📜 Fraud, the Ever Present Story in Corporate Business (w/ Roddy Boyd)
BRIAN PRICE: Rod, you've been described as one of the most feared men on Wall Street, one of the most effective investigative reporters. But that being said, you earned that title given your ability to uncover fraud and wrongdoing within public and private companies. So what I want to do is just take a step back, learn a little bit about who you are, your education, your life, and how you got on this path to discovering what it is that you were put on this Earth to do. RODDY BOYD: Just to be called an investigative reporter is just what my life had been directed to do. I was born, you know, New York City suburbs, Northern Westchester. Pound Ridge, Bedford is where I was raised primarily. And moved to Connecticut when I was 18. I went to one of those kind of goofy boarding schools up there. And I kind of decided I wanted to get a little more urban and wound up in University in the Bronx. Mid '80s was an interesting time to be there, but it was good. I learned a lot. I met my wife there, which I view as my primary accomplishment there or primary benefit. BRIAN PRICE: Likewise. RODDY BOYD: Yeah. I came out of there with a degree in English. And looking back on it, I certainly love literature, but most of the time I was at Fordham, I was really focused on journalism. I used to cut a lot of classes just to go to the library, and you know, get into the microfiche or go back into the stacks for really old copies of, quite frankly, papers that aren't around anymore, like The New York Sun or I think one time, I was looking at The New York-- something-- Telegram. And I'd spend hours just reading. I found the original the muckrakers, like Ida Tarbell and stuff like that-- you know, what she did with Standard Oil and exposing the Rockefeller colossus. And I just, you know, it was brutal on my grade point average, but I really wasn't terribly interested by my junior year in Chaucer, or Milton, or Shakespeare. I was, however, very interested in understanding how life worked, how our government worked, how policy was made, how the economy worked. And I used to just spend hours, you know, covering council meetings or doing exposés around the campus and making no friends doing that. And I learned to develop a thick skin and I learned to do a lot of work. I understood that if you're going to say anything in public, you best had do your work beforehand. And doing work beforehand, I had learned-- I just sort of pieced this together-- was understanding fact sets, understanding rules, regulations, the interconnection between business and policy, or between finance and operations. And I took all of that, did some stringing or freelance work for the Greenwich Time for a while, but I got married very young and had a child pretty young. And I decided that, well, while working as a journalist for $13,000 or $14,000 a year in 1990 was a noble thing, you know, my wife and kid did have to eat. And there were more kids behind it as I worked. So I wound up on Wall Street for about seven or eight years and really disliked it. I disliked it intensely. And most everything I did was-- I used to just sort of mentally say, OK, well, this is one more day down till I can do what I want to do. And you know, I look back at one particular incident. I was a trader and I was on the phone with a large, I think, mutual fund-- or actually, an institutional investor in Boston. And this guy wanted to buy some convertible preferred securities that I was selling. And it was going to be a fairly good trade for us, but I was talking to the guy and I'm like, look, these are pieces of garbage. I don't think you're going to be well-suited to buy this. I've done some work on the company. Let me tell you what I think. And you know, there's just total silence on the other end. He's like, are you a trader trying to talk me out of a trade that-- and you know, he was just mad. I mean, you know, the guy told on me, as it were and I got in a lot of trouble. And that's what I just wasn't made for that life-- wasn't made for trading desk life. And I was able to, but I learned an intense amount about not only business, and finance, and trading, and valuation. So even though it was a rough proving ground, I certainly acquired a knowledge base that has served me remarkably well in later years. BRIAN PRICE: So let's jump to 2012. And you're part of the team that establishes the Southern Investigative Reporting Foundation, the mission of which is to have a goal of providing in-depth financial investigative reporting for the common good. So given your work, given the fact that you're a board member of this foundation, are you one of the loneliest guys in the world? RODDY BOYD: At times. I mean, at times. I have long since accepted that I'm not going to make a lot of friends doing this, that while people profess to appreciate it, they appreciate it in the abstract. Everybody says they love investigative reporters reporting, but they don't really love investigative reporters. And you don't make a ton of friends doing this. And you don't, by definition, have a ton of allies. So yeah, it is a lonely job, but I mean, I like it. I think it's important and it's what I'm made to do. It's what we need at this moment, quite frankly. BRIAN PRICE: Why do you say that? RODDY BOYD: Because there isn't really other people doing what I do. I should say there are plenty of great reporters out there. And some of them do find business journalism and some of them do it on the regular, but there isn't an organization out there dedicated 24/7 to exposing abuses, or misrepresentations, or quite frankly, just plain old