Martin Shkreli Case Summary
Often called one of the most hated man in America, Martin Shkreli is an American businessman and investor who was CEO of Turing Pharmaceuticals. What led him to receive this label was his decision to increase the price of the drug Daraprim from $13.50 a tablet to $750 overnight. Daraprim is a drug that is used to treat a parasitic disease called toxoplasmosis that afflicts patients with HIV, AIDS, and cancer. Shkreli claims that the current version of the drug is harmful and so he believes that new versions of the drug needs to be developed with the profits made from the current version of Daraprim. In reality, he spiked the price to increase revenue to show to his investors that his company is profitable. “My investors expect me to maximize
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profits” says Shkreli in an interview (Mclean). While he claimed that his decision was based on good motives to help the medical industry for the better by using those profits to invest in research and development to find cures to rare diseases, ultimately, he was price gouging Daraprim to benefit himself, his stakeholders, and the employees in his company.
We do not agree with Shkreli’s decision to increase the price of Daraprim overnight as well as the choices he made with spending the profits generated from the drug. Our recommendation is that Shkreli should have listened to his partner's suggestion to incrementally increase the price throughout the year so he could have avoided the scrutiny from the media while showing consideration and sensitivity towards the patients who need Daraprim. Shkreli’s insensitive approach to his decision-making was lacking consideration to patients who are actually in need of the drug. As a result, he is now labeled as a villain. In this paper we will discuss how his personality, leadership style, and decision making brought him to be perceived today as the poster child for capitalistic greed and how he fell over to the dark side of characteristic …show more content…
leadership.
Martin Shkreli is focused on generating a large profit without regards to ethical implications.
He displays a lack of remorse for the negative consequences his decision had on patients who are in need of Daraprim. When asked by the U.S. Congress what he thinks about the situation where a woman who is in dire need of Daraprim and cannot afford it, thus may die due to her inability to obtain the drug, he replies with “no comment.” He has a tendency to be arrogant, and has a grandiose sense of self-importance. In a retort against an interviewer as to why he raised the price overnight, he said: “It's a great business decision that also benefits all of our stakeholders, I don't expect the likes of you to process that” (Carroll). When asked what he would do if he had a chance to do things over, after knowing the negative impacts his decision has on patients, he says that he “probably would have raised the price higher” (Rockoff). These traits exemplify the characteristics of the Dark Triad: machiavellianism, narcissism, and psychopathy. Having these traits directly reflects his leadership abilities. Shkreli appears to possess most of the traits of a charismatic leader, but unfortunately for him, he has entered the “dark side” of a charismatic leader as he is labeled a villain for this decision. He does not act in the best interest of his organization as he does not seem to care if his company is in a negative spotlight. Nor does he care about the patients who fall victim to the
new price of the drug. He can be considered charismatic but also corrupt. By being charismatic, but corrupt, he allowed his personal goals to override the organization's vision. The execution of his decision caused him to lose followers and respect from his peers because it lacks consideration of the patients being affected and hospitals that need to stock the drug. Ultimately, his decision to spike the price overnight has negatively impacted his business as well as the healthcare industry which caused him to lose credibility as a leader (Crow).
Shkreli’s personal perception of his decision is based on the context in which profit and trust of stakeholders is immensely prioritized. His perception does not consider the consequences inflicted on the patients and hospitals who now struggle obtaining the drug for treatment. Using the attribution theory, we can assume that his decision was internally caused because it is in his own interest to maximize profits for the benefit of his stakeholders. Internally, Shkreli should be considerate or at least sensitive to the personal behavioral control he has over this situation in terms of the effect it has on patients and hospitals. As being someone in his position, he has the ability to afflict good to patients directly affected by drug prices, yet he chooses to disregard their feelings. This kind of behavior is not the first to emerge from Shkreli. His decision does not appear to be distinctive from other cases. In previous situations, when Shkreli was CEO of Retrophin, his goal was also to maximize profits by jacking up drug prices. It was his initial idea to purchase two drugs from Valeant Pharmaceuticals, Cuprimine and Syprine. His plan was to raise the prices of those drugs to earn a substantial amount of profit, however, the deal fell apart and Shkreli couldn’t make the profit he wanted off those medications (Crow). In this recent situation with Daraprim, Shkreli used the $98 million revenue brought in by Daraprim to approve $685,000 in raises for three executives and increase pay bonuses for his employees by 30%. Furthermore, Turing Pharmaceuticals threw a lavish party which incurred a total cost of roughly $300,000. At the end of all their general and administrative expenses, the company generated a first-year loss when Shkreli was supposed to incur a profit for the sake of his investors (Ramsey). This makes the ethical justifications behind the increase in price weaker. Being an internally caused decision, Shkreli had total personal control over his behavior and outcome of his decision. He had potential to be an influential, charismatic leader, however, due to his insensitive internally caused behavior he is perceived as a villain.
