The US District Court for the Southern District of New York Imposes Lifetime Ban Against Pharmaceutical Executive and Requires $65 Million Payment for Antitrust Violation (Martin Shkreli)

Abstract

This short article discusses the ruling that imposed a lifetime ban on “Pharma Bro” Martin Shkreli, perhaps the most notorious “bad actor” in the pharmaceutical industry, and required that he pay $65 million in excess profits he obtained from anticompetitive conduct relating to the drug Daraprim.

The piece explains how the court found that Shkreli’s company, Vyera, had market power and how it employed two strategies to engage in an unreasonable restraint of trade. First, it used a closed distribution system, bottle limits, and a surveillance system to make it difficult for generics to obtain the samples needed for equivalence testing. And second, it used exclusive supply agreements that blocked access to the active pharmaceutical ingredient used in the drug.

It concludes that FTC v. Shkreli is an important case because of (1) its reminder of brand firms’ use of a vast array of activity to delay generic competition, (2) the sheer brashness of Shkreli’s belt-and-suspenders-and-braces approach, and (3) his lifetime ban from the pharmaceutical industry.

Keywords: pharmaceuticals, drugs, antitrust, Pharma Bro, Martin Shkreli

JEL Classification: I18, K21, L40, L41, L43, L65, O34, O38