naked fraud as their mission. And our mission is to do it for the common good. You know, we don't take advertisement. We don't short stocks. We don't tell people when the story is coming. We don't do any of that. And I think that's important in this day and age. BRIAN PRICE: With that, I want to start unpacking some of your most impactful work. And I want to start with Valeant and I want to start with The King's Gambit-- Valeant's Big Secret, which made a lot of waves when it came out. Walk me through your work leading up to what you suspected Valeant was up to. And ultimately, does it start with a hunch? Does it start with a gut instinct? What ultimately led to this discovery that really rocked Wall Street, and finance, and the entire world that Valeant was a part of? RODDY BOYD: That story is kind of the Southern Investigative Reporting Foundation's approach to journalism in a nutshell, in that through 2013, 2014, 2015, and most of 2015, Valeant was Wall Street's darling and corporate America's darling. And the investors it had attracted and the serious accolades it was generating were unusual. And I was attracted to it because there was this sort of Olympian battle going on. While it was being lauded, and making many people rich, and attracting star investors, on the other hand, there was a very loud, defined, and serious coterie of Valeant skeptics. People were doing a great deal of work-- highly credible people, in my estimation. I mean, most publicly would be Jim Chanos, the guy who runs Kynikos Investments-- Kynikos Partners, I believe-- and was quite public that this was a roll-up-- just a company that was using acquisition accounting to its benefit. Eventually, they would not be able to implement across-the-board absurd price increases. There was another short seller out there that was quite public, Fahmi Quadir. John Hampton had written about it extensively. So there were these people who are highly credible. BRIAN PRICE: And I want to just note, Fahmi was the protégé to Marc Cohodes. RODDY BOYD: Yeah, yeah. Well, she was at a place called Krensavage Capital Management, I believe. And so you have these highly credible people on both sides. And the journalism, quite frankly, was reflecting that. It was very obvious who was talking to who. And I don't view my job as just intermediating this fight or just noting that the fight's going on. I wanted to do a lot of work and find out what really is going on. And I took a step, I said, OK, I'm going to try and find something about Valeant that no one knows about. And this is like an absurd thing, right? You're looking for a needle in a stack of needles because everybody's combing over this. And 4:00 o'clock or at 3:00 o'clock in the morning, I'd woken up one time and couldn't get back to sleep. And I just started scrolling through a Cafepharma message board, which is this kind of pharma industry chat site where people gossip about their bonuses, or talk about what's selling, or this doctor or that manager is a jerk or a prince. And I found something on like page 14 of Valeant's message board-- you know, screen 14, so it shows you I'd been there a while-- and it was some guy was saying that he was going to get in trouble if he talked about Philidor. And he was being told, you know, telling all these doctors just to call Philidor and it will work out great for the patient. And he's like, uh, hey, guys, anybody know what Philidor is because they told me not to talk about it internally? So he's just throwing it out there, you know, hoping a rep from another district picks it up. And some guy replied a day later explaining roughly what he thought Philidor was, which was a fulfillment center, but it might be a specialty pharmacy. And there was this cryptic line in it and it's the reason this company is profitable, and in fact in business. And I was like, well, what's that mean? So I just-- you know, again, so it's 4:30 in the morning now. I crank open my 10-K and I'm like, this company really is benef-- I think Chanos and Hempton had the truth of it. This company is a roll-up and they're not being able to grow organically. So well, if you can't grow organically, the minute you stop buying big companies for more and more money, and piling on more and more debt, you're going to be in a great deal of trouble. Now that might be in 15 years, and, you know, the stock might be $970, and all the short sellers are bankrupt, but when that day comes, it'll be a reckoning that's going to be cruel. I was like, how is this company Philidor this crux of the company? So I started making calls and asking people across the industry who might have an idea what it was. The company wasn't talking about it. And it took me weeks. I mean, I'm talking weeks to get an informed sense of what it is. And I finally was able to start pulling documents on the company. They were registered in lots of different states, but you couldn't figure out who is on the board, who was the beneficial owner. There were hold cos on top, like one of those Russian nesting dolls. And so I was able to disaggregate that after weeks and months. And then I got really lucky just as I was about ready to throw my hands up in exasperation. Because you can't go out to the public, you know, when you're a nonprofit and say, hey, donate or support SIRF, and here's something that might be something, but it might not be anything. Here's what I know and here's what I don't know later. You know, like, that just doesn't happen. So I was able to find buried somewhere, a copy-- a video copy-- of a proceeding from the California Pharmacy Regulation Board or some such. And they were essentially rejecting the application