In addition, Shkreli used bounded rationality in his decision making process. Shkreli’s initial problem was that he wanted to generate a larger revenue and his solution was to increase the price of drugs that he acquired. He knew that Valeant Pharmaceuticals had succeeded in increasing profits when they spiked the price of Syprine. After acquiring the rights to Daraprim, Shkreli immediately spiked the price so that he can accomplish his goal. Because this solution met his criteria of generating a larger profit, he accepted it without considering the complexity of the consequence such as the impact on health-care and patients who cannot afford the new price, the loss of credibility of his company, and the loss of face for himself. His decision was also distorted by his narcissism through the escalation of commitment. His narcissism causes him to be achievement-oriented in his personal goals without regards to the repercussions it has on the medical industry. Since he wanted to prove to his stakeholders that his company is profitable, he sticks with his decision even though there is clear evidence that it is wrong. Shkreli perceives money and his ambition to be of higher importance than ethical standards, therefore, he is willing to engage in such behaviors (Pollack). In the past, as CEO of Retrophin, he promised his investors that his company was going to develop new drugs for rare diseases, however, the company started to buy existing drugs only to hike the prices on them. Essentially, he lied to his investors about having the intention to invest profit made from Daraprim into developing new drugs, which in turn caused him to lose a number of investors (McLean).
The medical industry, hospitals, and patients in need of Daraprim fell victim to Shkreli’s heartless decision. Strikingly, Shkreli fell victim as well, not to his own decision, but to certain biases that creeped into his judgements. He fell victim to overconfidence bias by being too confident in his own abilities to impress stakeholders, which kept him from planning how to avoid the problems that came up after the decision. Clearly, he did not foresee the impact of his decision on the medical industry, which resulted in investors losing faith in him and selling their stocks. As a result of his overconfidence bias, the only way to recuperate some of the investments he lost would be to reduce the price on Daraprim, however, he still refused to do so.
Even after having knowledge of the negative result concerning his decision, he proceeded to raise the price on Daraprim which did not align with anyone else's vision causing him to be labelled as a villain and poster child for capitalism greed.
Martin Shkreli was not the charismatic leader the medical industry needed. While he claimed to have good motives to use the profits to develop drugs for rare diseases, what he actually did was benefit himself and the employees in his company. His personality which exemplifies traits of the Dark Triad enabled him to go through the decision making process the way he did. Instead of listening to his partners or even considering the realistic end result, he decided to go with his personal interest, which was to increase revenue for his stockholders. He could have slowly increased the price on Daraprim and do what he claimed he would do, which was to use the profits to develop new drugs and appeal to people as a charismatic leader. Because he did not, and chose to use the profits for greed, he is labeled as a villain considered the poster child for capitalistic greed.
profits” says Shkreli in an interview (Mclean). While he claimed that his decision was based on good motives to help the medical industry for the better by using those profits to invest in research and development to find cures to rare diseases, ultimately, he was price gouging Daraprim to benefit himself, his stakeholders, and the employees in his company.
We do not agree with Shkreli’s decision to increase the price of Daraprim overnight as well as the choices he made with spending the profits generated from the drug. Our recommendation is that Shkreli should have listened to his partner's suggestion to incrementally increase the price throughout the year so he could have avoided the scrutiny from the media while showing consideration and sensitivity towards the patients who need Daraprim. Shkreli’s insensitive approach to his decision-making was lacking consideration to patients who are actually in need of the drug. As a result, he is now labeled as a villain. In this paper we will discuss how his personality, leadership style, and decision making brought him to be perceived today as the poster child for capitalistic greed and how he fell over to the dark side of characteristic …show more content…
leadership.
Martin Shkreli is focused on generating a large profit without regards to ethical implications.
He displays a lack of remorse for the negative consequences his decision had on patients who are in need of Daraprim. When asked by the U.S. Congress what he thinks about the situation where a woman who is in dire need of Daraprim and cannot afford it, thus may die due to her inability to obtain the drug, he replies with “no comment.” He has a tendency to be arrogant, and has a grandiose sense of self-importance. In a retort against an interviewer as to why he raised the price overnight, he said: “It's a great business decision that also benefits all of our stakeholders, I don't expect the likes of you to process that” (Carroll). When asked what he would do if he had a chance to do things over, after knowing the negative impacts his decision has on patients, he says that he “probably would have raised the price higher” (Rockoff). These traits exemplify the characteristics of the Dark Triad: machiavellianism, narcissism, and psychopathy. Having these traits directly reflects his leadership abilities. Shkreli appears to possess most of the traits of a charismatic leader, but unfortunately for him, he has entered the “dark side” of a charismatic leader as he is labeled a villain for this decision. He does not act in the best interest of his organization as he does not seem to care if his company is in a negative spotlight. Nor does he care about the patients who fall victim to the
new price of the drug. He can be considered charismatic but also corrupt. By being charismatic, but corrupt, he allowed his personal goals to override the organization's vision. The execution of his decision caused him to lose followers and respect from his peers because it lacks consideration of the patients being affected and hospitals that need to stock the drug. Ultimately, his decision to spike the price overnight has negatively impacted his business as well as the healthcare industry which caused him to lose credibility as a leader (Crow).
