Lifetime Drug Industry Ban Kept on the Table for Martin Shkreli

Martin Shkreli, the former hedge fund manager under fire for buying a pharmaceutical company and ratcheting up the price of a life-saving drug, is escorted by law enforcement agents in New York on Dec. 17, 2015, after being taken into custody following a securities probe. (AP Photo/Craig Ruttle, File)

MANHATTAN (CN) — Unapologetically the poster child of pharmaceutical price gouging, Martin Shkreli stumbled in a court fight to save his career in the prescription drug industry.

In a 43-page opinion Tuesday night, U.S. District Judge Denise Cote refused to dismiss an antitrust lawsuit by the Federal Trade Commission and a coalition of seven states that says Shkreli broke the law when he jacked up the price of Daraprim from $17.50 a pill to $750 in a single day.  

Already incarcerated for unrelated securities fraud, Shkreli could face a lifetime ban from ever working in the pharmaceutical industry again if he loses the case with the FTC, New York and other states.

“While much of the country continues to suffer from rising Covid-19 infections, Martin Shkreli and his company continue their unlawful scheme to gouge and hold captive essential, life-saving drugs from ill and vulnerable individuals,” New York Attorney General Letitia James said in a statement.  

Essential in fighting the parasitic infection toxoplasmosis, Daraprim attacks a disease afflicting pregnant women and those with weakened immune systems from conditions such as AIDS. Shkreli’s smirking defense of the 40-fold hike on the drug to Congress four years ago meanwhile entrenched him as the figurehead of predatory tactics and earned him a cult following on social media that viewed him as a libertarian bad boy. 

Back then, Daraprim’s maker had been known as Turing Pharmaceuticals, but it was rebranded Vyera as Shkreli served his sentence for a “Ponzi-like scheme” involving another company, Retrophin. 

Despite the new corporate name, regulators say, Shkreli exercised “shadow power” over Vyera and its Swiss parent Phoenixus AG from behind bars. 

“This order will not only ensure our case against Shkreli and his company continue, but that at-risk patients and victims of this fraud get their day in court,” the New York attorney general added. “Our bipartisan coalition will stop Vyera’s egregious conduct, make the company pay for its illegal scheming, and block Martin Shkreli from ever working in the pharmaceutical industry again because we will never allow greedy pharmaceutical companies and CEOs to line their pockets at the expense of suffering patients.” 

California, Ohio, Pennsylvania, Illinois, North Carolina and Virginia have joined the lawsuit, which also charges Shkreli’s companies and associate Kevin Mulleady. 

On Tuesday, Judge Cote cut through Shkreli’s argument that the case is barred by the statute of limitations.

 “While Shkreli may have lost his official title as an officer or director of Vyera upon his arrest in 2015, his liability hinges not on his title, but on his involvement and participation in Vyera’s unlawful scheme,” she write.

The judge made clear that the lawsuit alleges far more than historic wrongs. 

“Not only is it alleged that the purpose of these agreements was to block competition, it is also alleged that the conspirators succeeded in accomplishing that purpose,” the 43-page opinion notes. “The amended complaint explains how multiple manufacturers of generic pharmaceuticals that wish to compete with Vyera have been delayed for years in obtaining FDA approval because of their inability to obtain Daraprim for bioequivalence testing and [its active pharmaceutical ingredient] from an FDA-approved manufacturer. And of course, Vyera continues to sell Daraprim at the inflated price of $750 per tablet.” 

Shkreli and Mulleady also failed to persuade the judge that they should not face individual liability for the claims against their company. 

“Performing the activities described in the amended complaint as corporate officers and agents is sufficient to subject them to liability for antitrust violations,” the ruling states. “Moreover, they benefitted personally from the illegality to the extent Vyera benefitted and their intent to benefit Vyera establishes as well their intent to benefit themselves through that wrongdoing.” 

Like Shkreli, Mylleady could face a lifetime bans from the industry if found liable. Attorneys for the men — Kenneth David at Kasowitz Benson for Mulleady, and Christopher Casey at Duane Morris for Shkreli —did not immediately respond to emails seeking comment. 

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