When Martin Shkreli jacked up prices for the critical drug, Daraprim by 5000%, democratic internet citizens took it upon themselves to serve justice and right the wrong that Shkreli had committed. The pill which once costed just $1, was being sold at a meager $13.50 before Shkreli acquired the firm. The price after was $750 a pill. Now Daraprim is the best treatment for an otherwise rare parasitic infection called toxoplasmosis which particularly affects those with AIDS .
Healthcare is an Inalienable Human Right – Profits vs. Ethics
No one can deny that AIDS has remained the single-most persistent disease to plague humanity, particularly on the African continent. I wouldn’t consider a high cost associated with a life-saving pharmaceutical drug such as Daraprim a controversy – just simple economics.
However, I am Canadian, and I firmly believe that healthcare should be free, especially life-saving drugs. If we could cure cancer, for example, we wouldn’t be worried about managing it, and we would even pay the price. But any capitalist knows that there is a point where ethics outweigh profit motives, simply human beings have something called empathy. Imagine all the work that non-profit organizations have been doing (see here on how to start a successful non-profit) using private donor money to build healthy societies going to waste because somewhere along the way, someone decided that health wasn’t an inalienable human right.
But there is no cure for most cancers (Cuba have a vaccine for lung cancer) and AIDS can only be prevented or managed, not cured. Successful businesses are those that have high morals, solid integrity, and unwavering ethical principles. It’s pretty evident that Martin Shkreli’s Turing Pharmaceuticals was guided by none of these values.
The Crisis Response
So when both the public and corporate spheres decried the price hike – including the Pharmaceutical
industry itself – I expected Martin Shkreli to (a) admit his misguided motives, (b) apologize, (c) promise that this would never happen again, (d) invest in corporate governance, and (e) use the opportunity and attention to turn his celebrity or company into a vocal advocate for healthcare (read: How Tylenol overturned a crisis).
I seriously doubt that Shkreli had a crisis communications team on retainer. The stakes with the
pharmaceutical industry are always high and requires not only responsiveness, but a proactive approach. A principled communications firm that specializes in crisis response would have seen the problem coming a mile away and taken control of the messaging.
Instead Shkreli played the scapegoat and came across as unempathetic – even disconnected from reality. The stakes were high; both the hazard to society due to the inaccessible price increase as well as the outrage that stemmed from it (hazard and outrage are both determinants of crisis).
The Shkreli Domino Falls
Shkreli became the most hated man of 2015. The pharmaceutical industry cried foul, distancing itself from him. There was a figurative vote of no-confidence and the stubborn domino that he was, Shkreli was about to fall, setting off a series of unfortunate events.
Despite committing to reducing the drug price, which didn’t happen, the “pharma bro” continued to defy public and industry. Four days ago, Shkreli was arrested on security fraud charges. The charges were completely unrelated to price gouging, but both Bloomberg and BBC give great insight into how he conducted business in a highly regulated industry.
“Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company,” Brooklyn U.S. Attorney Robert Capers said at a press conference. – Bloomberg
According to STAT, Peter Lamotte, Chief of Digital Engagement at Levick Public Relations claimed that he
had never seen so many people use the word online. The Twitterverse was gleeful – Christmas came early. The FBI’s New York office posted a tongue-in-cheek comment about not having a seizure warrant for the Wu Tang Clan album.
#Breaking no seizure warrant at the arrest of Martin Shkreli today, which means we didn't seize the Wu-Tang Clan album.
— FBI New York (@NewYorkFBI) December 17, 2015
New Yorker author, Andy Borrowitz shared in the celebrations by writing a satirical article titled, “Lawyer for Martin Shkreli Hikes Fees Five Thousand Percent.”
For his part, Martin Shkreli no longer had control of the message, which is unfortunate for him, considering he is vocal, outspoken, and sometimes brazen. But in a style that has become all too much of a signature, Shkreli claimed that the arrest was related to his drug price increase.
“What do you do when you have the attention of millions of people? It seemed to me like it would be fun to experiment with,” Mr. Shkreli said in the interview. He said he was arrested “because of a social experiment and teasing people over the Internet,” adding, “that seems like a real injustice.” – Rob Copeland, Wall Street Journal
First, the company that owns Daraprim, Turing Pharmaceuticals replaced him. That’s the first shoe. The other shoe dropped when he was fired from KaloBios, which to the best of my knowledge, hasn’t replaced him. Now neither company said he was fired. He either voluntarily stepped down or resigned. The messaging here isn’t in control of any of the three parties, however. It’s in control of the public and the public says, “You’re Fired.” Of course, there is no relation here to Mr. Trump.
The Remaining Dominos
I spoke earlier about how the pharmaceutical industry cried foul. But big pharma has been at the centre of
controversies and public outrage time and time again. This is why you need a high stakes firm such as Levick that can help broker trust and negotiate balance between profit and people. The best PR, I think, is one that leaves all stakeholders better off. In pharma, I think this is as much about accessibility to health care and government policy as it is about corporate interests.
“The arrest of Martin Shkreli gave pharmaceutical industry executives a golden opportunity to separate themselves from the “$750 pill guy” who has done so much damage to their image.
They might not want to celebrate too much.” – Rebecca Robins and David Nather
STAT News and Harvard T.H. Chan School of Public Health conducted a survey showing that “three quarters of Americans said brand-name drug prices had become unreasonable, and fewer than half said drug companies are doing a good job for their customers.”
In other words, people might temporarily be focusing on Martin Shkreli, but when they step back, they’re going to see other pharmaceutical companies as eggs of the same basket. Healthcare and medicine is inevitably coming to the forefront of public debate and with elections looming, this might be a great thing to tackle for Presidential candidates (see: Controversy over rising drug prices from Harvard T.H. Chan School of Public Health). In fact, according to the study conducted by T.H. Chan School, 69% of respondents favoured direct government intervention by Medicare negotiating prices directly with pharma for all prescription drugs. More than 50% favoured Medicare directly setting prices for all prescription drugs for seniors.
Apparently, Shkreli has a shoddy past when it comes to business. I’m surprised that the pharmaceutical companies that invest millions in trials didn’t think it was necessary to vet someone before letting them hold on to an executive position.
When Shkreli donated $2700 to Bernie Sander’s campaign, Bernie donated that money to an HIV clinic. Excuse the tongue-in-cheek comment, but I bet Shkreli was feeling the Bern when this happened. The lesson here is that you cannot make amends without being remorseful and apologizing. Bernie took the limelight.
SO ANGRY AT @BernieSanders I COULD PUNCH A WALL!!!!!!!!!!!!!!!!!!!!!!!1
— Martin Shkreli (@MartinShkreli) October 18, 2015
Without ethical principles and morals to guide business – and I believe balance is always possible – companies are going to suffer. No matter how powerful other management functions are, without a strong public affairs team that has buy-in at the decision-making table, it is only a matter of time before a small issue snowballs into a full-blown crisis.
Stakeholder engagement is critical. Despite being very active on social media, Shkreli wasn’t able to take control of the message because he was disconnected from the realities of the multiple internal and external stakeholders. Instead, the public took control of the message.
Have something to add? I would love to hear your thoughts on this as well as other lessons in PR.