Pharma Boy Gets Lesson in Capitalism

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The media stirred people into a frenzy when it was learned that the young CEO of Turing Pharmaceuticals, Martin Shkreli, raised the price per pill from $13.50 to $750.00 (a 5000% price increase) for a drug formulation of Daraprim used to treat toxoplasmosis in AIDS patients.  The unfiltered greed and sheepish price increase explanation by Mr Shkreli was not fooling anyone.  On the one hand, this type of story highlights everything that is wrong with Capitalism, yet it is the core concepts of Capitalism that came in to save the day.

In basic Econ 101, that most high school and college kids learn about, when supply is down and demand is high, prices skyrocket.  However, within Econ 101, it is also learned that when prices rise, it signals to the marketplace for more participants to enter the market and drive competition.

By stepping back and letting Capitalism do its job and letting economic forces lead the way, another company, Impris Pharmaceuticals led by Mark Baum, was able to step-in and is now offering a similar Daraprim pill for $1 per pill.  Thus, Mr. Shkreli probably missed the second-half of his Econ class in college.

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