The FTC and New York state accuse Martin Shkreli of running a drug monopoly. They plan to squash it — and permanently exile him
Pharma bro Martin Shkreli was jailed, publicly pilloried and forced to confront some lawmakers in Washington riled by his move to take an old generic and move the price from $17.50 per pill to $750. But through 4 years of controversy and public revulsion, his company never backed away from the price — left uncontrolled by a laissez faire federal policy on a drug’s cost.
Now the FTC and the state of New York plan to pry his fingers off the drug once and for all and open it up to some cheap competition. And their lawsuit is asking that Shkreli — with several years left on his prison sentence — be banned permanently from the pharma industry.
In a joint action taken Monday, the two groups accused Shkreli — the poster boy for pricing reform — and one of his close associates of “an elaborate anticompetitive scheme to preserve a monopoly for the life-saving drug, Daraprim.”
Gail Levine, deputy director of the Bureau of Competition at the Federal Trade Commission, accused Shkreli’s company Vyera of keeping “the price of Daraprim astronomically high by illegally boxing out the competition.”
Shkreli and the company knew from the start that once they set the price at $750 per pill they’d be vulnerable to generic rivals that would squeeze out profits, his accusers claim in a lawsuit. As a result, Shkreli kept a grip on distribution to make sure that generic drugmakers would never have the samples they would need to make a knockoff. They also blocked access to sales revenue numbers to make sure no one could accurately size up the market — further blocking competition.
According to the federal lawsuit:
Absent Defendants’ anticompetitive conduct, Daraprim would have faced generic competition years ago. Instead, toxoplasmosis patients who need Daraprim to survive have been denied the opportunity to purchase a lower-cost generic version, forcing them and other purchasers to pay tens of millions of dollars a year more for this life-saving medication
For all the anger Shkreli stirred ahead of his fraud conviction — with his quick turn to social media bad boy, caustically calling out his critics — the feds were never able to lay a hand on Daraprim. As the public uproar over price gouging on drugs grew ever more heated, Shkreli became a representative of the industry — which the industry vehemently wished would just go away. And that didn’t stop with his 7-year sentence on fraud charges related to the hedge funds he ran into the ground.
Shkreli was transferred from his first prison after the Wall Street Journal reported that he had continued to operate his biotech with a contraband cell phone.
The FTC and New York evidently plan to finish the job once and for all.