In a unanimous decision, a three-judge panel on the 2nd U.S. Circuit Court of Appeals upheld the lifetime ban imposed on Martin Shkreli, widely known as ‘pharma bro,’ from the pharmaceutical industry. The ruling also mandated Shkreli to disgorge up to $64.6 million in profits linked to obstructing competition for the drug Daraprim, CNBC reported.
Initially enforced by a New York federal judge two years ago, the ban was a response to a civil lawsuit initiated by the Federal Trade Commission (FTC) and seven states, including New York and California. The legal action accused Shkreli and his companies, Vyera Pharmaceuticals, and Phoenixus AG, of violating antitrust laws by impeding generic drugmakers from accessing Daraprim for testing purposes.
Shkreli gained infamy in 2015 when his company drastically increased the price of Daraprim, a life-saving drug, by more than 4,000% overnight. Despite serving a prison term for federal securities fraud unrelated to the drug’s price hike, the recent ruling reaffirms the severity of the lifetime ban.
Shkreli’s lawyer, Benjamin Brafman expressed discontent to CNBC with the decision, stating, “The lifetime ban is too severe.” Brafman argued that the courts should encourage individuals like Shkreli, highlighting that his fraud conviction was unrelated to the pharmaceutical industry.
The FTC offered no immediate comment on the appeals court decision.
The lawsuit alleged that Shkreli’s actions allowed him and others to protect profits from selling Daraprim at an exorbitant price of $750 per tablet, compared to its previous cost of $17.50.
The panel emphasized that the Federal Trade Commission Act empowers the FTC to seek injunctive relief for violations, such as a lifetime ban. It concluded that the district court’s decision did not abuse discretion, considering Shkreli’s “egregious, deliberate, repetitive, long-running, and ultimately dangerous” illegal scheme.
Regarding the monetary penalty, the ruling noted Shkreli’s appeal against the reliance on federal law remedies under New York law. The panel rejected this argument, citing Shkreli’s strategic decision at trial to rely exclusively on federal equity jurisprudence, not raising any state law arguments.
“Therefore, the circumstances here do not persuade us that we should exercise our discretion to address this new argument on appeal,” the Court said in its ruling. “Given his strategic decision in the district court, there is no injustice to Shkreli by us declining to address his new argument.”
In a footnote, the panel addressed the possibility of Shkreli’s argument not being effectively waived and stated that it would still fail, emphasizing the lack of injustice to Shkreli by declining to address the new argument.
Jim Thomas | [email protected]
Jim Thomas is a writer based in Indiana. He holds a bachelor’s degree in Political Science, a law degree from U.I.C. Law School, and has practiced law for more than 20 years.
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