Commentary

Feds, NY AG Hit 'Pharma Bro' Martin Shkreli With New Charges

Martin Shkreli, the so-called “Pharma Bro” who is currently spending his time in federal prison in Allenwood, Pennsylvania for securities fraud, is facing new charges of price fixing. The Federal Trade Commission and New York attorney general Letitia James filed suit yesterday, alleging that he and his firm, Vyera Pharmaceuticals, have perpetrated “an elaborate anticompetitive scheme to preserve a monopoly for the life-saving c.”

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“The Manhattan federal court lawsuit -- which seeks a lifetime ban of Shkreli from the pharmaceutical industry -- comes almost five years after he gained widespread infamy by purchasing the rights to sell Daraprim, and increasing its price to $750 per tablet, an increase of more than 5,000%,” write  CNBC’s Jim Forkin and Dan Mangan.

“The suit alleges that as recently as last August -- while in prison serving a current seven-year criminal sentence -- Shkreli had discussions with Vyera executives taking illegal steps to thwart competitors from coming to market with an alternative to Daraprim, a decades-old drug which has no patent protection,” Forkin and Mangan add.

“They ‘held this critical drug hostage from patients and competitors as they illegally sought to maintain their monopoly,’ James says in a statement. At least four potential competitors have so far been kept from making cheaper generic versions of the medication, the suit says,” the AP’s Jennifer Peltz reports for SFGate.

“Daraprim is the gold standard treatment for a rare, potentially fatal parasitic infection known as toxoplasmosis. In most people, toxoplasmosis is easily contained by the immune system and causes no symptoms, according to the complaint. But for those with compromised immune systems—such as individuals with HIV/AIDS, cancer patients, or recipients of organ transplants—toxoplasmosis can lead to deadly infections of the brain and lungs,” according to the press release revealing the charges.

“Daraprim is a lifesaving drug for vulnerable patients,” states Gail Levine, deputy director of the Bureau of Competition at the Federal Trade Commission. “Vyera kept the price of Daraprim astronomically high by illegally boxing out the competition.”

Kevin Mulleady, an owner and director of Vyera Pharmaceuticals’ parent company Phoenixus AG, is also named in the complaint. Vyera was formerly known as Turing Pharmaceuticals.

“‘Mr. Shkreli looks forward to defeating this baseless and unprecedented attempt by the FTC to sue an individual for monopolizing a market,’ Shkreli’s lawyer Benjamin Brafman said in a statement,” report  Bloomberg’s Erik Larson and Riley Griffin.

“Shkreli, who taught himself biology, and his company Turing Pharmaceuticals were among those included in a 2016 U.S. Senate committee report that called for the government to stop a ‘monopoly business model’ used by some drugmakers to raise prices on certain medications,” they add.

Shkreli has found ways to stay involved in Phoenixus AG despite his imprisonment, The Wall Street Journal reported last year.

“Federal regulators require generic drugmakers to conduct studies comparing their proposed products with samples of branded drugs, but Vyera used contract restrictions to prevent distributors from reselling Daraprim to generic producers, the lawsuit says,” the WSJ’s Micah Maidenberg reports.

“Messrs. Shkreli and Mulleady, along with their associated companies, also cut off rivals’ access to an ingredient used to manufacture Daraprim, the suit alleges. In addition, they used so-called data-blocking agreements with distributors of Vyera’s products to prevent them from selling sales data about the drug to third-party data companies, according to the complaint. That cut off a source of information about Daraprim, obscuring whether a generic version would be commercially worthwhile, the lawsuit says,” Maidenberg adds.

“We won’t allow ‘Pharma Bros’ to manipulate the market and line their pockets at the expense of vulnerable patients and the health care system,” NYAG James says in a statement.

Another set of Shkreli lawyers, Kandis Kovalsky and Edward Kang, “called the suit baseless and took particular umbrage with James’ calling Shkreli a 'Pharma Bro,’” Emily Saul writes for the New York Post.

“‘As is evident from the attorney general’s comments, including her use of the pejorative term ‘Pharma Bro’ to refer to Mr. Shkreli, the lawsuit seeks to punish Mr. Shkreli based on his reputation, not on the conduct,’ the lawyers wrote in a statement,” Saul adds.

Well, that’s better that some of the other pejoratives Shkreli has faced. 

A 2017 article Saul wrote for the Postcarries the headline "Potential jurors on Pharma Bro: He’s ‘evil,’ a ‘snake’ and a ‘d–k’.” He’s also “earned the moniker, ‘most hated man in America,’” she writes. And that’s against some pretty stiff competition.

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