of Philidor to have a specialty pharmacy in the state of California. Well, that's big news right there. And then it's also big news because California is, what, 10% of the American economy? So I got lucky there. I got to see a face and a name. And I actually got in my car and I went up there. And I saw the operation. I just figured this might be some storefront kind of like these things you see on side streets of New York City, like little cell phone stores that are like six foot by eight foot. Not so. This was a massive-- it was in a former, I think, paper mill. I mean, it's multiple 1,000 square feet, 600, 700 employees, and expanding. And you know, well, I was able to get on some glassdoor.com. And they're paying above market wages, so it tells you they're profitable. And I pieced all this together. And part of what I think makes SIRF, SIRF is we approach the company and I laid all this out-- you know, a very, long, detailed email and series of phone calls to Valeant's press operation-- a woman named Renee Soto at Sard Verbinnen, an outside PR company was. And they kept me going for about a week or two. I held off, I held off, and finally, I get an email from her saying, oh, you know, regarding your questions, just listen to the conference call on Monday. Well, I'm like, what? They're not reporting earnings. They're not-- what's going on? And I looked at they had moved up their conference call and this was going to be part of it. And I was astounded. I mean, this is companies don't do that. They schedule their calls, and then they don't move them up unless there's a damned good reason. And the only thing I could think of-- and might be totally self-referential and flattering-- was these series of questions I'm asking about Philidor. And I just put it out at 6:00 that morning, maybe 6:15, the morning of that conference call. I think it was October 15 or 16, 2015. And again, I just thought I had an interesting story. Hey, this might be additive to these, you know, Jim Chanos-- a rich guy-- throwing lightning bolts at Bill Ackman-- a richer guy-- you know, Harvard, Yale guys. I mean, this is just not my milieu. BRIAN PRICE: Fordham guy. RODDY BOYD: And I'm a Fordham guy. And so I just throw out that little thing. And I promptly, I think I went for either a run or did some push-ups, showered, shaved, and was making my kids lunch. I turn on my cell phone. Let's say it's 7:15 that morning. I have 19 messages, and then I have a message from my cell phone provider, Verizon, saying, you know, capacity full. You know, you need extra. You know, you need a new plan. I have texts from people I've never heard of. My email box is at like 44, 48 emails. And I'm getting these long, iambic pentameter practically, 1,500-word emails from people-- from serious investors, not kind of day trading margin monkeys. You know, these were serious blue-chip investors. I just said to my wife, what the hell is this? She's like, Roddy, it looks like you caught a fish here. And still, you know, the day is going on, and I'm doing my day, and trying to get through it. And the stock opens up and it's down a yard. I mean, it's down a lot of points. And I think within five or six hours, a guy named Andrew Left of Citron Research puts out a real flamer of a piece, like this is the next Enron or something. He had called me enraged that I had posted this. I've known him for years. And I just still wasn't grasping it, which again, speaks that I'm totally isolated. I'm in coastal North Carolina, not in this New York milieu plugged in. And at that point, my office was in my house. And she'd come upstairs like, you've got to come downstairs and see what's going on. I'm like, oh. I figured, oh, my god. What's happening? Something really bad. I go downstairs. She's got like Bloomberg News on and they're talking about SIRF. And they're talking about this conference call where the CEO Mike Pearson couldn't really answer the question. I mean, they had some absurd, you know, scripted nonanswer answer. And I think from then on in, I think SIRF was-- we were established. People saw that there was some utility here. BRIAN PRICE: Should Mike Pearson be in jail? RODDY BOYD: I think so. I mean, look, I'm not a federal prosecutor. In my mind's eye, I am, you best believe. But I am not a lawyer and I don't work for the Southern District, but I am convinced he knew exactly what Valeant was, he was keeping it from shareholders, from the investing public. I'm convinced there was a series of dishonest gambits involved in it. He should at least be civilly sanctioned through the SEC on disclosure violations. But I mean, I think some of this stuff is certainly criminal. And I don't believe that it stopped with just two guys. I mean, I just don't. And I don't know how he isn't in jail. He certainly shouldn't be free and affluent in suburban New Jersey. That's for damn sure. BRIAN PRICE: Well, and how about receiving-- what is it-- $83,000 a month after he initially steps down as CEO. He's a senior advisor, but he's still being paid. RODDY BOYD: Yeah, he's actually still working on transactions at that point, when I was able to-- I was talking to sources within Valeant who were like, you really won't believe who I spoke to today. And I'm like, oh, hey, you know, what? I'm figuring, oh, they talked to another reporter some because I had a good source and I figured this guy had been discovered. And he's like, no, it was Mike Pearson. You know, we were working on squaring away this Walgreen's deal or something. I was like, he what? Like how? Who? I mean, are you kidding me? I mean, and it just goes to show. I mean, this is one of the things that SIRF is trying