A class action lawsuit brought by Blue Cross and Blue Shield of Minnesota naming the infamous “pharma bro” Martin Shkreli has been settled for up to $28 million, the insurer announced Monday.
Shkreli controversially raised the price of the drug Daraprim, which is used to treat a potentially fatal parasitic infection called toxoplasmosis in vulnerable patients, by 4,000%, from $13.50 to $750 per pill in 2015.
Blue Cross filed suit in March of last year against Vyera Pharmaceuticals; its parent company, Phoenixus AG; and former executives Shkreli and Kevin Mulleady. The class action suit claimed that the defendants monopolized the market and targeted the drug because of the relatively small patient population and their ability to tightly control who could access Daraprim.
Reached by email Tuesday, Shkreli’s attorney Benjamin Brafman declined to comment on the settlement.
Ruling on a related lawsuit brought by seven states and the Federal Trade Commission, a federal judge recently ordered Shkreli to repay $64.6 million in profits made from the sale of Daraprim and banned him from the pharmaceutical industry for life.
“The risk of a recurrence here is real,” wrote Judge Denise Cote of the U.S. District Court for the Southern District of New York in her ruling on Jan. 14. “Shkreli has not expressed remorse or any awareness that his actions violated the law.”
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
The settlement Blue Cross’s suit on behalf of other payers is pending approval with the federal district court in the Southern District of New York.
According to the settlement agreement, which Blue Cross said was submitted for the court’s approval on Friday, Vyera and Phoenixus are required to abandon alleged anticompetitive practices and pay up to $28 million to a proposed class of third-party payers that purchased Daraprim.
Blue Cross is represented in the lawsuit by Robins Kaplan LLP.
“We are pleased to be on the path towards compensating class members who we allege were harmed by the defendants’ scheme,” said Kellie Lerner, co-chair of Robins Kaplan’s Antitrust and Trade Regulation Group, in the insurer’s news release. “We hope this settlement sends a clear message that private payers will fight against unconscionable price increases.”
The settlement also reiterates that Shkreli has to abide by the terms of Judge Cote’s ruling and stay away from the pharma industry for life.
“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, president and CEO at Blue Cross and Blue Shield of Minnesota, in a statement. “We look forward to finalizing this settlement in the courts so that funds may be distributed appropriately to impacted members of the class.”
Shkreli is currently serving a seven-year prison sentence after being found guilty, in 2017, of wire and securities fraud in connection with two hedge funds and another pharma company he managed.
Photo: Blablo101, Getty Images
