Court bans Pharma Bro Martin Shkreli for life from the pharma industry

Martin Shkreli

Photo: Drew Angerer/Getty Images

A federal court has banned former CEO and "Pharma Bro" Martin Shkreli from the pharmaceutical industry for life.

Judge Denise Cote of the United States District Court in New York held Shkreli liable for antitrust claims brought by the Federal Trade Commission and a group of seven states, in an order released Jan. 14.  The court also found Shkreli liable for $64.6 million.

In 2015, Shkreli raised the price of Daraprim by 4,000%, according to the lawsuit. 

The drug is used to prevent toxoplasmosis infection in people with HIV infection and to treat a serious parasite infection. Shkreli also initiated a scheme to block the entry of generic drug competition, the court said.

"Based on the trial evidence, Shkreli will be barred for life from participating in the pharmaceutical industry and is ordered to disgorge $64.6 million in net profits from his wrongdoing," the judge ordered. 

Additionally, a settlement has been announced in a class action lawsuit brought by Blue Cross and Blue Shield of Minnesota against two of Shkreli's former companies, Vyera Pharmaceuticals; its parent company, Phoenixus AG; and former executives Shkreli and Kevin Mulleady for allegedly monopolizing the market for Daraprim. Under the settlement agreement submitted Friday to the federal court in New York for approval, Vyera and Phoenixus must pay up to $28 million to a proposed class of third-party payers that purchased Daraprim.

The complaint was filed in March 2021 by Blue Cross on behalf of other third-party payers across the country. It alleges that Vyera intentionally monopolized the pharmaceutical market for Daraprim – a once-affordable, lifesaving drug for the treatment of toxoplasmosis – by illegally limiting generic competition. 

WHY THIS MATTERS

The message from Blue Cross, which was represented by Robins Kaplan LLP, is that payers will hold drug companies liable for high drug costs.

The $28 million in recovered funds will be distributed to insurers that paid for the drug.

 "Blue Cross and Blue Shield of Minnesota believes that drug companies need to be held accountable for the uncontrollable rise of prescription drug costs," said Dana Erickson, president and CEO at Blue Cross and Blue Shield of Minnesota. "We look forward to finalizing this settlement in the courts so that funds may be distributed appropriately to impacted members of the class."
 
Kellie Lerner, co-chair of Robins Kaplan's Antitrust and Trade Regulation Group, said, "We hope this settlement sends a clear message that private payers will fight against unconscionable price increases."

FTC Chair Lina Khan reinforced that message. 

"Judge Cote's decision to ban Shkreli for life from the pharmaceutical industry is a significant victory for American consumers," Khan said by statement. "This precedent-setting relief should be a warning to corporate executives everywhere that they may be held individually responsible for the anticompetitive conduct they direct or control."

THE LARGER TREND

Under the direction of Shkreli and Mulleady, the per-pill price for Daraprim went from $17.50 to $750 – an increase of more than 4,000%, according to the complaint from Blue Cross. 
 
The settlement also requires Shkreli to abide by the injunctive relief entered against him in the related lawsuit brought by the FTC and states New York, California, Ohio, Pennsylvania, Illinois, North Carolina and Virginia.  A week-long bench trial was held in December 2021.

In 2018, Shkreli was sentenced to seven years in prison after being convicted of securities fraud and conspiracy in August 2017.

A year later, he was reportedly removed from the federal prison in Fort Dix, New Jersey, after claims that he was running his pharmaceuticals firm Phoenixus AG while locked up with the help of a contraband cell phone, according to CNBC. Shkreli was taken to the Metropolitan Detention Center in Brooklyn to be transferred to the federal prison in Allenwood, Pennsylvania.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com