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‘Pharma Bro’ Martin Shkreli Must Face Antitrust Suit for Now

April 11, 2019, 3:54 PM

Martin Shkreli failed to convince a federal judge to dismiss an antitrust lawsuit against him April 10, about a week after reports that the imprisoned “pharma bro” had been placed in solitary confinement.

Shkreli, Retrophin Inc., and two related companies are facing claims that they unlawfully shielded the blockbuster kidney drug Thiola from competition by refusing to put out samples that competing pharmaceutical companies must use, under federal law, to demonstrate the “bioequivalence” of their generics.

They will now have to undergo 90 days of limited discovery to determine whether plaintiff Spring Pharmaceuticals LLC has standing to sue by virtue of the investment it made preparing to develop a generic Thiola rival, according to the ruling by Judge J. Curtis Joyner of the U.S. District Court of the Eastern District of Pennsylvania.

Joyner declined to rule on Shkreli’s argument that Spring lacks standing because it was not a fully operational company on the verge of rolling out a drug to compete with Thiola, which is used to treat a rare genetic kidney disease that causes cyst formation.

Spring has countered that although it was a newly formed business, it was founded with significant financial backing specifically to develop generic drugs. The company claims it was ready to begin development of a Thiola generic as soon as it obtained the samples that Shkreli and Retrophin refused to make available.

The 90 days of limited discovery will probe those claims, which, if true, would give Spring standing to proceed, Joyner said. He stayed Shkreli’s motion to dismiss the lawsuit, which also names two affiliates, Mission Pharmacal Co. and Alamo Pharmacy Services Inc., as defendants.

The ruling followed eight days after news media reports emerged that Shkreli was sent to solitary after corrections authorities read in the Wall Street Journal that he was using a smuggled cellphone to run an unrelated company, Phoenixus AG, from the New Jersey federal prison where he’s serving seven years for defrauding hedge fund investors.

Spring is represented by Winston & Strawn and Stevens & Lee. Shkreli is represented by Fox Rothschild LLP. Retrophin is represented by Cooley LLP and Drinker Biddle & Reath. Mission and Alamo are represented by Norton Rose Fulbright US LLP.

The case is Spring Pharm. LLC v. Retrophin Inc., E.D. Pa., No. 18-cv-4553, 4/10/19.

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

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; C. Reilly Larson at rlarson@bloomberglaw.com