WASHINGTON/NEW YORK – Infuriating members of Congress, a smirking Martin Shkreli took the Fifth at a Capitol Hill hearing Thursday when asked about his jacking up of drug prices, then promptly went on Twitter and insulted his questioners as “imbeciles.”
The brash, 32-year-old entrepreneur who has been vilified as the new face of pharmaceutical-industry greed was summoned by the House Oversight and Government Reform Committee, which is investigating soaring prices for critical medicines.
Four times, he intoned: “On the advice of counsel, I invoke my Fifth Amendment privilege against self-incrimination and respectfully decline to answer your question.”
Lawmakers erupted. Rep. Elijah Cummings of Maryland, the top Democrat on the committee, all but told Shkreli to wipe the smile off his face.
“I call this money blood money … coming out of the pockets of hardworking Americans,” he said as Shkreli sat through the lecture.
“I know you are smiling, but I am very serious, sir,” Cummings said. “I truly believe you can become a force of tremendous good. All I ask is that you reflect on it. No, I don’t ask, I beg that you reflect on it. ”
The former hedge fund manager with a frat-boy swagger has been reviled in recent months for buying Daraprim, the only approved drug for a rare and sometimes deadly parasitic infection, and unapologetically raising its price more than fiftyfold.
Shkreli is out on $5 million bail after being arrested in New York in December on securities-fraud charges unrelated to the price increase.
Shkreli, wearing a sport jacket and open-collar shirt, was dismissed less than an hour into the hearing, but not before chairman Rep. Jason Chaffetz, R-Utah, shouted down a request by Shkreli’s attorney to speak. Lawmakers instead took turns denouncing his conduct and attitude.
Minutes after he left — and even before the hearing had ended — Shkreli thumbed his nose at the committee.
“Hard to accept that these imbeciles represent the people in our government,” the former CEO of Turing Pharmaceuticals tweeted.
Shkreli’s attorney, Benjamin Brafman, later said in his defense: “He meant no disrespect, but in truth, statements made by some of the members of the committee were wrong, unfair and difficult to listen to without responding.”
Shkreli calls himself “the world’s most eligible bachelor” and “the most successful Albanian to ever walk the face of this Earth.” He strums his guitar on YouTube and paid a reported $2 million for the only known copy of an album by the Wu-Tang Clan.
After Shkreli’s departure, Turing’s chief commercial officer and the interim CEO of Canada’s largest drugmaker, Valeant Pharmaceuticals, received a bipartisan lashing from the lawmakers.
Internal documents released by the committee show that Valeant and Turing have made a practice of buying and then dramatically raising prices for low-cost drugs given to patients with life-threatening conditions such as heart disease, AIDS and cancer.
Chaffetz, an admitted “conservative guy” who accepts that companies need to make profits, said he was disgusted. And Rep. Carolyn Maloney, D-N.Y., told them: “This is a scandal, an absolute abuse of power, an abuse of the pharmaceutical industry.”
With Shkreli mum, it was up to Turing’s Nancy Retzlaff to defend the Daraprim price rise. She said the company invests in research and development, as well as programs that help patients afford drugs. Turing tries to strike the right balance between those needs and rewarding shareholders, Retzlaff testified.
“I don’t believe my company has done anything wrong,” she said.
As early as last May, Turing planned to turn Daraprim into a $200-million-a-year drug by dramatically increasing its price, according to documents obtained by the committee. Turing bought the 60-year-old drug in August for $55 million.
Shkreli said in an email to one contact: “We raised the price from $1,700 per bottle to $75,000. Should be a very handsome investment for all of us.”
As for Valeant, documents indicate the company believed it could repeatedly raise the prices of the lifesaving heart drugs Nitropress and Isuprel without repercussions because the medicines are administered by hospitals, which are less price-sensitive than consumers.
Shkreli, 32, sparked outrage last year among patients, medical societies and Democratic presidential front-runner Hillary Clinton after his company, Turing Pharmaceuticals, raised the price of 62-year-old Daraprim by more than 5,000 percent to $750 a pill.
The lifesaving medicine, used to treat a parasitic infection, once sold for $1 a pill.
At Thursday’s hearing, Shkreli repeatedly invoked the Fifth Amendment, which says no person shall be compelled in any criminal case “to be a witness against himself.”
Wearing a sport jacket and collared shirt rather than his usual T-shirt, he responded to questions by laughing, twirling a pencil and yawning.
Committee Chairman Jason Chaffetz, a Utah Republican, asked Shkreli what he would tell a single, pregnant woman with AIDS who needed Daraprim to survive, and whether he thought he had done anything wrong. Shkreli declined to answer.
“I intend to follow the advice of my counsel, not yours,” said Shkreli after South Carolina Republican Rep. Trey Gowdy suggested he could answer questions that were unrelated to pending fraud charges against him.
After the hearing, Shkreli’s lawyer, Benjamin Brafman, attributed his client’s behavior to “nervous energy.”
Later, though, Shkreli tweeted: “Hard to accept that these imbeciles represent the people in our government.”
U.S. Rep. Elijah Cummings, who learned about the tweet while Turing Chief Commercial Officer Nancy Retzlaff was testifying, pounded his fist on the dais. The Maryland Democrat then shouted about an internal Turing document in which a staffer joked about the price increase.
“You all spent all of your time strategizing about how to hide your price increase … and coming up with stupid jokes while other people were sitting there trying to figure out how they were (going) to survive,” Cummings said.
Shkreli was arrested in December and charged with running his investment funds and companies almost like a Ponzi scheme. He has pleaded not guilty to the fraud charges, which are not related to the pricing of Daraprim. He also stepped down from Turing and was fired from KaloBios Pharmaceuticals Inc .
Cummings pleaded with Shkreli to reconsider his views about drug pricing: “You can go down as the poster boy for greedy drug company executives, or you can change the system.”
At one point, Brafman asked to address the committee, but Chaffetz said no.
Shkreli was allowed to leave the hearing early after he repeated that he would not answer any questions.
Rep. John Mica, a Florida Republican, said he would consider asking fellow lawmakers to hold Shkreli in contempt for his behavior.
“I don’t think I’ve ever seen the committee treated with such contempt,” Mica said.
Brafman said Shkreli would have liked to discuss drug pricing but had no choice, given the criminal charges against him.
Also at the hearing, Valeant Pharmaceuticals interim CEO Howard Schiller put forward a conciliatory face, testifying that his company had changed its business and pricing tactics.
“Where we have made mistakes, we are listening and changing,” Schiller said during opening remarks. “In a number of cases, we have been too aggressive” about price increases.
Valeant shares rose more than 5 percent during the hearing.
Retzlaff testified that Turing acquired Daraprim because it was “priced far below its market value” and is committed to investing revenue into new treatments.
The Federal Trade Commission and the New York attorney general are investigating Turing for possible antitrust violations.