Last Friday, Martin Shkreli, the infamous "pharma bro" and perhaps the most hated CEO in America, was convicted in court on three counts of fraud.
Nobody denies that Shkreli engaged in fraud-like behavior: He told investors in two hedge funds he controlled that the hedge funds were flush with cash, when in reality, he had lost almost all of their money on a bad stock bet.
And yet, this condemnation is an outrage. Why? Because Martin Shkreli is nothing less than an American hero.
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Let's get one thing out of the way first: Shkreli has not always acted in a way that was dignified, smart, or wise. He often exhibits the characteristics of a spoiled brat. But this is America, where being distasteful is not (yet) a crime.
Shkreli is perhaps most famous for his behavior regarding a drug called Daraprim, which is used to treat a number of things, most notably an obscure infection called toxoplasmosis. Shkreli bought the rights to the drug, and promptly jacked up the price. At a time when many blame rising health-care costs, and the general unfairness of the economic system, on corporate greed, this move, on top of Shkreli's generally fratty behavior, made him a perfect scapegoat. Outrage ensued.
Lost in the Sturm and Drang of all that anger was any context for what Shkreli actually did. As he himself went blue in the face pointing out, those increased prices were to be paid out by insurers and other middlemen, not patients. He even promised to personally pay for the drugs of any patient who had to pay them out.
But casting all that aside, the truth is that what Shkreli did was good. Daraprim is what's called a "specialty drug," used to treat diseases that affect a very small number of people. These diseases are known appropriately as "orphan diseases," because they affect such a small number of people, and there is too little research done on them.
Shkreli wasn't jacking up Daraprim to fly off to Cabo with the profits. He quit the hedge fund world to start a pharmaceutical company with a definite business plan: to buy undervalued drugs, increase their prices, and use those profits to fund research into orphan diseases, and he hired a research team for that purpose. This was a great business plan: With large pharmas focused on producing so-called "blockbuster" drugs, focusing on niche products is a genius way to compete with the big guys.
It was a good business plan, but more importantly, it would have been great for the world. The best way for orphan diseases to be less orphaned is to make drugs and remedies high-margin so that pharmaceutical companies have a profit motive to research them. Otherwise they're going to remain orphaned. In the real world, while government-funded research is useful in coming up with insights, you need a for-profit pharmaceutical industry to turn that basic research into viable drugs, which means that there must be a profit motive. And this doesn't mean that patients have to suffer: Even though drugs would cost a lot individually, they would still represent a small absolute cost for insurers, who would be able to eat it. Everybody wins, especially patients.
But nobody cared about any of that. Shkreli jacked up the price of Daraprim, and he acted like a jerk on social media, and so he must be made to suffer.
This is what makes Shkreli an American hero. Here is a man born of immigrants, whose father was a janitor, who became a self-taught scientist, and intended to get fabulously rich by building a better mousetrap. Isn't that the most quintessentially American thing? Shouldn't we want America to have 10,000 Shkrelis, rather than put the one we have in jail? Today, the only profitable sectors left in the American economy are basically social media apps, financial engineering, and reality TV. Maybe jailing people who quit the hedge fund world to find life-saving drugs isn't the best idea?
Which brings me to the next stage of this drama. The fraud for which Shkreli has been sentenced has both nothing to do with the Daraprim story and everything to do with it. It concerns unrelated events, which happened before the whole Daraprim saga. But, of course, the trial wouldn't have happened if it hadn't been for the Daraprim saga.
Shkreli did technically commit fraud — he lied to his investors about how much of their money he still had. But that's not why he was sentenced by a jury. He was sentenced because a prosecutor smelled good publicity in harassing him, and we live in a system where a sufficiently determined prosecutor will find something to hold against you. Shkreli wouldn't have been prosecuted otherwise, because no one was hurt by his crime: He lost his investors' money but then eventually made it back and then some. All of those investors testified at trial that they didn't feel gouged by Shkreli at all. So really, he was prosecuted for being distasteful and for being the target of a media and social media mob. Perhaps he was an inviting target, but that still is not a crime.
The right to be a weirdo, even a distasteful weirdo, and even an offensive weirdo, should be protected. I tend to think there is a good chance that Martin Shkreli could have been the Mark Zuckerberg of biotech — another slightly awkward, slightly-savantish, highly ambitious young man with tremendous ideas but poor social graces and a big ego. But even if he's just a self-important jerk, nothing he did in his business career ever hurt anyone — not his hedge fund fraud and not his purchase of Daraprim.
Two of our current obsessions are diversity and the prospect of a shrinking horizon of economic opportunity in what's been called the great stagnation. If we are to leave the great stagnation, it will be because some people will invent new technologies, new business models, and new ways of doing things. And those innovators will, almost by definition, be weirdos, since they'll be the kind of people who have ideas most people don't (or, at least, don't have the courage to pursue). We believe in diversity when it comes to skin color or sexual orientation, and this is good, but we don't believe in it when it comes to being just plain weird, or having counter-intuitive ideas. If an innovative idea didn't seem crazy to most people, someone would already have done it and it wouldn't be innovative. To Make America Great Again, we have to Make America Weird Again, and the Shkreli case shows that, unfortunately, we have moved far from that goal.