desperately to do is stand in this gap between the financial media's economic trouble-- you know, this sort of the collapse of the media-- on one side, and then sort of regulatory inertia on the other. You know, Jesse Eisinger wrote a great book called The Chickenshit Club. And I'd recommend it to anybody, but he talks about the stunning lack of conviction among so many prosecutors and regulators these days to prosecute white collar fraud. So in that gap, we're going to stand. That's our sort of mission and I think that's for the common good. BRIAN PRICE: With that in mind, I want to also discuss some very important work you did with AIG in mind and the book you wrote, Fatal Risk-- A Cautionary Tale of AIG's Corporate Suicide. When we think about the events of '08, '09, and the crisis, do you look at that moment in history and where we're at now, and potentially observe people who haven't learned valuable lessons? Who's at fault, perhaps, for not operating in a responsible, safe way within the market, within the economy, within the US that has you most concerned right now? RODDY BOYD: Well, I mean AIG and companies like it are how we got here. I mean, I'm pretty convinced. I'm not trying to be partisan, but I'm pretty convinced you can't get Trump elected or you can't even get the candidacy to the point where he's in punching distance of the GOP nomination in 2016 if you didn't have a complete collapse of white collar prosecution in the years after the financial crisis. I mean, the fact that nobody went to jail, that nothing was broken up, that there were-- there were certainly at the margins, or I would argue respectfully, minor ways, some small regulatory shifts here. They're, of course, are being pared back now, but the fact that no one with a big name and a bigger paycheck got in trouble after that multi-year episode with the reams of evidence we had suggests that the fix is in-- that either our politicians weren't telling us just how bad it was, that if you break up, let's say, Citigroup, that it would have knock-on effects across the world, or if you kick out a recidivist, almost criminogenic entity like HSBC-- if you say, you can't do banking in the United States of America-- or RBS, which is just a little less horrid than HSBC, that it might bring down England, as it were, then I feel personally that should have been said to us in some form or another. It's just been left to us to fill in the gaps. Well, they did this and this, and they didn't do that and that. You can kind of read tea leaves and suppose that things were actually much worse than we thought in 2009, '10, and '11. But if that's the case, you've got to tell us. And I think a lot of Americans thought that something should have been done, someone should have been held to account. And the elites-- the people who essentially make the rules in Washington and Wall Street- - weren't terribly punished from that. I think that we're now reaping that whirlwind. Institutions that make me worry-- I mean, look, I'm not smart enough to be like Jonathan Tepper or these people who think on a macro basis, but I mean, I don't think a terrible amount has been improved post-2011 or '12. I just think we've inflated the system enough that things are, quite candidly, materially more stable, but we have less institutions that are just bigger. And yes, they're better capitalized and they're not lending abusively, or as abusively as they were. But I mean, I think there's-- you know, the answer to an overly-concentrated economic system in which commercial banks and investment banks were completely intertwined and huge to begin with, completely vertically integrated, was just to merge all these sick sisters together and hope that you get one healthy family member at the end of the battle. And well, that's what we have now. And I don't think that that was the right approach. So if you were to say to me, well, we get low rates again and it stimulates just tons of lending and speculative activity-- maybe not home based, maybe it's commercial real estate. I don't know. Maybe it's autos, boats-- you know, I could see stuff happening. | mean, I don't think crises necessarily repeat. They just have similar characteristics. So the junk bond collapse of '88, '89, that essentially put Drexel on its knees and was down for the count when the Fed fined him in '90. had similar characteristics to 2003 and '04 Orange County crises. You know, I mean, they all had similar characteristics, which is intense concentration of leverage and decreasing valuation in one or two entities are going to have knock-on effects among an increasingly concentrated sector. And you know, what the next trouble is? I don't know. Maybe China. Maybe China has its day of reckoning. I know there is a huge alignment of China shorts out there versus China bulls. I certainly don't have enough knowledge to weigh in, but God Almighty, they're leveraged. And we have all the exposure in the world to them. If anything happens, we're going to lose a lot of weight really quickly when we didn't want to be on a diet. So I mean, that's one thing. BRIAN PRICE: Well, that helps lead me to my next question. And I want to quote Josh Wolfe of Lux, who's also a-- RODDY BOYD: Oh, sure BRIAN PRICE: --friend of Real Vision, a frequent guest. We love having him on. And he tweeted out just the other day saying that, the tide is turning. When the tide is high, rates are low, cash runs out, fraud gets done. He then cites Theranos, the Fyre Festival, crypto hustlers, the admissions scandal that we're seeing play out right now. RODDY BOYD: Delicious. It's delicious, yeah. BRIAN PRICE: And he then asks, what or who is