Episode 5: Martin Shkreli (Pharma Bro)

By his early 30s, Martin Shkreli had held a variety of impressive roles; he was the co-founder of multiple successful hedge funds, CEO of biotechnology firm Retrophin; and founder and CEO of Turing Pharmaceuticals. So, how did young Martin Shkreli, with no formal training in chemistry and a Bachelor's Degree in business administration, become a pharmaceutical CEO and have an estimated worth by Fortune magazine in 2016 of $45 million? 

And how did Martin Shkreli only a few years later become a convicted felon worth practically nothing; referred to by the media as "Pharma Bro" and "the most hated man in America"? 

And whatever happened to that unreleased Wu Tang Clan Album Martin Shkreli bought for $2 million? Find out today on the Controversial Figures Podcast.

Connect with us on Twitter: https://twitter.com/FiguresPodcast

Episode Sources:

• CNBC https://www.cnbc.com/2019/08/07/retrophin-paid-martin-shkreli-to-settle-all-legal-claims.html
• NetFlix Dirty Money, Drug Short episode
• Vanity Fair  https://www.vanityfair.com/news/2015/12/martin-shkreli-pharmaceuticals-ceo-interview
• Wikipedia
  • Martin Shkreli  https://en.wikipedia.org/wiki/Martin_Shkreli
  • Naked Short Sell https://en.wikipedia.org/wiki/Naked_short_selling
  • Once Upon a Time in Shaolin https://en.wikipedia.org/wiki/Once_Upon_a_Time_in_Shaolin
• Xconomy  https://xconomy.com/san-diego/2019/08/22/retrophin-sinks-as-drug-pharma-bro-martin-shkreli-co-invented-fails/ 
• Music: The 6 is Silent by Skyjelly

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Transcript

00:00

By his early 30s, Martin Shkreli had held a variety of impressive roles; he was the co-founder of multiple successful hedge funds, CEO of biotechnology firm Retrophin; and founder and CEO of Turing Pharmaceuticals. 

00:16

So, how did young Martin Shkreli, with no formal training in chemistry and a Bachelor's Degree in business administration, become a pharmaceutical CEO and have an estimated worth by Fortune magazine in 2016 of $45 million? 

00:32

And how did Martin Shkreli only a few years later become a convicted felon worth practically nothing; referred to by the media as "Pharma Bro" and "the most hated man in America"? And whatever happened to that unreleased Wu Tang Clan Album Martin Shkreli bought for $2 million? Find out today on the Controversial Figures Podcast.

00:54

Musical Interlude

01:20

Welcome to Controversial Figures; a podcast about intriguing figures in the media. My name is Tammy Hawkins. If you enjoy this podcast, please leave a 5 star rating and comment on Apple Podcasts or wherever you listen to podcasts - and don't forget to subscribe to the show. 

01:37

Visit Controversial Figures on Patreon and donate anything that you can. I will give you a shout out on a future show, and send along occasional swag to regular donators. If you donate at higher tier levels, you will obtain access to additional content on a regular basis. And with that, let's discuss our Controversial Figure for today.

01:56

Born in 1983 and raised in New York, Martin Shkreli attended Hunter College High School in the Upper East Side of Manhattan. At age 17, Martin would drop out of attending high school before his senior year, while receiving the credits necessary to complete his diploma through an internship program. 

02:15

This internship program placed Martin at Wall Street hedge fund Cramer, Berkowitz and Company. The Cramer in the company name belonging to CNBC financial pundit and resident tv Mad Money screamer, Jim Cramer, who ran the company at that time.

02:31

Martin started in the mailroom, but displayed a unique talent early on for smoking out small biotech company scams. Only about 15 percent of drugs that begin clinical trials are ever approved by the FDA. And while the lengthy FDA approval process occurs, drugs are hyped beyond what they may be capable of doing. It is extremely rare for any company or any person to be prosecuted for inflated drug claims meant to lure investors. 

03:00

Also, during this time, Martin  working his networking skills, getting to know the small group of investors who focus on shorting biotech pharma stock. He took advantage of other pharma bros bragging about which stocks they've shorted as they felt were fakes sure to lose money.

