The Federal Trade Commission (FTC) announced Tuesday that a firm once owned by “Pharma Bro” Martin Shkreli must pay a $40 million settlement due to bumping the price of medicine by about 4,000 percent. The life-saving drug, Daraprim, was owned exclusively by Shkreli’s formerly owned firm Vyera Pharmaceuticals LLC and the parent company, Phoenixus AG.
The FTC and seven states, including New York, California, Illinois, North Carolina, Ohio, Pennsylvania, and Virginia, participated in a federal court lawsuit in New York.
Shkreli is currently serving a seven-year prison sentence for a separate securities fraud conviction due to illegal handling of hedge funds, which occurred prior to his involvement with Vyera Pharmaceuticals LLC, where he became that firm’s first CEO.
Both companies agreed to settle the lawsuits alleging they gouged buyers in need of Daraprim and also held a monopoly on the drug Daraprim. The drug treats toxoplasmosis, a fatal infection for anyone with immune system health issues including HIV.
Toxoplasmosis is especially dangerous to children born to women who suffer from this serious infection.
The complaint claimed the company then owned by Shkreli “fleeced patients” with their extreme hike of the decades-old drug cost for the life-saving medication, the only one available for Toxoplasmosis. The FTC agreed.
Under Shkreli’s leadership, Vyera Pharmaceuticals LLC acquired exclusive rights to the drug in 2015 and then raised the price for the drug from $17.50 to $750 per pill.
The gouging of Daraprim created a public outcry, resulting in viral protests, congressional hearings and the lawsuit. Some buyers reported having to pay extremely high co-pays for the life-saving drug, up to about $16,000.
Court Documents claimed Vyera Pharmaceuticals LLC dramatically hiked the price of the drug and then designed a “web of anticompetitive restrictions” to stop other pharmaceutical firms by creating affordable generic versions. The lawsuit alleged Vyera Pharmaceuticals LLC did not allow any access to a vital ingredient for Daparprim to other firms and also would not share clinical data to companies seeking to evaluate the drug and its potential market growth.
The 40 million dollar settlement will go to consumers who claim they were gouged by the 4,000 percent increase in the price of Daraprim, and also will force the company to share the drug with any generic competitor at the true cost of manufacturing it.
The FTC released a statement reporting that prior to this week’s settlement, Kevin Mulleady, the former CEO of Vyera Pharmaceuticals LLC, said he would pay $250,000 if he didn’t adhere to the settlement, which also stops him “working for, consulting for, or controlling a pharmaceutical company” for seven years.
Shkreli, as the former CEO of Vyera Pharmaceuticals LLC, is also being separately sued by the FTC and the seven states involved in this first NY suit. His trial is scheduled for the week of December 13.
In related news, a three-year investigation by the House Oversight Committee today announced in their 269-page report that they found drug-pricing practices to be “unsustainable, unsuited and unfair.”
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