next? And so I want to pass that question to you. What or who is next? RODDY BOYD: If you put a gun to my head, I'd say if-- you know the old Warren Buffett adage, when the tide goes out, you get to see who's swimming naked? I think private equity operations are going to be the real loser in any let's see who's accurately and fairly valuing assets, let's see who has deployed capital rationally, let's see who has operated with reasonable levels of leverage. And I think private equity operations across the board fail that test. There obviously are-- I'm not trying to indict the concept of private equity in which you just take over entities and you can manage them better, buy entire businesses or discarded units. I mean, I think there is economic value to be had there within an economic system. What private equity is now though is so far from, I think, what Gibson Greetings and William Simon in '81-- it's preposterous that you see the transactions out there. You see how they just suck cash out of businesses. I'm not saying that they're all bad people. But I'm saying, within some very large private equity shops, I have been astounded at the poor management of the assets they have, the abusive behavior in terms of just not investing, and sucking cash out, and piling on debt. And I think, eventually, some big shops are going to get in trouble. My guess would be we're going to need an event to catalyze that, right? Now, I don't know what that is. I just have in my mind-- and I have been-- it's not good form for a reporter to talk a whole lot about what he or she is working on. But I certainly can say with confidence that I've been looking at more than a few kind of big name shops that are-- let's say, Apollo, you know? And you look at that place, and you're just like, god, look at the crap they're buying, you know? Just what are they doing? Now, I guess their limited partners love them. But you know, you look at, like, Blackstone. Like, how are these places even publicly traded? I mean, it's-- you're just like, my god, you know? They win. The people who manage those funds win. Their LPs, I guess, do OK. But jeez, the shareholders don't seem to be getting a whole hell of a lot of value. That's just one example. I mean, that's not a systemic problem. I think it's more. I also think, from a sort of a moral or ethical capitalism question, the way private equity conducts itself with that, we need to just get lean and firing employees, I do think that it's bad for the American economy in the long term to have actors like that, the Chainsaw Al Dunlaps and people. I don't think it grows enterprise value on a long-term basis. I think managers like Buffett, you know, not a perfect guy or example, but I think that example of if you're going to own a business, well, you bought it for a reason. Get people in there who you think can manage it and let them manage it as opposed to just buying something, butchering it so that its entire ability to grow, be a dynamic enterprise is essentially removed, but you can still harvest cash from it. I mean, I have great concerns about the long-term effects of private equity on the American economy. You know, Apollo just seems to buy garbage. And they manage to make it work through piling on debt and taking dividends. And I guess it all works for their limited partners. I think over time, though, you buy enough crap and it catches up to you. Now, it's been a while for Leon Black, and he's a billionaire. So I don't know if any of this matters. You know, I look at Blackstone and just say, god. I look at that stock, and I look at how they run that business, and I'm like, well, you can be pretty sure that maybe their LPs are doing OK. And the people who run the business there are certainly doing OK, Steve Schwarzman, et al. But you can't look at their investors and say you're doing too terribly well. And I just think it's an abusive business construct that-- You know, it all connects back to that Harvard Business School kind of mindset, shareholder value. It sounds wonderful. And it's agreeable to a point. But I don't think it's the best framework or methodology for growing value long term for investors, who are the risk takers, as well as other stakeholders. I mean, a well-run businesses is a beautiful thing. You know, it provides value. It provides jobs. Those in turn, you know, make our communities better to live. And I'm sounding like a parody of liberal leftist, isolated journalist. So I don't want to-- [LAUGHS] I'll end my rambling there. BRIAN PRICE: Well, it sounds like one of the most feared men on Wall Street just took a warning shot at Apollo and Blackstone. RODDY BOYD: Yeah, yeah, that's fair. Yeah. BRIAN PRICE: Well, promise me-- RODDY BOYD: Yeah, I hate those guys. [LAUGHS] BRIAN PRICE: Say that again. RODDY BOYD: I dislike those people intensely. BRIAN PRICE: Promise me as your work progresses, you'll come back and talk to me about it. RODDY BOYD: Absolutely, absolutely. BRIAN PRICE: Let's move on. RODDY BOYD: Sure. BRIAN PRICE: Let's look at health care. RODDY BOYD: Yeah. BRIAN PRICE: I want to talk about a recent post on your website. And you spoke to the health care crisis in this country citing price gouging, abusive loopholes, hidden risks to patients, baffling regulatory decisions, marginal efficacies, and the use of doctor payments to stimulate drug sales. Ultimately, how do you see all these factors coming together to destroy lives? But more importantly, how do we fix them? How do we address this crisis? RODDY BOYD: I mean, this is the classic dilemma of the American relationship to business. You know, business works well when you have clear and defined