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Wednesday, January 19, 2022

FTC and Multiple States to Reimburse Victims of Underpricing Scheme, Martin Shkreli

The Federal Trade Commission (FTC) and the states of New York, California, Illinois, North Carolina, Ohio, Pennsylvania and Virginia intend to reimburse up to $ 40 million in aid to victims of an illegal scheme organized by Martin Shkreli.

The FTC said in a press release on Tuesday that the government agency, along with several states, has accused Vyera Pharmaceuticals and Shkreli, its former CEO, as well as his assistant Kevin Mallidi and parent company Vyera Phoenixus AG, of ripping off patients in need of life-saving. drug Daraprim under an illegal scheme.

According to the FTC, Shkreli and his partner violated antitrust laws when they raised the price of Daraprim by 4,000 percent and then “concocted an intricate web of restrictions to illegally prevent competitors from producing a cheaper option.”

Daraprim, also known collectively as pyrimethamine, is used in combination with other medicines such as sulfonamide to treat toxoplasmosis, a serious parasitic infection. It is also used in the treatment of people with human immunodeficiency virus (HIV), according to WebMD.

The FTC said it filed a ruling on Tuesday following a January 2020 complaint against the defendants that shut down the illegal scheme. The order also prohibits Mallidi from engaging in the pharmaceutical industry and requires Vyera and Phoenixus AG to pay up to $ 40 million in fair cash aid to victims.

A January complaint alleges that Shkreli and Mallidi launched Vyera with plans to buy Daraprim, sharply increase its price and use anticompetitive contracts to block competition.

According to the complaint, Vyera raised the price of the drug, which is decades old, from $ 17.50 to $ 750 per pill by 4,000 percent after acquiring Daraprim in 2015.

The company then sought to block competition through various means, such as entering into resale agreements with distributors that prevented generic companies from purchasing the drug for testing as requested by the FDA. The Vyera scheme “has delayed generic competition for years and damaged consumers tens of millions of dollars,” the complaint said.

Shkreli has been widely criticized for several comments he has made in defense of the price hike, as well as on social media.

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Mallidi will now be banned from working, advising, or controlling the pharmaceutical company for the next seven years, and faces a $ 250,000 adjudication if found to be in breach of the order.

Of the $ 40 million in disaster relief, $ 10 million is guaranteed in advance, and up to $ 30 million is payable over 10 years if companies improve financially.

Vyera and Phoenixus are also “required to make Daraprim available to any potential generic competitor at list price and provide advance notice of any planned pharmaceutical deal worth $ 25 million or more,” the FTC said in a statement.

“Mullidi, Viera and Phoenixus are also banned for 10 years from engaging in any behavior similar to what the FTC and the states claimed in their amended April 2020 complaint,” the agency said in a statement.

Shkreli, who allegedly initiated the scheme and continued to run it from prison, is due to start a trial later this month.

He is currently serving a seven-year prison sentence after being convicted in 2017 of lying to investors about the performance of two bankrupt hedge funds he managed. He was also fined approximately $ 7.4 million.

The Epoch Times contacted Vyera Pharmaceuticals for comment.

“Today’s action is putting money back in the pockets of drug patients deprived of a monopoly scheme,” said Lina M. Khan, chair of the Federal Trade Commission. “Martin Shkreli has devised an elaborate plan to skyrocket the price of the vital drug Daraprim, blocking cheaper options. While the lawsuit against Shkreli continues, the order closes down the illegal enterprise run by his companies, Vyera and Phoenixus, and prohibits his partner from participating in the industry. This massive relief sets a new standard and warns corporate executives that they will face serious repercussions by robbing society by unreasonably monopolizing markets. ”

To follow

Katabella Roberts is a reporter currently based in Turkey. She covers news and business for The Epoch Times with a special focus on the United States.

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