A company once owned by “Pharma Bro” Martin Shkreli will pay up to $40 million to settle allegations that it jacked up the price of a life-saving medication about 4,000 per cent after obtaining exclusive rights to the drug, the Federal Trade Commission announced on Tuesday.
The FTC said Vyera Pharmaceuticals and its parent company, Phoenixus AG, agreed to settle allegations that it gouged buyers and monopolised sales of Daraprim, which is used to treat toxoplasmosis, an infection that can be deadly for people with HIV or other immune-system problems and can cause serious problems for children born to women who were infected while pregnant.
Vyera raised the price of the decades-old drug from $17.50 to $750 per pill after obtaining exclusive rights to it in 2015.
“Should be a very handsome investment for all of us,” Shkreli put it in an email to a contact at the time.
The increase left some patients facing co-pays as high as $16,000 and sparked an outcry that led to congressional hearings.
The company was sued in federal court in New York by the FTC and the states of New York, California, Illinois, North Carolina, Ohio, Pennsylvania, and Virginia.
The lawsuit alleged that Vyera increased the price of Daraprim and illegally created “a web of anticompetitive restrictions” to prevent other companies from creating cheaper generic versions by, among other things, blocking their access to a key ingredient for the medication and to data the companies would want to evaluate the drug’s market potential.
After the lawsuit was filed last year, the company called its claims meritless and denied that its actions froze out potential competitors.
The settlement filed on Tuesday requires Vyera and Phoenixus to provide up to $40m in relief over 10 years to consumers who were reportedly fleeced by their actions and requires them to make Daraprim available to any potential generic competitor at the cost of producing the drug.
Former Vyera chief executive Kevin Mulleady agreed to pay $250,000 if he violates the settlement, which in general bars him from “working for, consulting for, or controlling a pharmaceutical company” for seven years, an FTC statement said.
The settlement does not stop litigation against Shkreli, who reportedly masterminded the scheme as Vyera’s first chief executive. The lawsuit filed against him by the FTC and the states is scheduled for trial next week.
Shkreli currently is serving a seven-year prison sentence for a securities fraud conviction related to hedge funds he ran before coming into the pharmaceuticals industry.