guardrails. Like all games, all contests, if there is-- you know, look at an NFL game. You know, it would be appalling to watch without rules and regulations. It'd just be a big bar fight with a leather football being tossed around at the margins. And I think business is kind of the same way. There has to be really bright line regulations. It has to be enforced clearly, fairly, and rapidly. And none of this works. None of this works at all because we allow lobbyists and businesses to carve out exemptions, and loopholes, and all sorts of riders and attachments to rules. And it makes the-- The American health care experience for the taxpayer, for the average citizen is just concentric levels of horror. Yeah, and there's no way out. You can go insured. You can go uninsured. Either way, it just gets-- one's more expensive. The other just ties you up in, you know, red tape and expense, you know, plenty of expense too. So the reason-- how we got here is a function of-- largely a function of these just lack of willpower. In terms of doctors, like, look at doctors and opioids. You know, we have very clear, unambiguous, like a kid could understand these regulations. I mean, you have to-- lots of informed consent both on the patient and the physician side, on the prescriber side. Oftentimes, they require the patient to fill out a form, sometimes watch a video or sit through a talk, quarterly updates. But we don't really monitor physicians who, let's say, prescribe seven times over their regional average, the average amount of, let's say, Class II opioids in that area. I mean, it's just the abuse of off-label. People go in and get these short-term opioids for chronic conditions like, let's say, a disk degeneration or things, you know, old sports injuries. You know, opioids are designed for short term care. They're designed either on one side, the palliative. So you're giving somebody who's terminal rest so they can sort of pass with dignity. Or to stabilize them when they're in a trauma situation. They're not designed to be taken four times a day over six months. And we allowed this industry, or an aspect of the pharmaceutical industry, led by Purdue Pharmaceuticals, to create this medical notion that these are going to be long-term drugs, that there is good science behind it. I mean, what it is, basically, Purdue essentially bribed a couple of doctors in the mid-'90s to sign a marketing document that pain is the fifth vital sign and all of this nonsense. And again, this is just one little aspect of our trouble. But I mean, we have lots of trouble with the FDA monitoring sharp spikes in fatality or morbidity, I guess I should say, in drugs or dubious efficacy. OK, well, it might work for somebody. It doesn't work for most people. But it might work for somebody. Let's get it out there. Yeah, I mean, let's try something. I mean, I get some of their thoughts along these lines. But I don't think that we're doing better as a society by having to-- if these drugs are out there, Medicare's paying for them. There's spiking morbidity. I mean, I just think that there has to be a better way of addressing this. If America is going to be the engine that drives pharmaceutical profits so they can plow it back into R&D for the world, if we're going to put that on our backs as a people, I think that we're entitled to a better class of regulation and enforcement than we've gotten. Because it seems to me that the FDA and wide sections of the broader Department of Health and Human Services, with the exception of their Office of Inspector General, I have to say, are fairly co-opted by the medical community on one side or the pharmaceutical community on the other. And I don't think patients are benefiting from it. Now, I have to note that there are some incredible advancements. We have the ability now to wipe out Hepatitis C. What a break that is. What an incredible medical leap forward. So I mean, I do think that the industry is-- there are gains being made. There's been slow but steady improvement in life expectancy across all kind of cohorts of oncology. Breast cancer used to be fatal just 15, 18 years ago, or medium-term high levels of morbidity. Now, I mean, people or women are living much longer. I mean, so we've made remarkable progress in a number of different areas. So I'm not at all trying to suggest that this industry is doing nothing for us, or you know, they're just purely rent-seeking, to use an economic term. But I mean, I do think that if we are going to be the cow that generates the cash, we deserve a better pasture. You know, we deserve more than we're getting from our regulatory system, especially since Medicare is hundreds of billions of dollars of expense a year, well it's-- BRIAN PRICE: Well, undoubtedly, advancements have been made within the medical community. But I want to stay on the dark side for a second because I think there's-- RODDY BOYD: Well, it's my favorite side. It's-- BRIAN PRICE: There's a lot to unpack there. And if examine the catalyst, whether it's greed, whether it's ineptitude, whether it's some combination of the two, when you look at the opioid epidemic in this country, could it be framed as pharmaceutical genocide? RODDY BOYD: Genocide is a strong word. I am fairly confident, though, that the amount of people killed, the amount of American citizens killed by overdosing or the mass distribution of opioids since, let's say, the mid-'90s-- again, Purdue is in the vanguard there. But I mean, you have plenty of people right behind them-- Cephalon, I've done a tremendous amount of work on Insys Therapeutics. I mean, you can just insert name, Galena Biopharmaceutical. God, they're just all in