Companies founded by notorious “Pharma Bro” Martin Shkreli have agreed to pay up to $28 million to settle a class-action lawsuit related to claims they illegally thwarted competition to the prescription medication Daraprim after its price was raised by more than 4,000%, according to new court filings.
The companies’ settlement with a class led by Blue Cross & Blue Shield of Minnesota, which includes other third-party insurer payers for Daraprim, comes two weeks after a judge ordered Shkreli be banned for life from the pharmaceuticals’ industry, and that he pay back $64.6 million in profits from the drug.
The settlement deal between Vyera Pharmaceutics, its parent firm Phoenixus AG, Shkreli, another former company executive Kevin Mulleady, and Blue Cross has to be approved by a federal judge in Manhattan. Under terms of the proposed settlement, the defendants did not admit wrongdoing.
The up-to-$28 million payout from Vyera and Phoenixus will come from the $40 million that the company earlier agreed to pay to end a lawsuit filed by the Federal Trade Commission, which alleged illegal monopolistic activity.
Shkreli chose to go to trial on the FTC’s claims, which led to finding by a federal judge that while serving as Vyera’s CEO, he had violated federal and state laws with anticompetitive conduct to protect profits from Daraprim.
The drug is used to treat parasitic infections in pregnant women, babies, HIV patients, and others.
Shkreli controversially raised the drug’s price from $13.50 per pill to a whopping $750 per pill in 2015.
“Blue Cross and Blue Shield of Minnesota believes that drug companies need to be held accountable for the uncontrollable rise of prescription drug costs,” said Dana Erickson, CEO of that insurer.
Lawyers for the defendants did not immediately respond to requests for comment.
Shkreli is serving a seven-year federal prison term for financial crimes unrelated to his controversial price increase of Daraprim. He is due to be released in November.
In her ruling against him this month, Judge Denise Cote found that Shkreli “initiated a scheme to block the entry of generic drug competition so that he could reap the profits from Daraprim sales for as long as possible” when he increased the price of the drug.
“Through his tight control of the distribution of Daraprim, Shkreli prevented generic drug companies from getting access to the quantity of Daraprim they needed to conduct testing demanded by the Food and Drug Administration,” the judge wrote.
“Through exclusive supply agreements, Shkreli also blocked off access to the two most important manufacturers of the active pharmaceutical ingredient … for Daraprim.”