Shkreli’s infamous 4,000% price hike gets him a lifetime pharma ban

New York’s attorney general celebrated with Wu-Tang Clan references.

Beth Mole – Jan 14, 2022 5:13 pm | 193

A federal court on Friday banned convicted fraudster Martin Shkreli from ever working in the pharmaceutical industry again in any capacity and ordered him to pay back $64.6 million in profits from his infamous scheme that raised the price of the life-saving drug Daraprim more than 4,000 percent.

US District Judge Denise Cote issued the lifetime ban after finding that Shkreli engaged in anticompetitive practices to protect the monopoly profits of Daraprim.

According to a lawsuit filed by the Federal Trade Commission and seven states—New York, California, Illinois, North Carolina, Ohio, Pennsylvania, and Virginia—Shkreli, his former pharmaceutical company Vyera (formerly Turing), and former Vyera CEO Kevin Mulleady created a “web of anticompetitive restrictions to box out the competition” in 2015 after they bought the rights to Daraprim.

Daraprim is a cheap, decades-old anti-parasitic drug used to treat toxoplasmosis, which often sickens people with compromised immune systems (such as AIDS patients) and can be deadly to newborns. Shkreli and Mulleady allegedly set up a complex scheme that kept the drug out of the hands of competitors, restricted suppliers from selling critical drug ingredients to competitors, and blocked the release of sales data that would reveal the market size to competitors.

Meanwhile, Shkreli and Mulleady abruptly hiked the list price of Daraprim by more than 4,000 percent, from $17.50 to $750 per tablet.

A better tomorrow

In Cote’s ruling Friday, she concluded that Shkreli “was the mastermind of [Vyera’s] illegal conduct and the person principally responsible for it throughout the years.” His lifetime ban and the order to pay $64.6 million in disgorgement “serves the interests of justice,” she wrote.

In a press release Friday, New York Attorney General Letitia James celebrated the ruling with some Wu-Tang Clan references.

“‘Envy, greed, lust, and hate,’ don’t just ‘separate,’ but they obviously motivated Mr. Shkreli and his partner to illegally jack up the price of a life-saving drug as Americans’ lives hung in the balance,” Attorney General James said, referencing lyrics from Wu-Tang Clan’s A Better Tomorrow.

“But Americans can rest easy because Martin Shkreli is a pharma bro no more… The rich and powerful don’t get to play by their own set of rules, so it seems that cash doesn’t rule everything around Mr. Shkreli,” Attorney General James continued.

Friday’s ruling follows a settlement announced last month in which Vyera and its parent company, Phoenixus, agreed to pay up to $40 million to victims of the Daraprim scheme. The settlement also required the companies to make Daraprim available to competitors at cost and barred them from entering into any similar scheme for 10 years. Mulleady was banned from the pharmaceutical industry for seven years.

Shkreli is currently serving a seven-year prison sentence from a 2017 securities fraud conviction related to two hedge funds he ran prior to the Daraprim scheme. Following his fraud conviction, he was ordered to forfeit $7.36 million in assets, including the sole copy of the Wu-Tang album Once Upon a Time in Shaolin, which he bought in 2015 at auction from Wu-Tang member RZA for $2 million.