03:15

Short selling is essentially betting that a stock price will go down on the stock market instead of up; in this example, the investors were betting which medicines would prove ineffective or not get FDA approval. Not getting FDA approval often has a significant impact on a small biotech pharmaceutical company and its associated stock value, which can make short sellers very profitable, very quickly.

03:44

Ok. Let's take a moment to discuss short sellers; as they are investors of a different breed. Publicly owned businesses' primary objective is to increase stockholder value. To that end, it is rare that companies will share more info than they are required relative to any issues that would lead to a decrease in their stock price. 

04:06

In other words, companies are very careful to share that which only makes it appear they will continue to be successful and have stock growth. This encourages investors to keep investing. And most investors put their money towards the companies they think will grow they most the fastest sustainably. 

04:25

However, short sellers play on the darker side of the market. They try to see through the pomp and circumstance to find the companies that will have stock price decline as opposed to growth. They are betting against the house. To go short, you are playing against the entire market, betting on failure. 

04:43

And to do this, short sellers have to find the facts that every company is seeking to hide. They comb through 10-Ks, research obscure footnotes hidden in the margins in hopes most investors won't notice. All to find that one hint, that one clue, that shows the smoke and the mirrors, the real company value and the decline that could occur.

05:04

And in the more nefarious portion of the market, some short sellers create widespread rumors to impact the trading prices of companies to lower in their stock price in their investment favor. Helping, or frankly creating, the smoke and mirrors to affect the market.

05:23

Also, short sellers are well known for taking their research that may have found criminal misreporting or actions to journalists, industry competitors, and regulatory agencies; using these entities to expose the controversy, due the dirty work for them, and cause a decrease in stock market price for the company embroiled in scandal, all leading to the short seller's swift personal gain. 

05:48

Whether these moves are altruistic or market manipulation on the part of the short seller is a very, very fine line and up for personal interpretation due to many policy loopholes. Stock market prices are suppose to reflect a companies' perceived market value. But perceptions can be misleading.

06:05

While working at Cramer, Berkowitz and Company, Martin recommended short-selling Regeneron Pharmaceuticals stock; they were a biotech company testing a new weight-loss drug. 

06:15

When Regeneron's price dropped in accordance with Shkreli's prediction, the hedge fund profited. But this highly profitable prediction drew the attention of the Securities and Exchange Commission, which then investigated Martin Shkreli's knowledge about the stock. 

06:30

The SEC was unable to prove wrongdoing on Martin's part, but this would not be the first nor last time the SEC would investigate Mr. Shkreli. He was now on their radar.

06:41

After four years at Cramer, Berkowitz, and Company, Shkreli left for greener pastures. He bounced around a few other hedge firms before starting his own in 2006 which he called, Elea Capital Management. In the summer of 2007, the Elea fund tanked when Martin made a $2.6 million bet, through Lehman Brothers, that the overall market would decline. 

07:05

When the market instead increased, Martin lost his bet. He then refused to pay Lehman Brothers, and chose instead to make “veiled threats of filing a bankruptcy,” according to the eventual lawsuit. 

07:20

But it was Lehman Brothers which instead went down in flames, during the 2008 meltdown. Although the courts found the suit against Martin Shkreli in Lehman Brother's favor to the tune of $2.3 million, the verdict was vacated as Lehman Brothers was no more. There was no one to pay.

07:36

Martin is quoted as saying, “I wasn’t successful with my first hedge fund. I shut it down and lived with my parents." 

07:45

This would only be the first of many examples of Martin Shkreli being overly bold in his approaches. Big risk only means big payoff if the risk isn't realized. If an investor has enough money sources to bounce through a couple of investing failures, the risk is minimized. Water off a duck's back; I'll make it back the next big trade. 

08:04

However, it's akin to gambling addiction when the investor no longer has the money sources and is unwilling to admit that to themselves. The Netflix show Dirty Money is fantastic and highly suggested. In Episode 2, titled Drug Short, which features the story about Martin Shkreli and others that played in this pharmaceutical space, shares this quote that I think sums up Martin and others like him quite well. That quote is, "often wrong, never in doubt".

08:35

Never one to be deterred, Martin Shkreli started a new, new hedge fund in 2008, called MSMB. The name is made from Martin's initials and those of his business partner, Marek Biestek. It's during this hedge fund where some of Martin's further tricks become known. 

