'Pharma bro' Martin Shkreli just got hit with a 9-figure lawsuit by health insurers who say he illegally hiked the price of a life-saving drug for HIV patients

  • Shkreli is in prison, but he and his drug firms face lawsuits over their Daraprim price hikes.
  • The US government sued Shkreli over the hikes in 2020, and he is fighting the case from prison.
  • Insurers said they could have saved at least $200 million if Shkreli hadn’t blocked competition.
  • Visit the Business section of Insider for more stories.

Martin Shkreli, the pharmaceutical executive whose 4,100% price hike on a drug used by HIV patients stoked public outrage, has been hit with a new lawsuit from health insurers who alleged he illegally monopolized the market for the drug.

Daraprim was not a very valuable drug when Shkreli and his companies Vyera Pharmaceuticals and Phoenixus AG acquired it in 2015. But when they raised its price by over 41 times, they prevented a generic version from reaching the market for years, the proposed class action filed Thursday by Blue Cross and Blue Shield of Minnesota alleged.

Shkreli and his pharmaceutical companies are being sued by the US government over the price hikes, but this is the first lawsuit brought by a private company.

The nonprofit insurer alleged Shkreli and the companies illegally cornered the market for a key ingredient and prevented would-be competitors from acquiring samples or sales data. Insurers could have saved “hundreds of millions of dollars” if the defendants hadn’t impeded competition from generic drugmakers, the suit alleged.

“Publicly, defendants claimed they welcomed generic competition, calling it a ‘great thing,'” the suit said. “But in private, defendants blocked competitors from performing generic testing through contractual restrictions that forbade distributors and other purchasers from selling Daraprim to generic companies.” 

Shkreli is serving a seven-year prison sentence for securities fraud unrelated to Vyera or Daraprim. He’s expected to be released in 2023.

For the past year, he has been fighting the government’s lawsuit over his price hikes from behind bars. The Federal Trade Commission and a coalition of states alleged Shkreli, his companies, and his business associate Kevin Mulleady violated antitrust laws.

Shkreli tried to get that case dismissed, saying he couldn’t effectively coordinate with his lawyers while in prison. But a judge allowed it to move forward. The parties are supposed to complete their exchange of evidence — including recorded calls between Mulleady and Shkreli — by the end of August.

Before Shkreli’s companies acquired it, Daraprim grossed about $1 million in sales per year. It was often kept on hand by hospitals to treat toxoplasmosis, a rare disease that can be deadly in people with weakened immune systems, like people with HIV and AIDS. The lawsuits alleged Shkreli and his associates used illegal methods to keep prices high for years, even though the drug wasn’t patent-protected.

Vyera, Phoenixus, and Mulleady didn’t respond to emails or LinkedIn messages seeking comment on Thursday, and Shkreli couldn’t be reached. All have denied wrongdoing in the FTC’s lawsuit.

Shkreli was known for his offensive and eyebrow-raising conduct even after he was criminally charged. He used the income he gained from his investment activities for lavish purchases, like a $2 million album by the Wu-Tang Clan, and his bail was revoked in 2017 after he offered a reward to anyone who could produce a sample of Hillary Clinton’s hair.

He has maintained an unusually high profile while behind bars. In addition to the lawsuit from the FTC, it was reported in 2020 that he had a romantic relationship with a former Bloomberg reporter, Christie Smythe, who had previously written about him.

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