海角大神

Martin Shkreli, the former hedge-fund manager turned pharmaceutical CEO who was arrested last week, has been described as a sociopath and worse.

In reality, he鈥檚 a brasher and larger version of what others in finance and corporate suites do all the time.

Federal prosecutors are charging him with conning wealthy investors.

Lying to investors is illegal, of course, but it鈥檚 perfectly normal to use hype to lure rich investors into hedge funds. And the line between the two isn鈥檛 always distinct. 聽

Hedge funds are lightly regulated on the assumption that investors are sophisticated and can take care of themselves.

Perhaps聽prosecutors went after Shkreli because they couldn鈥檛 nail him for his escapades as a pharmaceutical executive, which were completely legal 鈥� although vile.

Shkreli took over a company with the rights to a 62-year-old drug used to treat聽toxoplasmosis, a devastating parasitic infection that can cause brain damage in babies and people withAIDS. He then promptly聽raised its price聽from $13.50 to $750 a pill.

When the media and politicians went after him, Shkreli was defiant,聽saying聽鈥渙ur shareholders expect us to make as much as money as possible.鈥� He said he wished he had raised the price even higher.

That was too much even for the Pharmaceutical Research and Manufacturers of America, Big Pharma鈥檚 trade group, which complained indignantly that Shkreli鈥檚 company was just an investment vehicle 鈥渕asquerading鈥� as a pharmaceutical company.

Maybe Big Pharma doesn鈥檛 want to admit most pharmaceutical companies have become investment vehicles. If they didn鈥檛 deliver for their investors they鈥檇 be taken over by 鈥渁ctivist鈥� investors and private-equity partners who would.

The hypocrisy is stunning. Just three years ago, Forbes Magazine聽praised聽Shkreli as one of its 鈥�30 under 30 in Finance鈥� who was 鈥渂attling billionaires and entrenched drug industry executives.鈥�

Last month, Shkreli got control of a company with rights to a cheap drug used for decades to treat聽Chagas鈥� disease聽in Latin America. His aim was to get the drug approved in the United States and charge tens of thousands of dollars for a course of treatment.

Investors who backed Shkreli in this venture did well. The company鈥檚 share price initially shot up from under $2 to more than $40.

While other pharmaceutical companies don鈥檛 raise their drug prices fiftyfold in one fell swoop, as did Shkreli, they would if they thought it would lead to fat profits.

Most have been increasing their prices more than聽10 percent聽a year 鈥� still far faster than inflation 鈥� on drugs used on common diseases like cancer, high cholesterol, and diabetes.

This has imposed a far bigger burden on health spending than Shkreli鈥檚 escapades, making it much harder for Americans to pay for drugs they need. Even if they鈥檙e insured, most people are paying out big sums in co-payments and deductibles.

Not to mention the impact on private insurers, Medicare, state Medicaid, prisons and the Veterans Health Administration.

And the prices of new drugs are sky-high. Pfizer鈥檚 new one to treat advanced breast cancer costs $9,850 a month.

According to an聽analysis聽by the Wall Street Journal, that price isn鈥檛 based on manufacturing or research costs.

Instead, Pfizer set the price as high as possible without pushing doctors and insurers toward alternative drugs.

But don鈥檛 all profit-maximizing firms set prices as high as they can without pushing customers toward alternatives?

Unlike most other countries, the United States doesn鈥檛 control drug prices. It leaves pricing up to the market.

Which enables drug companies to charge as much as the market will bear.

So what, exactly, did Martin Shkreli do wrong, by the standards of today鈥檚 capitalism?

He played the same game many others are playing on Wall Street and in corporate suites. He was just more audacious about it.

It鈥檚 easy to go after bad guys, much harder to go after bad systems.

Hedge fund managers, for example, make big gains from trading on insider information. That robs small investors who aren鈥檛 privy to the information.

But it鈥檚 not illegal unless a trader knows the leaker was compensated 鈥� a looser standard than in any other advanced country.

Meanwhile, the pharmaceutical industry is making a fortune off average Americans, who are paying more for the drugs they need than the citizens of any other advanced country.

That鈥檚 largely because Big Pharma has wielded its political influence to avoid cost controls, to ban Medicare from using its bargaining clout to negotiate lower prices, and to allow drug companies to pay the makers of generic drugs to delay their cheaper versions.

Shkreli may be a rotten apple. But hedge funds and the pharmaceutical industry are two rotten systems that are costing Americans a bundle.

This article first appeared at Robert Reich.