there. I think the amount of people dead since the mid-'90s from this class of drugs certainly is approaching the amount of fatalities we suffered in, let's say, the European theater of operations in World War II. I mean, we're definitely into the six figures now. And I'm not counting heroin here, OK? So you can't say genocide. But you can say that it's done to us what Hitler and other people, other implacable enemies of America couldn't do. And no hyperbole. bin Laden, just insert a name, any name. You know, all the enemies outside of our soil couldn't do to us what a privately held pharmaceutical company along Atlantic Street in Stamford, Connecticut could do to us. So I mean, I definitely think that's sort of the absolute perfect encapsulation of complete regulatory capture, that the DEA and relevant FDA organs, HHS, had seen the spike in abuse. They saw that, certainly by the late '90s, OxyContin was being abused. And it was being shipped in volume to places where the abuse was most intense. They saw that. And for some reasons, they didn't do anything. I mean, right now, as we're sitting here talking, in a courthouse in Boston-- I was just there for six weeks. In a courthouse in Boston, on Seaport Boulevard, the Moakley Courthouse, five executives from Insys Therapeutics are on trial. And I said to a couple reporters in the press gallery there, I said, there should be a sixth defense table, and the FDA should be there. They're the silent sixth defendant in the Insys Therapeutics case, where the abuses of the opioid industry are put on-- or just nudely being displayed. Because the FDA had chances in the late-'90s, the early aughts, '02, '03, that famous instance where Giuliani came in. And you know, at that point he's running Giuliani Partners and sharply advocated against criminal prosecution of some of Purdue's executives. I think '06 and '07, when you had the Purdue settlement, again, they allowed them to do some self-regulatory kind of-- there was a large fine. Three executives pled guilty to one charge. But I mean, it really didn't knock that company back. And you see that lack of-- again, is it regulatory willpower on one side or prosecutorial direction on the other? I don't know. I mean, we do know now that Eric Holder, and Lanny Breuer, and all of them, you know, certainly were holding the DOJ back in '09, '10, '11 from wide-reaching prosecution. Again, there's just so many instances where abuses in the system-- putting aside the concept of addiction across our broader-- the broader problem of treatment and addiction, which exists broadly across our society and all strata of our society-- You know, the most abusive aspects of the opioid-- the companies that sold these drugs weren't really curtailed until recently, until you started seeing the prospect of executives at Insys Therapeutics going away for 15, 20 years apiece. But even then, I mean, they have-- OK, they went after a bunch of people there. But I mean, they're not the only company doing this, you know? I mean, there's just a ton of work to be done there. BRIAN PRICE: Rod, is it fair to say, with all this in mind, that the FDA is on your radar? RODDY BOYD: Yeah, I mean, I-- SIRF wasn't set up to do these all-encompassing investigations of a massive enterprise like the FDA. But I think that I might have to rethink that eventually, maybe get up with some other reporters, do some-- maybe some other organizations, and just start to look at that institution as a standalone. Like, how do we keep on having these problems? No system is going to be perfect. And you know, the idea of eliminating risk from pharmaceutical development, and the idea that we're never going to have bad drugs, and that drugs are going to be cheap, and abundant, and effective, let's not live in Cloud Cuckoo Land. But we can do better than what we have right now. Those rules are in place. I mean, we don't really need new rules. We need to allow the people at the DEA to interdict the most abusive aspects of, let's say, the pharmaceutical industry, with the opioid wing. We need to perhaps have a-- stick to rigid interpretations of kind of classic testing doctrine. OK, well, you did a double blind trial, and it worked over standard of care? OK, you've got a drug. Go do it. Away you go. Or oh, hey, it didn't really prove better than placebo? Or you didn't really stage a proper trial? You did 31 people, and it was unblinded, and it's-- you know, you're not really showing that this is scientifically scrutinized. You owe-- You know, if this is going to be paid by Medicare, if this is going to be covered by the taxpayer, you owe the taxpayer the duty of applying scientific rigor to the approval process. It's not perfect. Science is never perfect. No drug is perfect. At the end of a day, no matter what drug you or I take, we both have tombstones with our name on it eventually. I mean, we need to accept these things. That's a different conversation. I do think we're placing, at some level, too much pressure on the pharmaceutical industry to stop cancer. I don't know that we're ever going to eradicate it. But I mean, we've been able to certainly curtail the most-- other diseases. You know? I mean, so-- BRIAN PRICE: Well, I mean, I don't think we're asking them to stop cancer. RODDY BOYD: Yeah, yeah. BRIAN PRICE: But I think, as consumers, we're hoping that the folks who are tasked with doing a job are doing it to the best of their ability so if I put something in my body I know that the people behind that medicine have done their due diligence, aren't putting me in a position of risk. I think that is a reasonable standard and a reasonable expectation. RODDY BOYD: I have no