A drug company previously owned by Martin Shkreli, known as “Pharma Bro,” and its parent company have agreed to pay up to $40 million to settle a complaint over allegations they "fleeced patients" by hiking up the price of a life-saving medication by around 4,000 percent.
Shkreli, best known for drug price-gouging and a snarky online persona, gained international notoriety over the allegations against him and is currently in prison for security fraud.
U.S. Federal Trade Commission said in a statement that its commission and state co-plaintiffs, including New York, California and Illinois, had filed an order in court that "shuts down (the) illegal scheme" that it said was "masterminded" by Shkreli to exploit patients "dependent on the life-saving drug Daraprim.”
Shkreli, best known for drug price-gouging and a snarky online persona, is currently in prison for security fraud.
Daraprim is used to treat toxoplasmosis, an infection caused by a parasite that can be deadly for those with HIV, as well as for others with health issues related to the immune system. It can also create health issues for children born to those who are infected while pregnant.
The order comes after the antitrust complaint was filed in January 2020 against Shkreli, as well as against his associate Kevin Mulleady, their company Vyera Pharmaceuticals, LLC, and its parent company Phoenixus AG.
The complaint had accused Shkreli and Mulleady of jacking up the price of the drug after obtaining exclusive rights to it before concocting "an elaborate web of restrictions to illegally block competitors from producing a cheaper option," the FTC said.
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Under Tuesday's order, Vyera and Phoenixus AG will be expected pay up to $40 million in relief for victims, while Mulleady has been banned from working with any pharmaceutical company for seven years.
Meanwhile, Shkreli, Vyera's first CEO, is expected to begin an antitrust trial over the allegations that is set to start on December 14.
"With respect to every defendant except Shkreli, this settlement resolves all claims brought by the FTC and the state co-plaintiffs, as well as those brought in a related class action suit," the FTC said.
In a separate statement, FTC Chair Lina Khan said the settlement "puts money back in the pockets of drug patients fleeced by a monopolistic scheme."
“While litigation against Shkreli continues, the order shuts down the illegal enterprise run by his companies, Vyera and Phoenixus, and bans his associate from the industry,” Khan said. “This strong relief sets a new standard and puts corporate leaders on notice that they will face severe consequences for ripping off the public by wantonly monopolizing markets.”
Shkreli is currently serving a seven-year prison sentence for a securities fraud conviction over hedge funds he operated before launching into the pharmaceuticals industry.
Contacted after hours for comment, Vyera and Phoenixus AG did not immediately respond.
When the lawsuit was initially filed, Vyera had branded its claims meritless and denied that it had frozen out potential competitors in the pharmaceutical industry, according to The Associated Press.