08:50

For example, it was observed that Martin and Marek were shorting biotech companies, then using stock chat rooms and other aggressive tactics to 'savage them'; in other words, to spread nasty rumors to cause the stock to decrease in trading price - the perfect approach for a short seller to make quick money.

09:10

In 2011, Martin Shkreli made another questionable yet profitable move that operates on the fringe of legal. Martin filed requests with the FDA to reject a new cancer diagnostic device from company Navidea Biopharmaceuticals and an inhalable insulin therapy from MannKind Corporation; this action caused each company's stock price to drop significantly. In the background, Martin had placed a large short sell on both companies' stocks. 

09:37

Both companies, after having invested many millions in R&D and trials, had difficulty launching their products after the rejection filings. Martin and MSMB ruthlessly walked away with millions from their quick gains on the short sell price impact. 

09:54

It should be noted, the FDA ultimately approved both medicines; the rejections filed by Martin Shkreli were a ruse for pure profit. And at what cost to those that needed this drug approval to survive? We'll never know.

10:09

In 2011, MSMB made a naked short sale on an account it held with Merrill Lynch that did not go well. 

10:18

Ok, bear with me, as I want to segue for a moment to explain what a naked short sale is before I go into the specifics around the MSMB trade. For those that already know this, or don't care and are just patiently waiting for me to get to the Wu Tang Clan album details, maybe skip ahead 1-2 minutes. Ok, for those of you still here, let's do this. 

10:39

First, it should be understood the naked short is a very risky, sort of shady, and rather discouraged practice. The simplest explanation of this approach is the investor, Martin Shkreli at MSMB in this example, is selling a number stocks at a price he thinks the stock will land at using someone else's money, Merrill Lynch's money in this particular example. The investor predicts all of this before actually owning or having bought the stocks they are already trading at a made up price. 

11:15

It's a risky bet involving many factors -  you have sold a number stocks to others that you are betting you can buy from someone else at a particular price using someone else's money that you think you can sell at a particular price for gain. And with this being a short sell, you are betting that the stock you are buying will significantly drop in price during the finite time you are making this trade. 

11:39

If you are wrong in any of your cause and effect prediction calculations of your ability to buy the stock from enough sellers at the price you were targeting, you have what is called a "failure to deliver" and you are responsible for the losses of the stocks you now owe to the other stock buyers which you will also fail to deliver - you are responsible for this loss of money not only to the folks you couldn’t sell the stock to, but also to the bank that loaned you the money and the fees associated to the trade. 

12:08

The loss in this type of trade is massive, and because the risk is high, the reward can mighty in the rare occasion in which it is actually accurately performed. This type of trading is not recommended for the weak of heart or the weak of wallet. And if too many people make a trade of this type against a particular company, it can impact the company's price negatively in a domino type affect. 

12:32

A report from the SEC and Bloomberg provided analysis that pointed to naked short selling as what possibly drove Lehman's Brother's price down and led to the dissolution of the company. It is clear Martin Shkreli likes finding the edges of the market and pushing them for his gain.

12:49

Ok, now that we sort of understand what a naked short sale is and why it's often bad news, here is the actual trade and damage that occurred. Martin Shkreli's company MSMB sold short 32 million shares of Orexigen Therapeutics stock at about $2.50 per share the day after its price dropped a couple of dollars from $9 per stock. The drop in stock price was due to the FDA declining to approve the drug Contrave; MSMB was betting it would fall further. 

13:20

To Martin's and MSMB's disappointment, the Orexigen stock price increased after their trade; which meant MSMB just lost an astronomical amount of money; MSMB did not have enough liquidity, or cash on hand, to cover the position, although it had told Merrill Lynch before this trade that it did. Merrill Lynch lost $7 million on the trade and MSMB was wiped out from this; it put their balance sheet completely into the negative - but Martin was keeping the lack of money information to himself... He had other ideas.

13:56

In 2012, Martin's hedge fund MSMB announced it was investing $4 million in a new biotech company called Retrophin. In a seemingly bizarre move at the time, it was also announced that Martin Shkreli would wind down MSMB after this purchase to devote all of his time to leading Retrophin as their CEO. When asked why at age 29, Martin would shift from running a hedge fund to running a pharmaceutical company, he stated, “There wasn’t enough money in hedge funds. Even at the biggest hedge funds, I didn’t think they were doing all that well compared to company builders. The Forbes top 50 is all company builders.”