arguments with you. I mean, well, let's just sort of jump aside 180 and just look at the idea of price. There should be the ability to import non-Schedule II, non-narcotic drugs from Canada. Canada is every bit as "civilized," quote-unquote, as the United States is, often, quite frankly, much more civilized than the United States. Their economy, their infrastructure is every bit as advanced as we are. Their pharmaceutical manufacturing processes are as rigorous and as scientifically and chemically valid as ours. And so why can't we import allergy medicine from Canada? Why can't we import other pills, from antibiotics, or other things, again, nonnarcotic, from Canada? But I mean, you look at the voting bloc senators from New Jersey and Pennsylvania. And again, I understand that the pharmaceutical industry is large, has a lot of employment in that area. But I mean, these-- we should have that. That should be an option. But it's not. You know, we can't really buy drugs that we should be able to buy from Canada. I mean, that's just like-- at every step of the way, even incremental, rational steps are blocked, or truncated, or just completely, in that case, shut down. And it's ridiculous. I mean, I'm not sure why you're paying $80 for a drug when you could be getting it for $10 in the mail or something like that. How all this would work, don't ask me. I'm a reporter. I mean, I'm not a businessman. I understand there's complexity and challenges. But I mean, that's just a great answer. How do we get here in this system, where we're reinforcing price gouging, abusive behavior, poor scientific-- or we're incentivizing poor scientific outcomes? Well, you know, it starts with shutting down rational avenues like that. BRIAN PRICE: Well, as your work focusing on the FDA perhaps progresses once again. RODDY BOYD: No, yeah, yeah, happy to. BRIAN PRICE: Let's stay on companies that you've been studying for quite some time. What's your assessment of Acadia Pharmaceuticals? RODDY BOYD: I mean, Acadia is a troubling company. And I think that a more muscular response by the FDA, if not investors, is warranted. I mean, their drug Nuplazid certainly had sort of a dubious scientific background. OK, it's approved. I get it. I guess I can accept it. But I mean, it's obvious that it's being prescribed in great volume off label, that they are simply getting up with the highly put upon, stressed, and challenged medical directors of nursing homes or care facilities. Oftentimes, these places are lightly regulated, to be charitable. And it's fairly obvious if you track, let's say, the Center for Medicaid and Medicare Services open payments data that they're just pouring cash into some doctors who are prescribing it en masse, off label as a sedative. Because I mean, at the end of a day, it is a sedative. And you give it to grandma or grandpa or Uncle Stu or something like that, they are going to be much more chill than they are going-- than they are. Now, I get it. I mean, if you've ever had any family members who are beginning to have central nervous system deterioration-- Alzheimer's, Parkinson's in my family-- it's a brutal, demeaning, degenerative disease. It is absolutely the area where medicine has-- it is a hill that every one has died on. The amount of drug research that has been expended by major, Western world pharmaceutical companies is in the multi-billions of dollars. You're almost not in the game unless you've written off hundreds of millions of R&D on this. I have a lot of empathy for people who are just grasping for treatment. The thing is, is it just medicates them for a little while. It doesn't do anything for the underlying conditions, I think, based on conversations I've had with a lot of sources inside and outside of the FDA. And it really is leading to a, I would argue, a spike in fatalities. Now, I understand the length or duration of life among people who have, let's say, mid to late stage Parkinson's, or if it's off label for Alzheimer's, which is where they're trying to go. Let's be clear. It's a cohort where you're going to see higher morbidity. People are at the end of their life. That said, I do believe there's probably got to be a better way than just throwing this wet blanket on them, you know, this central nervous system wet blanket. It's remarkably profitable for them. It's allowed. We have a system where, because of the rough parallels between Parkinson's and Alzheimer's and dementias and Lewy bodies, you know, we have a system in which that isn't going to step in and say, OK, is this indicated at least? Now, if it's indicated and it doesn't work, or you know, hey, that's on the label. It has the label that says this is a risk. You know, all eyes open. But when it's pretty obvious that it's being written just for Alzheimer's patients. I mean, in my story of last year, where I talked about-- we pulled some of the longer form adverse event report data. And you could see that it's being written constantly for people who don't even have the indication. And a few times, it wasn't even written for people who had any prospective dementia. So I mean, that, to me, is just-- you know, that's in the wheelhouse of malpractice. Again, not my place to be making those micro-arguments. But it does speak to a system where-- I'm not trying to be an idealist. I just have to believe that there-- if we just deincentivize this behavior, I think we'll be better off as a nation. BRIAN PRICE: All right, I want to thank you. RODDY BOYD: Oh, It's been an honor. Thank you. BRIAN PRICE: Please come back and join us here at Real Vision. RODDY BOYD: Oh, trust me. Trust me. BRIAN PRICE: Thanks so much. RODDY BOYD: Will do.