ATTORNEY GENERAL RAOUL WINS FEDERAL ANTITRUST LAWSUIT AGAINST MARTIN SHKRELI, THE FORMER CEO OF VYERA PHARMACEUTICALS
Court Bans Shkreli from Pharmaceutical Industry for Life and Requires $65 Million Payment
Chicago — Attorney General Kwame Raoul today announced that a federal court issued a decision in favor of Raoul and a coalition of six states and the Federal Trade Commission (FTC), finding that former Vyera Pharmaceuticals CEO Martin Shkreli violated state and federal laws by engaging in illegal anticompetitive conduct to maintain inflated monopoly prices it charged for the lifesaving drug Daraprim (pyrimethamine). The court’s decision bans Shkreli from participating in the pharmaceutical industry for life and requires him to pay $65 million in disgorgement.
“This decision should send a message to pharmaceutical companies that illegal anticompetitive practices will not be tolerated,” Raoul said. “If anything, the current pandemic has demonstrated the critical need for equitable access to health care, and I will continue to hold companies accountable for stifling competition and forcing residents to choose between lifesaving medications and other necessities.”
Raoul and the coalition filed a lawsuit in 2020 against Vyera, its parent Phoenixus AG, and two of its former CEOs — Shkreli and Kevin Mulleady – alleging the defendants executed an elaborate scheme for stifling competition to protect the exorbitant, monopolistic pricing of the drug Daraprim, which is used to treat the parasitic disease toxoplasmosis in at-risk patients. Raoul alleged that Shkreli and Vyera raised the price of the drug overnight, from $17.50 to $750 per pill, after they purchased the rights to Daraprim in August 2015, and then engaged in illegal conduct to continue selling Daraprim at that inflated price.
Daraprim, until recently, was the only drug approved by the Food and Drug Administration (FDA) for the treatment of toxoplasmosis, a parasitic disease that may pose serious and often life-threating consequences for those with compromised immune systems, including babies born to women infected with the disease, cancer patients, and individuals with human immunodeficiency virus (HIV). Daraprim is recommended by the Centers for Disease Control and Prevention, the National Institutes of Health, the HIV Medicine Association, and the Infectious Diseases Society of America as the initial therapy of choice for acute toxoplasmosis. Nevertheless, and despite being unpatented, a generic version of Daraprim was not permitted to be sold in the U.S. until March 2020 – after the lawsuit was filed.
Daraprim was cheap and accessible for decades. However, in August 2015, Vyera purchased the drug and increased its price by over 4,000%. Vyera, under Shkreli’s control, then altered its distribution and engaged in other conduct to delay and impede generic competition. The high price and distribution changes limited access to the drug, forcing many patients and physicians to make difficult and risky decisions for the treatment of life-threatening diseases.
The illegal scheme developed and perpetrated by Shkreli involved restrictive distribution and supply agreements, as well as data secrecy, with the intent and effect of delaying entry by lower-cost generic competitors.
During a seven-day trial last month in a Manhattan federal court, current and former Vyera employees, generic drug manufacturers and experts provided testimony concerning the purpose and effects of Vyera’s and Shkreli’s anticompetitive scheme. The court’s decision and order issued today largely agree with the states and FTC, and provided relief sought – finding Shkreli liable on each of the claims presented. Shkreli has been banned for life from participating in the pharmaceutical industry in any capacity, and is ordered to pay the plaintiff states $64.6 million in disgorgement. In addition, Martin Shkreli was sentenced in 2018 to seven years in prison based on securities fraud charges, and he is currently imprisoned in a federal facility.
Joining Raoul in the lawsuit are the attorneys general of California, North Carolina, New York, Ohio, Pennsylvania, and Virginia, as well as the Federal Trade Commission.
Bureau Chief Elizabeth Maxeiner and Assistant Attorney General Richard S. Schultz handled the case for Raoul’s Antitrust Bureau.