14:39

In late 2012, Shkreli took Retrophin public through what’s known as a “reverse merger". This is when someone merges a new business into an existing publicly traded shell, thereby getting stock that you can immediately sell to investors. These types of deals are so often used as scams that the SEC has issued a bulletin warning investors to stay away from them, which by now we've learned is kind of Martin's modus operandi. But at the time, biotech stocks were so hot, and Martin was apparently so convincing, he was able to raise $9 million from investors in 1 year.

15:19

Over the next two years, Retrophin and Martin Shkreli would go on to raise over $100 million from investors.

15:25

Martin was known to be boastful on his social media sites, Twitter being his personal favorite. In early 2014, Martin Shkreli began posting messages online about the Retrophin's business doing very well, referring to how the company's stock had soared from $3 a share to almost $20 under his leadership. 

15:45

Then, with no explanation of why, in May 2014, Martin tweeted “this is one of the best days of my life!”  The news the next day confirmed Martin had sold almost $4.5 million worth of his own stock in Retrophin. This infuriated investors who believed he was cashing out his short term boosted CEO gains as opposed to thinking of the longevity and profitability of the company for the investors. It was not a surprise when Shkreli was ousted as CEO from Retrophin in late 2014.

16:20

No bother to Martin Shkreli. Friends recall he had set up his offices for his new company by that weekend. He launched Turing with three drugs in development acquired from Retrophin: An intranasalversion of ketamine for depression, an intranasal version of oxytocin, and Vecamyl for hypertension. Martin named this new company Turing, as in Alan Turing, the mathematician known for cracking the Nazi Enigma-machine codes.

16:46

In a perfect example of Martin's controversial approach to life and lack of care for social norms, he is quoted in a Vanity Fair article as saying, “I bought an Enigma machine. I’m conflicted because it’s a Nazi relic. It’s like owning a gas chamber…but it’s a constant reminder that we should use knowledge for good, even if the process is ugly. From the Pythagorean theorem to Fermat’s theorem, the math is ugly, but if you hold your nose during the process of proving it, you get to the right place.” And while that is a hard quote to follow, the podcast must go on.

17:21

Martin had a clear business strategy for Turing: obtain licenses on niche, out-of-patent medicines that had little to no currently FDA approved competition, especially those without cheap generics available. Then, increase the pricing of each rare drug and profit. This approach eliminates the costs of developing, validating, and bringing drugs to market for the acquiring company. Leading to low operation costs and high net income.

17:54

In August 2014, Martin's new company Turing announced their $55 million acquisition of Daraprim, a drug approved by the FDA in 1953, from Impax Labs. The drug's patent had ran out, but there were no generics or competitors available. The deal included the condition that Impax immediately remove the drug from regular wholesalers and pharmacies to close all distribution channels, making Turing the exclusive provider of the drug, so they reap all the profits when they later boost the price. At the time, it was one of the largest financial moves in biotech history. However, Martin's financial shell game was about to be brought to a swift halt.

18:35

In August 2015, Martin's former biotech pharmaceutical company, Retrophin filed a lawsuit against him. Retrophin alleged Martin Shkreli stole both cash and shares worth millions of dollars from Retrophin. The company claimed he disguised the fraud as consulting arrangements.  He would  give shares to a small group of insiders, then pay off creditors and his former MSMB investors (who he still owned money to and where threatening to go to the SEC, and he'd use  whatever was left to settle other lawsuits.

19:05

The Retrophin lawsuit essentially alleges that Martin set up the Retrophin “to create an asset that he might be able to use to placate his MSMB Capital investors.” It turns out that Martin had lost more than $7 million on a poorly placed large short bid against Orexigen Therapeutics, as we had mentioned earlier in the podcast. He later lied to Merrill Lynch about being able to settle that position. When this lie was discovered, Merrill Lynch closed out the position at a large loss.

19:39

Despite just losing all of their money, on September 10, 2012, Martin had sent an e-mail claiming he had “just about doubled their money". He even told one investor that MSMB had $35 million in its balance sheet when actually only $700 (no additional zeros). In this optimistic fraud of a letter, Martin offered his MSMB company's investors a choice of cash or shares in Retrophin. It appeared that Retrophin was essentially a shell game created to launder a pyramid scheme of investment fund losses through.

