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‘Pharma Bro’ Shkreli Reaches $28 Million Class Action Settlement

Jan. 31, 2022, 4:18 PM

Martin Shkreli, a colleague, and his former company Vyera Pharmaceuticals LLC will pay up to $28 million to resolve class action litigation over their alleged scheme to gouge consumers on a potentially lifesaving anti-parasitic drug, according to a federal court filing in Manhattan.

The settlement, docketed in the U.S. District Court for the Southern District of New York, is related to a $40 million antitrust deal the company and the colleague, Vyera ex-CEO Kevin Mulleady, reached with the government in December, according to the motion for preliminary settlement approval.

“Pharma bro” Shkreli, the pharmaceutical industry’s imprisoned enfant terrible, was also hit with a $65 million fine and a lifetime ban Jan. 14 by the federal judge overseeing the enforcement action, which was brought by the Federal Trade Commission and six states.

Shkreli—known for flamboyant antics such as buying a never-mass-produced Wu-Tang Clan album and putting out a bounty on a lock of Hillary Clinton’s hair—has been serving a seven-year sentence since 2017 for defrauding investors and manipulating shares in a different biotech company he founded.

The anti-parasitic drug at the center of the cases, 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, including pregnant women.

The proposed antitrust class action against Shkreli, Mulleady, and Vyera, led by a Blue Cross Blue Shield affiliate, is one of several cases accusing them of jacking up Daraprim’s price by 4,000% after acquiring its rights, then conspiring to “thwart competition” that could have driven it back down.

Their tactics allegedly included exclusive restrictions in the contracts between Vyera and specialty manufacturers that effectively blocked competitors from accessing key market data or acquiring the ingredients needed to make Daraprim.

The settlement, disclosed Jan. 28, calls for an upfront $7 million payment, along with additional payments worth up to $21 million if sales of certain Vyera drugs hit specified targets. The agreement requires the approval of Judge Denis L. Cote, who imposed the earlier fine.

BCBS is represented by Robins Kaplan LLP. Vyera is represented by Morgan, Lewis & Bockius LLP. Shkreli is represented by Duane Morris LLP. Mulleady is represented by Kasowitz Benson Torres LLP.

The case is BCBSM Inc. v. Vyera Pharms. LLC, S.D.N.Y., No. 21-cv-1884, 1/28/22.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com