The (Near) Perfect Capitalist

Sure Martin Shkreli is human scum. But as a capitalist, isn’t he doing what he is supposed to be doing? The goal is to make money. Anything getting in the way of that is irresponsible to that singular goal. So why shouldn’t he force people to die in order to make profit? After all, as I have blogged about here almost daily for over 4 years, capitalists force people to their deaths in order to profit every day. They do so in the chemical industry, in apparel, in steel, in oil, in coal, in timber, in agriculture, in industry after industry, sometimes in this country, more often outsourced or contracted factories overseas. We ignore this, largely because, unlikely pricey pills, it doesn’t affect us. Such unregulated capitalism is at the core of American mythology, if not Shkreli’s arrogance.

Really, Shkreli is an honest breath of fresh air. Now everyone has an opportunity to know how evil capitalism is at its core.

Of course, we don’t have to allow capitalism to control the medical system. But we do.

The story of Daraprim’s giant price increase is, more fundamentally, a story about America’s unique drug pricing policies. We are the only developed nation that lets drug makers set their own prices — maximizing profits the same way that sellers of chairs, mugs, shoes, or any other seller of manufactured goods would.

In Europe, Canada, and Australia, governments view the market for cures as essentially uncompetitive and set the price as part of a bureaucratic process — similar to how electricity or water are priced in regulated US utility markets.

Other countries do this for drugs and medical care — but not other products, like phones or cars — because of something fundamentally unique about medication: If consumers can’t afford the product they could have worse odds of living. In some cases, they face quite certain odds of dying. So most governments have decided that keeping these products affordable is a good reason to introduce more government regulation.

When drug companies set their American prices, they don’t focus on the price of making the pills. Instead, they look at what their competitors already charge for similar products — and try to land their price somewhere in that same range, regardless of production costs or how good the drug actually is. Since most drugs are already expensive, new drugs keep matching those prices.

And, if you’re a drug company that produces the best cure for a disease (as Turing does for toxoplasmosis), this makes a ton of sense: you have consumers whose life, quite literally, depends on buying your product. This is what Shkreli talked about, quite bluntly, in his Bloomberg interview.

“We know these days that modern pharmaceuticals and cancer drugs can cost $100,000 or more,” he said. “Daraprim is still underpriced compared to its peers.”

The real question at the heart of the Daraprim outrage isn’t why one pharmaceutical company decided to hike a drug price. The real question is why other companies aren’t taking advantage of the pick-your-price nature of American pharmaceutical policy — and whether they will ultimately follow in Turing’s steps.

The cure for this particular problem is of course socialized medicine and government price controls. But I’ll note again that people die all the time making phones and cars and clothing around the world for these same nations that have made the decision to regulate medicine. If Bangladeshi workers die making clothing, they don’t care much. But if their own consumers die because of high priced medicine, that’s worth state intervention. I agree on the latter obviously, but there’s a lot of hypocrisy from these nations, as well as the same divide we see in this country, where consumer-based activism can sometimes have fast results, but worker-based activism is ignored. If our vegetables have chemical residue on them, that can (and has) to a major consumer movement. But if to avoid this, as was the solution, new generation of pesticides were developed that worked hard and fast but also massively exposed workers, consumers couldn’t care less.

There is one thing that makes Shkreli a less than perfect capitalist. His own hubris brought attention to himself and created the rare public pressure that forces a price down. Had he raised the price slowly but consistently, he could have sacrificed some short-term profits in favor of longer-term success. So he is flawed. But it’s also almost refreshing to have someone so evil that they are willing to strip away all the concealment that allows us to escape the daily knowledge of the human costs of unregulated or poorly regulated capitalism, because he just doesn’t care what we think about it (until it starts costing him money). It’d be nice if we recognized that capitalists kill people every day and do something about it.