20:20

While Martin fought off the Retrophin suits from 2012, he was devising his get rich quick scheme at his third new company, Turing Pharmaceuticals in 2015.  

20:30

To achieve this, he chose to increase the price of Daraprim - a drug Retrophin owned that is on the World Health Organization’s List of Essential Medicines. This medicine treats toxoplasmosis - a parasitic infection that is dangerous to pregnant women and people with compromised immune systems such as HIV patients and the elderly. Martin Shkreli changed the price of Daraprim from $13.50 per pill to $750 per pill - that's a 5000% price increase, and a cost of $400 a month to $22,000 a month for only one of many life saving medicines needed by people suffering this condition.

21:17

Martin defended the price hike by saying, "If there was a company that was selling an Aston Martin at the price of a bicycle, and we buy that company and we ask to charge Toyota prices, I don't think that that should be a crime."

21:32

An obvious solution to balance this ridiculous price hike is for another company to competitively undercut Turning's price, but due to the complex rules governing drug sales in the United States, this is a lengthy and arduous process for medical safety reasons. A pharmaceutical competitor would have to go through the FDA approval process to show its drug is equivalent to Dara­prim. 

21:55

However, this was effectively impossible at the time, as Shkreli’s current company, Turing Pharmaceuticals, controlled its drug distribution, making it hard to get the adequate samples to do the required comparative drug testing.

22:09

 It's hard to prove your drug works the same if you can't get the needed number of samples to compare it to.

22:15

These F.D.A. restrictions meant to protect consumers, are unfortunately used by some companies as a competitive approach to hike prices of drugs as a highly profitable business strategy (Valeant Pharmaceuticals was notorious for this - both Martin Shkrelli and Valeant Pharmaceuticals are covered in the Dirty Money episode I mentioned earlier in the podcast). 

22:34

Despite many companies taking advantage of this competitive loophole, 2015 was campaign season, and this drastic boost in the Daraprim drug price caught the precious, short attention of Americans and their politicians, so Martin Shkrelli immediately became US Public Enemy Number One, the villain of the media moment that all politicians running had a comment about. 

23:00

Bernie Sanders was quoted as saying, “The drastic price increase will have a direct impact on patients’ ability to purchase their needed medications". Shkreli in his typical immature and in your face nature, in turn, sent Bernie Sanders a $2,700 campaign donation. Bernie then gave the money to a healthcare clinic. Which might've been the only positive thing Martin Shkrelli ever accidentally did for the health industry.

23:00

Hillary Clinton tweeted that “price gouging like this is … outrageous” and promised to fix the problem if elected president. As a side note, this tweet consequently swiftly led to billions of dollars of loss in stock market capitalization of pharmaceutical stocks due to the fear Clinton's comment stoked in the industry that regularly leverages a similar although often less bold approach akin to what Shkreli was doing. 

24:10

And the ultimate winner of the election, President Donald Trump, was quoted in saying that Martin Shkreli “looks like a spoiled brat.” Sick burn.

24:23

When asked how he felt about the criticism Martin Shkreli said, "The attempt to public shame is interesting. Because everything we’ve done is legal. Rockefeller made no attempt to apologize as long as what he was doing was legal.” 

24:37

Martin Shkreli was also later quoted as saying he wished he had raised the price even higher as “My investors expect me to maximize profits. Dar­a­prim is 0.01 percent of healthcare costs in the US.” During a Vanity Fair interview from which this quote originated, it was stated that Martin then pulled up a chart of the price of admission to Disney World, showing how it has increased from $3.50 in 1971 to $105 today. 

25:16

This was to exemplify his point that his pricing increase approach is not unique to him nor his industry. And he further contested, by making the profit on this small area of the market, he could then reinvest the large earnings to discover, research, and test new life saving drugs. 

25:33

This would boost R&D faster to make real progress. Martin Shkreli claimed that Turing would spend 60 to 70 percent of its revenues on research versus the 15 percent typically spent by big pharma companies. Sounds great, however, it should be noted that Martin Shkreli never successfully delivered any new medications from any of his companies. 

