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Pharma Bro Martin Shkreli Loses a Round in Court, Could Face Lifetime Ban from Industry He Corrupted

A federal court threw out “Pharma Bro” Martin Shkreli’s motion to dismiss a lawsuit that could result in a ban from ever working in the pharmaceutical industry again.

In Jan. 2020, New York State Attorney General Letitia James (D) filed a lawsuit—which was later joined by the Federal Trade Commission (FTC) and the attorneys general of California, Illinois, North Carolina, Ohio, Pennsylvania, Virginia—against Vyera Pharmaceuticals, LLC (formerly known as Turing Pharmaceuticals) and two of its former CEOs: Shkreli and Kevin Mulleady. Denying Shkreli’s motion to dismiss that lawsuit on Tuesday, U.S. District Judge for the Southern District of New York Denise Cote unceremoniously threw out Shkreli’s arguments, one by one.

Shkreli is currently serving a 7-year sentence in federal prison for securities fraud, but the recent lawsuit alleged a somewhat creative theory that could bring about compensation for Shkreli’s victims: that Shkreli and Mulleady violated consumer protection laws by creating a monopoly for the drug Daraprim. According to the pleadings, Shkreli continues to carry out his scheme even from his prison cell, via the use of electronic communications and in-person visits.

The lawsuit seeks not only monetary compensation for Shkreli’s victims, but also an order banning the Shkreli and Mulleady from the pharmaceutical industry for life. It appears that Shkreli does intend to work in that industry in the future; in April, he petitioned unsuccessfully for release during the coronavirus pandemic, stating that he is uniquely qualified to conduct lifesaving COVID-19 research.

In Shkreli’s motion to dismiss, he advanced a host of arguments. Any conduct, he contended, failed to amount to illegal restraint of trade. Plus, he claimed, the conduct halted once his prison sentence began. The court flatly disagreed, finding that the complaint did indeed allege conduct that, if proven, would constitute a violation of federal antitrust laws.

Because the case was only at the motion-to-dismiss phase, the court is obligated to view the allegations in the light most favorable to the plaintiff. Here, Judge Cote found that because the amended complaint alleged that Shkreli and Mulleady still hold leadership positions and decision-making power at Vyera, the case survives to the next phase of litigation.

Judge Cote’s ruling denying Shkreli’s motion to dismiss does not indicate anything specific as to the strength of the case against Shkreli; rather, it simply indicates that the plaintiffs alleged facts necessary to potentially prove a claim against Shkreli. The case will now move forward toward trial.

Attorney General James release a statement in response to the news:

This order will not only ensure our case against Shkreli and his company continue, but that at-risk patients and victims of this fraud get their day in court. Our bipartisan coalition will stop Vyera’s egregious conduct, make the company pay for its illegal scheming, and block Martin Shkreli from ever working in the pharmaceutical industry again because we will never allow greedy pharmaceutical companies and CEOs to line their pockets at the expense of suffering patients.

[Image via Spencer Platt/Getty Images]

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Elura is a columnist and trial analyst for Law & Crime. Elura is also a former civil prosecutor for NYC's Administration for Children's Services, the CEO of Lawyer Up, and the author of How To Talk To Your Lawyer and the Legalese-to-English series. Follow Elura on Twitter @elurananos