February 1, 2016
By Alex Keown, BioSpace.com Breaking News Staff
CHICAGO – Boneheaded moves that cause regret are not uncommon for people to make and even the brightest of corporate leadership is not immune from actions that may cause them to kick themselves later on. The Motley Fool outlined three of the biggest boneheaded moves, which includes bad behavior and release of too much information, by chief executive officers in the pharmaceutical industry over 2015.
Without a doubt pharmaceutical investor and CEO Martin Shkreli takes the cake as far as having the worst 2015. Shkreli began the year founding a new company, Turing Pharmaceuticals. In August, Turing acquired the toxoplasmosis drug Daraprim for $55 million and immediately increased the cost 5,000 percent, from $13.50 per pill to $750 per pill. Although he was decried for his actions, Shkreli could have weathered the criticism. However, his personal behavior and the way he responded to the criticism, particularly through his Twitter account, caused the relatively unknown Shkreli to become the most hated man in America. Shkreli picked fights with multiple politicians who raised concern over the high cost of medications, including U.S. Sen. and presidential candidate Bernie Sanders and Rep. Elijah Cummings, the highest ranking Democrat on the U.S. House of Representatives’ Committee on Oversight and Government Reform. In multiple interviews and on his Twitter feed, Shkreli has said the federal government does not understand how pharmaceutical pricing works.
In addition to his troubles with the pricing of Daraprim, Shkreli was sued by his former company Retrophin over his use of company funds while helming that company. In its lawsuit, Retrophin said Shkreli breached his duty of loyalty to the biopharmaceutical company and he engaged in self-dealing and also seeks disgorgement of money paid to him.
Shkreli closed out the year without a company. In December, Shkreli was indicted on seven counts of securities fraud and awaits trial. If found guilty, he could face 20 years in prison. He resigned from his position with Turing and KaloBios , a company he took over in the fall, terminated his role as CEO.
MannKind Corporation had a tumultuous year. In October, the company went through its third round of layoffs for the year and company have dropped nearly 70 percent this year. MannKind produces Afrezza, a rapid-acting inhaled form of insulin to treat diabetes. It was approved by the U.S. Food and Drug Administration (FDA) in 2014 and hit the market in the U.S. in a partnership with Sanofi in February 2015. Sales have been less than expected, some analysts suggesting the novelty of inhaling the insulin rather than injecting it is not worth the additional price. But the boneheaded mistake actually came from Sanofi, Motley Fool analyst Kristine Harjes said in her column. She said Sanofi, under the leadership of Chris Viehbacher, continued to throw money at the relationship, about $200 million, before current CEO Oliver Brandicourt finally withdrew Sanofi from the relationship when no profits seemed to be forthcoming.
Part of Afrezza’s sales problems were related to insurance reimbursement issues. The drug was classified as a Tier 3 medication, which meant patients had to pay a higher co-pay for the drug. The higher tier status also means more restrictions can be placed on the drug. Another issue with the drug is that it cannot be prescribed to patients with asthma and other serious lung ailments.
Michael Narachi, CEO of Orexigen , inadvertently cost his company about $200 million after widely sharing the results of an interim analysis of the company’s weight loss drug, Contrave. The early information showed incredibly positive results, however, that revelation compromised the trial, Harjes said. The FDA demanded a trial redo and Orexigen’s partner Takeda Pharmaceuticals handed the full costs of the redo, about $200 million, over to Orexigen. Data for the Contrave trial is now not expected until 2022, Harjes said.