25:55

On December 17, 2015, Martin Shkreli was arrested by the FBI after being charged with a federal indictment on securities fraud. The charges accused Martin of making false statements to MSMB investors to raise more money after MSMB had suffered huge losses. Martin was also accused of misappropriating $11 million in Retrophin assets to pay back the MSMB investors.

26:20

Martin Shkreli was also subpoenaed to appear before the Committee on Oversight and Government Reform of the U.S. House of Representatives to answer questions about the Daraprim price increase. When he would ultimately testify, he would appear aloof, smiling, laughing, and smug. He stated his 5th amendment rights to not incriminate himself as a response to every question to the extreme frustration of the House committee. 

26:48

Directly after the congressional testimony, Martin Shkreli posted to Twitter quote “Hard to accept that these imbeciles represent the people in our government.”

26:58

This smug behavior from the young Pharmaceutical exec combined with the media attention around the suffering patients paying hundreds of thousands of dollars per more per year for their life preserving drugs due to his actions, lead to Martin being labeled as the "'Pharma Bro'  and the "most hated man in America" in the media.

27:17

It was also around this time that Martin Shkreli would anger a lot of Wu Tang Clan fans. Martin won an auction for the never heard, never released Wu-Tang Clan album titled Once Upon a Time in Shaolin after the single existing copy of the album was sold through Paddle8 auction house on November 24, 2015, for $2 million US dollars. 

27:41

That annoyed Wu Tang Clan fans, but what Martin did next enraged them. On October 2016, Martin claimed on his Twitter account that he would release the entire album for free download if Donald Trump won the 2016 US presidential election. He also stated he would destroy the album if Hillary Clinton won. Martin Shkrelli did the album intro and one track, the day after Trump became the president-elect.

28:19

While waiting for his criminal prosecution, civil penalties were rolling in.

28:24

In December 2016, the New York State Department of Taxation and Finance issued a tax warrant for $1.26 million for unpaid taxes owed by Martin Shkreli. After Martin made partial payments, the state recouped another $134,500 by seizing and auctioning off an Enigma machine for $65,000, a manuscript signed by Isaac Newton, a letter from Charles Darwin.

28:50

The Securities and Exchange Commission announced that Martin Shkreli had agreed to an order that would bar him from the securities industry. This agreement was to settle a pending SEC administrative action against him. Martin Shkreli is eligible to apply for readmission to the industry subject to applicable laws and regulations governing the process, but I have a feeling his application might get lost.

29:12

Due to his notoriety and overwhelmingly negative public opinion, it was difficult to select an unbiased jury, with potential jurors stating "I'm aware of the defendant and I hate him", "he kind of looks like a dick", and "he disrespected the Wu Tang Clan".

29:33

At his 2017 trial, Shkreli argued that none of his investors actually lost money (some actually turned a profit) and thus his actions did not constitute a crime. Shkreli's frequently criticized the federal prosecutors on his Facebook streaming video feed and in the hallways of the courthouse. 

29:53

In response, those prosecutors requested the judge issue a gag order to prevent what they called a "campaign of disruption." The judge ordered Martin Shkreli not to speak with reporters at all during the trial.

30:07

On August 4, 2017, the trial jury found Shkreli guilty on two counts of securities fraud and one count of conspiracy to commit securities fraud, and not guilty on five other counts. Later, he would receive a 7 year sentence and would be instructed to hand back more than $7.3 million in assets. Shkreli said he was delighted with the outcome and described his prosecution as "a witch hunt of epic proportions."

30:35

In September of 2017, Martin Shkreli's bail was revoked following a Facebook post offering $5,000 for a strand of Hillary Clinton's hair. The judge perceived this solicitation as an assault, which is not protected under the First Amendment. The reason this was perceived is a threat is thanks to his earlier Facebook posts prior to the hair request, suggesting Martin might have plans to clone Hillary Clinton. Just when you thought things couldn't get weirder. 

31:10

Martin said everyone should chill, his post was satire. His lawyer, in the understatement of the year, described the post as tasteless but not a threat. And, in what seems to indicate Martin Shkreli thinks people don't know how the internet and social media works, he much later edited the post to add a disclaimer that it was satire, and said the disclaimer had been there all along. When that didn't work, Shkreli later apologized for the post.

