationale for the increase in the price of his toxoplasmosis drug: This video is actually quite worth watching. You’ll learn a lot about Pharma and a lot about Martin: