‘Pharma Bro’ Martin Shkreli to Pay $28M to Settle Price-Gouging Claims

Martin Shkreli Anti-Parasitic Drug Class Action Settlement:

• Who: Martin Shkreli, known in pop culture as “pharma bro,” and his former company Vyera Pharmaceuticals LLC will pay a $28 million class action settlement to insurers led by a Blue Cross Blue Shield affiliate.
• Why: The plaintiffs say they were forced to overpay for a potentially lifesaving anti-parasitic drug that Shkreli and his company had the rights to.
• Where: The settlement was filed in a New York federal court.

Martin Shkreli, his former pharma company Vyera Pharmaceuticals LLC and a colleague will pay $28 million to settle claims that they bought the rights to a medicine that treats a parasitic disease then jacked up the price by 4,000%.

The settlement was filed Jan. 28 in the U.S. District Court for the Southern District of New York, Bloomberg reports. It comes as Shkreli is currently serving a seven-year prison sentence for an unrelated securities fraud conviction.

Last week’s settlement is related to a $40 million settlement Vyera and its parent company, Phoenixus AG, made with the Federal Trade Commission and seven states in December last year after the companies and its executives allegedly hiked the price of Daraprim back in 2015.

Daraprim is used to treat toxoplasmosis, which is caused by a parasite found most often in cat feces. Toxoplasmosis normally involves mild symptoms, if any, but it can be life-threatening in immune-compromised people.

Class Action Alleged Defendants Monopolized Sales of Daraprim

The complaint alleged that the defendants monopolized sales of Daraprim. After the companies acquired exclusive rights to the drug in 2015, the price of Daraprim shot up from $17.50 to $750 per pill. 

While Shkreli billed it as a “very handsome investment for all of us” to the company, some patients then faced co-pays as high as $16,000. 

In the claims alleged ahead of last week’s settlement, the insurance companies said the company’s tactics included exclusive restrictions in the contracts between Vyera and specialty manufacturers that blocked competitors from accessing key market data or getting the ingredients needed to make Daraprim.

The settlement required an upfront $7 million payment, along with additional payments worth up to $21 million if sales of certain Vyera drugs hit specified targets. 

From last year’s settlement, the $40 million will provide relief to consumers who were affected by the substantial price hike, $10 million of which is guaranteed up front. Up to $30 million more is payable over 10 years depending on the companies’ financial condition. 

The settlement requires Vyera and Phoenixus to make Daraprim available to any potential generic competitor at list price or the cost of producing the drug. The companies must also provide prior notification of any planned pharmaceutical transaction valued at $25 million or more.

Were you affected by the Daraprim price hike? You might be eligible for a settlement reward! Tell us about it in the comments below. 

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