31:34

Back to the Wu Tang Clan part of this podcast. You might be wondering why this album has never been publicly heard or released, and how it came to go up on auction. Wu-Tang Clan began working on Once Upon a Time in Shaolin in the late 2000s; they worked on the album for 6 years, it was mostly recorded in Morocco. It also surprisingly features Cher twice. 

31:57

Once Upon a Time in Shaolin was made when streaming music piracy was on the rise. The band wanted to make a statement against this, so they treated the album a bit like an art project in an attempt to exemplify the value of the album. Yeah, it was kinda as cheesy as it sounds. 

32:13

A quote from Wu-Tang Clan's website at the time of the album creation states, "The music industry is in crisis. The intrinsic value of music has been reduced to zero. Contemporary art is worth millions by virtue of its exclusivity ... By adopting a 400 year old Renaissance-style approach to music, offering it as a commissioned commodity and allowing it to take a similar trajectory from creation to exhibition to sale ... we hope to inspire and intensify urgent debates about the future of music."

32:48

To that end, the album was held in a silver jewel-encrusted box. The box was sealed with a wax Wu-Tang Clan seal and contained leather-bound liner notes. In March 2015, Wu-Tang Clan exhibited the album for the only time, to a crowd of about 150 art collectors, dealers, and critics in Queens, New York for 13 minutes. The album was then put on sale on the Auction site Paddle8 which has sold many other high value art pieces. So, where is the album now?

33:23

In September 2017, Martin Shkreli attempted to sell Once Upon a Time in Shaolin on auction site  eBay; the winning bid surpassed $1 million. Unfortunately for him, Martin Shkreli was incarcerated on unrelated fraud counts before the sale could be completed. In March 2018, a federal court seized assets belonging to Martin worth $7.36 million, including Once Upon a Time in Shaolin. So, the US government owns the piece of musical art and it is not known if it will ever reach the public.

33:57

Shkreli made a request for compassionate release on April 22, 2020. In his request he said he should be allowed to live at his new fiance's apartment. Martin Shkreli claimed his company needed him to develop a remedy for the Covid 19 virus. The Judge declined the request, stating this was yet another instance of "delusional self-aggrandizing behavior".

34:19

So, what is to be done about short sellers and pharmaceutical companies, and probably plenty of other industries, manipulating the market for their short term capital gains at the long term cost of all of us? While this story often focused on the particular drug increasing in price, and the impact to the direct population that takes that drug, have no mistake. The extreme, artificial boost in these drug costs impacts us all. 

34:50

Medical insurance is a shared risk, shared cost approach at paying for health costs in which we participate in the employment sector in the United States. When healthcare companies year after year raise drug or device prices which have no alternatives and therefore no competition, this impacts all of our insurance costs and premiums, and many of us pay these premiums through a pooled insurance work scheme. 

35:13

The more people in your company who's costs rise, overall, all our costs rise. This also can make some workers fear for their job; if their coworkers or management find out, perhaps they will fire them to save money for the overall company and employees because their prescription is the expensive one. These company and market manipulations across healthcare have been a big driver of the increasing medical costs around the world, but most noticeably significant in the United States market.

35:45

One obvious solution to this industry challenge is price controls. This is practiced in a number of countries, to a varying degree of success. However, this is also one of the United States' pharmaceutical industry’s greatest fears; to be avoided at all costs given the impact to their bottom lines. To this end, big pharma funds one of the biggest, in size of monetary spending, lobbyist groups in Washington DC to protect against any cost regulation policies.

36:14

The blatant lack of morality, the willingness to put lives and financial stability for common people at risk, for corporate and personal gain throughout this story is nauseating. How we fix that problem is an age old question for which I'm not sure when we'll have an adequate answer.

36:35

Thank you for listening to this episode of Controversial Figures. Just a reminder, please like, subscribe, and leave a rating and comment for Controversial Figures in your favorite podcast app. We have a Twitter page now @FiguresPodcast - so please follow us, give us recommendations of Controversial Figures you'd like to hear.

36:54

This podcast is an independent podcast created by Tammy Hawkins. This is funded by those that donate, so please join Patreon and give what you can - once I hit 50 Patreon subscribers, I'll send out swag to all donators! And I'll give shout outs during the show to anyone that's donated along the way. Research references are available in the show notes as are musical references. Thank you so much for listening, thank you so much for your support - be well.