Shkreli’s personal perception of his decision is based on the context in which profit and trust of stakeholders is immensely prioritized. His perception does not consider the consequences inflicted on the patients and hospitals who now struggle obtaining the drug for treatment. Using the attribution theory, we can assume that his decision was internally caused because it is in his own interest to maximize profits for the benefit of his stakeholders. Internally, Shkreli should be considerate or at least sensitive to the personal behavioral control he has over this situation in terms of the effect it has on patients and hospitals. As being someone in his position, he has the ability to afflict good to patients directly affected by drug prices, yet he chooses to disregard their feelings. This kind of behavior is not the first to emerge from Shkreli. His decision does not appear to be distinctive from other cases. In previous situations, when Shkreli was CEO of Retrophin, his goal was also to maximize profits by jacking up drug prices. It was his initial idea to purchase two drugs from Valeant Pharmaceuticals, Cuprimine and Syprine. His plan was to raise the prices of those drugs to earn a substantial amount of profit, however, the deal fell apart and Shkreli couldn’t make the profit he wanted off those medications (Crow). In this recent situation with Daraprim, Shkreli used the $98 million revenue brought in by Daraprim to approve $685,000 in raises for three executives and increase pay bonuses for his employees by 30%. Furthermore, Turing Pharmaceuticals threw a lavish party which incurred a total cost of roughly $300,000. At the end of all their general and administrative expenses, the company generated a first-year loss when Shkreli was supposed to incur a profit for the sake of his investors (Ramsey). This makes the ethical justifications behind the increase in price weaker. Being an internally caused decision, Shkreli had total personal control over his behavior and outcome of his decision. He had potential to be an influential, charismatic leader, however, due to his insensitive internally caused behavior he is perceived as a villain.
In addition, Shkreli used bounded rationality in his decision making process. Shkreli’s initial problem was that he wanted to generate a larger revenue and his solution was to increase the price of drugs that he acquired. He knew that Valeant Pharmaceuticals had succeeded in increasing profits when they spiked the price of Syprine. After acquiring the rights to Daraprim, Shkreli immediately spiked the price so that he can accomplish his goal. Because this solution met his criteria of generating a larger profit, he accepted it without considering the complexity of the consequence such as the impact on health-care and patients who cannot afford the new price, the loss of credibility of his company, and the loss of face for himself. His decision was also distorted by his narcissism through the escalation of commitment. His narcissism causes him to be achievement-oriented in his personal goals without regards to the repercussions it has on the medical industry. Since he wanted to prove to his stakeholders that his company is profitable, he sticks with his decision even though there is clear evidence that it is wrong. Shkreli perceives money and his ambition to be of higher importance than ethical standards, therefore, he is willing to engage in such behaviors (Pollack). In the past, as CEO of Retrophin, he promised his investors that his company was going to develop new drugs for rare diseases, however, the company started to buy existing drugs only to hike the prices on them. Essentially, he lied to his investors about having the intention to invest profit made from Daraprim into developing new drugs, which in turn caused him to lose a number of investors (McLean).
The medical industry, hospitals, and patients in need of Daraprim fell victim to Shkreli’s heartless decision. Strikingly, Shkreli fell victim as well, not to his own decision, but to certain biases that creeped into his judgements. He fell victim to overconfidence bias by being too confident in his own abilities to impress stakeholders, which kept him from planning how to avoid the problems that came up after the decision. Clearly, he did not foresee the impact of his decision on the medical industry, which resulted in investors losing faith in him and selling their stocks. As a result of his overconfidence bias, the only way to recuperate some of the investments he lost would be to reduce the price on Daraprim, however, he still refused to do so.
Even after having knowledge of the negative result concerning his decision, he proceeded to raise the price on Daraprim which did not align with anyone else's vision causing him to be labelled as a villain and poster child for capitalism greed.
Martin Shkreli was not the charismatic leader the medical industry needed. While he claimed to have good motives to use the profits to develop drugs for rare diseases, what he actually did was benefit himself and the employees in his company. His personality which exemplifies traits of the Dark Triad enabled him to go through the decision making process the way he did. Instead of listening to his partners or even considering the realistic end result, he decided to go with his personal interest, which was to increase revenue for his stockholders. He could have slowly increased the price on Daraprim and do what he claimed he would do, which was to use the profits to develop new drugs and appeal to people as a charismatic leader. Because he did not, and chose to use the profits for greed, he is labeled as a villain considered the poster child for capitalistic greed.