Martin Shkreli continued to orchestrate anti-competitive schemes for Daraprim behind bars — FTC
Martin Shkreli didn’t just blog, read up on drug development news and run his biotech business with a contraband cell phone in prison. According to the FTC, he was also coordinating the anticompetitive scheme to shield Daraprim — the drug at the center of a price-gouging controversy that earned him the “Pharma Bro” nickname — from generic rivals.
Back in January the FTC, together with New York’s attorney general, launched a federal lawsuit against Shkreli, who’s now serving a 7-year sentence for defrauding investors in his hedge fund, alleging that he effectively created a drug monopoly. While Shkreli’s notorious move to raise the per tablet price of Daraprim from $17.50 to $750 was perfectly legal, the tactics he allegedly deployed to box out competitors weren’t.
“During our pre-complaint investigation, the FTC learned that Mr. Shkreli was communicating from prison about relevant matters,” reads a letter to Judge Denise Cote.
Specifically, they found records of his conversations with executives of Vyera — formerly Turing and now Phoenixus — including co-defendant Kevin Mulleady, which contained “information relevant to this case, including about Mr. Shkreli’s efforts from prison to support Vyera’s scheme to prevent generic competition to Daraprim.” There are also materials on his communication with attorneys.
The agency wants the court to rule that the communications it obtained from the Federal Bureau of Prisons are not privileged — and therefore fair game for the ensuing legal battle.
Unlike the records on his contraband cell phone, the FTC argues, these calls and emails happened on the prison’s TRUFONE and TRULINCS systems, which Shkreli knew could be monitored and recorded. Neither attorney-client privilege nor the work product doctrine should apply here, it writes.
It’s unclear how much Daraprim’s pricing will be affected. A month after the FTC and the New York AG filed their lawsuit asking, among other things, to restore competitive conditions and halt any ongoing anti-competitive conduct, the FDA approved the first generic for Daraprim. Although the generic maker hasn’t disclosed how much it’s charging for its copycat drug, it was enough to kick Daraprim off the list of the top 20 most expensive treatments in the US.
But for Shkreli and Mulleady, losing the lawsuit could mean being barred from the pharma industry in the future in addition to monetary relief.
The prospect could be especially tough for Shkreli, who sought — but was denied — a 3-month furlough to research Covid-19 cures after posting a paper describing a drug screen and proposing RdRp inhibitors as potential treatments.