Shkreli inflated price of life-saving drug from federal prison, FTC says
Martin Shkreli conspired to illegally increase the price of a life-saving drug during phone calls he made from prison, according to the US Federal Trade Commission (FTC).
In a letter issued on 12 August to the US District Court for the Southern District of New York Judge Denise Cote, the FTC has claimed that phone conversations Shkreli made to his lawyers must be made available to attorneys prosecuting an antitrust case against the “pharma bro”. Shkreli, who has been imprisoned since September 2017 for an unrelated securities fraud, claimed in June that these phone calls were protected according to attorney-client privilege.
In the letter, the FTC has requested a court ruling “that the monitored and recorded communications of Martin Shkreli that the FTC obtained from the Federal Bureau of Prisons (BOP) are not privileged”.
Earlier this year, the FTC sued Shkreli and Vyera Pharmaceuticals, which he founded in 2015, accusing them of unlawfully monopolising the market for Daraprim (pyrimethamine). In an unusual move, the FTC is seeking to hold an individual defendant liable for an alleged monopoly.
In April, the FTC filed an amended complaint, adding the states of California, Illinois, North Carolina, Ohio, Pennsylvania, and Virginia as co-complainants. According to the claim, when Vyera (previously known as Turing Pharmaceuticals) acquired the US rights to Daraprim from the only existing supplier in 2015, the drug had been an affordable, life-saving treatment for more than 60 years. After buying the rights, Vyera immediately raised the price from $17.50 to $750 per tablet – an increase of 4000%.
The FTC claimed in the letter to Judge Cote that Shkreli’s prison phone calls include communications with executives of Vyera, and directors of its parent company Phoenixus. These included calls with Phoenixus chairman Kevin Mulleady, who the FTC has accused of conspiring with Shkreli to grossly hike the price of Daraprim and stifle competition.
It added that from these communications, the FTC secured information relevant to the case, including about Mr. Shkreli’s efforts from prison to support Vyera’s scheme to prevent generic competition to Daraprim.
However, the FTC has been unable to access Skraeli’s communications with lawyers made through the numerous confidential channels that the BOP makes available to inmates, such as unmonitored phone calls, meetings and mail.
The letter stated that Shkreli and his attorneys would have known that BOP was monitoring and recording his calls and email and pointed to case law that held, “a phone call that a ‘prisoner knows is being recorded by prison authorities’ is not privileged because that communication is “not made in confidence and thus constitute[s] a waiver of the privilege”.
In July, Shkreli filed a motion for the court to dismiss the case against him, arguing that he cannot be held personally responsible for any of the allegations. Lawyers for Shkreli wrote that the FTC’s allegations of Shkreli’s direct involvement in the alleged misconduct, during his spell as CEO of Vytera, were “vague and nonspecific”.
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