Two years after a judge banned US pharmaceutical boss Martin Shkreli for life from working in the industry, a federal appeals court this week upheld the ban, which had been issued for monopolistic behaviour by his then-drug company in selling the medication Daraprim.
In the case, the Federal Trade Commission (FTC) and seven states, among them New York and California, had sued Shkreli, who first gained notoriety in 2015 when his company raised the price of the lifesaving drug by more than 4 000% overnight.
CNBC reports that this week, the court not only upheld the lifetime ban but also issued an order for him to pay up to $64.6m in disgorged profits for blocking competition to Daraprim after hiking its price by more than $700 per pill.
“The district court’s injunction was a reasonable measure to protect the public from the risk of recurring anti-competitive conduct in the pharmaceutical industry by Shkreli,” the ruling judge said.
“Given Shkreli’s pattern of past misconduct, the obvious likelihood of its recurrence, and the life-threatening nature of its results, we are persuaded that the court’s determination as to the proper scope of the injunction was well within its discretion.”
Fraud conviction
Shkreli had served a prison term for federal securities fraud and other financial crimes not related to his controversial price hike of Daraprim, which is used to treat toxoplasmosis, a life-threatening parasitic condition found in people with HIV, pregnant women and babies.
His fraud convictions stemmed from his involvement with Retrophin, a pharmaceutical company he founded in 2011, and two hedge funds he ran.
New York Attorney-General Letitia James, whose office originated the latest suit, said: “For years, Martin Shkreli and his company made millions by putting vulnerable people at great risk and denying lifesaving medication. Our latest victory once again holds him accountable.”
However, Shkreli’s lawyer, Benjamin Brafman, told CNBC: “The lifetime ban is too severe. The courts should encourage real geniuses like him to work in the industry especially … when his conviction for fraud had nothing to do with the pharmaceutical industry.”
The plaintiffs had sued Shkreli and his companies, Vyera Pharmaceuticals and Phoenixus AG, and his former business partner Kevin Mulleady, for violations of antitrust laws in preventing generic drugmakers from getting access to Daraprim, on which they needed to conduct testing.
The scheme allowed Shkreli and others – for more than a year – to protect the profits they received from selling Daraprim for $750 per tablet, compared with the $17.50 per tablet it previously sold for.
In January 2020, the FTC and the other plaintiffs reached a settlement with Vyera and Mulleady that required the company to pay up to $40m in disgorged profits, and which banned Mulleady from the pharmaceutical industry for seven years.
Shkreli took the case to trial in December 2021, and lost.
In its ruling against him on Tuesday, the appeals court noted that Shkreli argued that Manhattan federal court Judge Denise Cote “abused” her discretion in imposing a lifetime ban on him from the drug business. He had also argued that the injunction unconstitutionally limited his free speech, and violated a federal rule of civil procedure by not being specific enough.
“We conclude that the district court did not abuse its discretion by imposing a lifetime ban from the pharmaceutical industry on Shkreli because an injunction of that scope was within the range of permissible decisions,” the ruling said.
“The district court found, and Shkreli does not dispute, that his illegal scheme was ‘egregious, deliberate, repetitive, long-running, and ultimately dangerous’.”
See more from MedicalBrief archives:
Pharma executive Shkreli sentenced to 7 years for fraud
Jailed US drug company boss barred for life, ordered to repay $64m
US government targets drugmaker 'shenanigans’ over generics
Pharmas named in major generic drug price-fixing suit