What is the difference between Marlin Shkreli and Bruce Rauner? One is in jail.


They want you to think that the drug bad boy, Marlin Shkreli, is a one-off.

But tell me this. What is the difference between what Shkreli did in boosting the cost of an AIDs drug to an obscene amount and what our Governor did when he ran GTCR?

In October of 2014  Doug Ibendahl reported on the Rauner deal.

It’s certainly true that during Rauner’s chairmanship of GTCR, the private equity firm acquired Ovation in 2002. GTCR sold Ovation in March of 2009 for $900 million to Denmark-based H. Lundbeck A/S. GTCR didn’t disclose how much it made in the deal, but it’s probably safe to assume it was a lot. We do know that GTCR’s original equity commitment was $150 million.

 Ovation certainly had a substantial number of employees when Rauner and his GTCR chums controlled the company, so my Facebook friend’s question is a reasonable one.

 But there’s a simple reason why Rauner didn’t mention Ovation last night – and never will.

 Rauner is never going to brag about his spoils derived from Ovation because in 2008 the Federal Trade Commission took the company to federal court, accusing it of price gouging and violating antitrust laws.

 According to the FTC, Ovation acquired control of the only two drugs used to treat heart defects in premature babies. The company then raised the cost of treatment nearly 1,300 percent. (The Star Tribunereported in 2008 that Ovation also bought three other children’s drugs and raised their prices by 864 to 3,437 percent.)

 Ovation acquired the rights to a drug developed by Merck & Co. called Indocin I.V. Ovation then acquired the drug NeoProfen from Abbott Laboratories about a year later in 2006. The FTC asserted the NeoProfen acquisition was unlawful because Ovation knew it was getting the only competitor to its Indocin I.V. drug.

 The FTC detailed how Ovation quickly raised the price of Indocin from $36 to nearly $500 a vial. The price of NeoProfen was similarly inflated by Ovation.

 The FTC brought its complaint in U.S. District Court for the District of Minnesota in 2008. The Minnesota Attorney General joined the FTC as a plaintiff in the lawsuit.

 Acting FTC Bureau of Competition Director David P. Wales issued this statement upon announcement of the legal action:

“While Ovation is profiting from its illegal acquisition, hospitals and ultimately consumers and American taxpayers are forced to pay millions of dollars a year more for these life-saving medications. The action taken today is intended to restore the lost competition and require Ovation to give up its unlawful profits.”

 The FTC went on to say:

“Indocin and NeoProfen are the only two pharmaceutical treatments sold in the U.S. for a condition known as patent ductus arteriosus, a disorder that primarily affects very low birth- weight premature infants. In babies with this condition, the blood vessel connecting two major arteries of the heart fails to close on its own soon after birth. Patent ductus arteriosus can be fatal if not treated. The only treatment other than drug therapy is surgery, which carries the risk of serious complications and costs far more than treatment with either Indocin or NeoProfen.”

 The FTC’s Commissioners approved filing of the federal complaint by a vote of 4-0.

Most devastating of all is this statement from Commissioner Jon Leibowitz (appointed by George W. Bush) who wrote separately:

“Ovation’s profiteering on the backs of critically ill premature babies is not only immoral, it is illegal. Ovation’s behavior is a stark reminder of why America desperately needs health care reform and why vigorous antitrust enforcement is as relevant today as it was when the agency was created almost one hundred years ago in 1914.”

What is the difference between Rauner and Shkreli?

One of them is Governor of Illinois.

10 Replies to “What is the difference between Marlin Shkreli and Bruce Rauner? One is in jail.”

  1. Fred,
    There is something inherently wrong with the economic system that allows that kind of pricing to exist over a period of time, unless of course it was under priced before.
    Its the health care sysytem and guess who has thier fat paws in it elbow deep.

  2. Fred, pretty slim comparison.

    Shkreli was/is the CEO of the company, had absolute control over the company.
    Rauner was a partner in the private equity firm that owned Ovation, he id not have daily control of the company. GTCR invested in HUNDREDS of companies on behalf of investors such as public employee pension funds.

    It seems as though this Shkreli character is scum, but there is more to his story and Rauners as well.

    While pharma companies do rake in billions, most people don’t understand how a drug is brought to market and how it is financed. It takes over 10 years to bring a drug to market. Millions of dollars are spent in research, testing, and FDA approval process. 90% of those dollars are spent before the drug is brought to market, without a gaurantee that: 1. the drug will work, and 2. the FDA will allow it to be sold. Therefore when we pay for a drug, we don’t only pay for the manufacture of the drug (smallest cost in the process), we are paying for the years of research and approval process of that drug, the cost of money that was spent upfront, and the risk costs of that money being spent.

    Doug Ibendahl wrote about the GTCR acquisition of Ovation during a heated political campaign, and it is important to understand that context. Ibendahl was the former attorney for the Illinois Republican Party – former, as in he was let go. And for whatever reason he railed on Rauner during the entire campaign. When acquiring a company, and especially a pharma company, you also acquire the debt of that company. While the increase in the cost of the drug and the eventual spinoff of the company makes it sound like GTCR (not Rauner personally) made a killing, the profit or loss was never reported. The debt GTCR purchased was never reported. The lawsuit was not over the price of a drug, it was over anti trust laws, and GTCR prevailed. Having a your day in court is a cornerstone to American society wouldn’t you say?

    The price gouging by the rat Shkreli also should have some context. This drug is not actually an AIDS drug, although it is use in combinations with other drugs to treat certain infections. It was developed 60 years ago primarily for treatment of malaria. The drug is hardly used in relation to other common drugs. In fact, in Canada they actually make it at hospitals if needed, or if some other same acting drug is not available – which there are many. In Europe the drug is sold for 10 cents a tablet, and sometimes less. But of course in Europe they don’t have the overreaching FDA to contend with so they are able to bring drugs to market much cheaper than in the US. This is not defending Shkreli, but there is more to the story than the media is hyping.

    And certainly there is quite a difference between Shkreli and Rauner. One simply would have to “just look at the data” and then post about it.

    1. Bullshit. Read the story in the NY Times this weekend. Shkreli is small fry compared to Private equity guys like Rauner and Big Pharma. And apologists like you smear the truth tellers. Anonymously, of course.

  3. Shkreli was angered by criticism from Bernie Sanders, so he gave $2,700 to the Sanders Campaign to get a meeting w/him.
    The Sanders Campaign responded by giving the money to an AIDS foundation, & publicly denounced the little schnook.

  4. Google bust up of a company by private equity and then be disturbed that our pension funds are financing these criminals and since they are criminals they turn and try to steal all our pension money….and in our case the whole state

  5. Just to be clear: Martin Shkreli hasn’t been charged for overpricing a pill. There doesn’t seem to be anything illegal about that. He was misusing (and incorrectly reporting) funds from another company that he was running.

      1. Well, it’s not really a distinction about the accused, rather a clarification of the charge leveled by the government. The law tends to be awfully specific in these United States.

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