Fed. Trade Comm'n v. Shkreli
| Decision Date | 14 January 2022 |
| Docket Number | 20cv00706 (DLC) |
| Citation | 581 F.Supp.3d 579 |
| Parties | FEDERAL TRADE COMMISSION, State of New York, State of California, State of Ohio, Commonwealth of Pennsylvania, State of Illinois, State of North Carolina, and Commonwealth of Virginia, Plaintiffs, v. Martin SHKRELI, Defendant. |
| Court | U.S. District Court — Southern District of New York |
For plaintiff Federal Trade Commission: Markus H. Meier, Bradley S. Albert, Armine Black, Daniel W. Butrymowicz, J. Maren Haneberg, Leah Hubinger, Lauren Peay, Neal J. Perlman, James H. Weingarten, Amanda Triplett, Matthew B. Weprin, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580.
For plaintiff State of New York: Elinor R. Hoffmann, Bryan Bloom, Jeremy R. Kasha, Amy E. McFarlane, Saami Zain, Office of the New York Attorney General, Antitrust Bureau, 28 Liberty Street, 20th Floor, New York, NY 10005.
For plaintiff State of California: Michael D. Battaglia, Office of the Attorney General of California, 455 Golden Gate Avenue, Suite 11000, San Francisco, CA 94102.
For plaintiff State of Illinois: Richard S. Schultz, Office of the Attorney General of Illinois, 100 W. Randolph Street, 11th Floor, Chicago, IL 60601.
For plaintiff State of North Carolina: Jessica V. Sutton, North Carolina Dept. of Justice, Consumer Protection Division, 114 West Edenton Street, Raleigh, NC 27603.
For plaintiff State of Ohio: Beth A. Finnerty, Office of the Ohio Attorney General, 150 E. Gay Street, 22nd Floor, Columbus, OH 43215.
For plaintiff Commonwealth of Pennsylvania: Joseph S. Betsko, Pennsylvania Office of Attorney General, Strawberry Square, 14th Floor, Harrisburg, PA 17120.
For plaintiff Commonwealth of Virginia: Tyler T. Henry, Office of the Attorney General of Virginia, 202 North Ninth Street, Richmond, VA 23219.
For defendant Martin Shkreli: Christopher H. Casey, Jeffrey S. Pollack, Andrew J. Rudowitz, Sarah Fehm Stewart, Sean P. McConnell, J. Manly Parks, Duane Morris LLP, 30 South 17th Street, Philadelphia, PA 19103.
A. Vyera Acquires Daraprim...599
...619
In 2015, Martin Shkreli raised the price of the life-saving pharmaceutical Daraprim
by 4,000% and initiated a scheme to block the entry of generic drug competition so that he could reap the profits from Daraprim sales for as long as possible. Through his tight control of the distribution of Daraprim, Shkreli prevented generic drug companies from getting access to the quantity of Daraprim they needed to conduct testing demanded by the Food and Drug Administration ("FDA"). Through exclusive supply agreements, Shkreli also blocked off access to the two most important manufacturers of the active pharmaceutical ingredient ("API") for Daraprim. Through these strategies, Shkreli delayed the entry of generic competition for at least eighteen months. Shkreli and his companies profited over $64 million from this scheme.
The Federal Trade Commission ("FTC") and seven States1 (the "States"; collectively,
"Plaintiffs") filed this action in 2020. At a bench trial held over seven days between December 14 and 22, 2021, the Plaintiffs carried their burden to establish that Shkreli violated federal and state laws that ban anticompetitive conduct. Based on the trial evidence, Shkreli will be barred for life from participating in the pharmaceutical industry and is ordered to disgorge $64.6 million in net profits from his wrongdoing. This Opinion contains the Findings of Fact and Conclusions of Law from the trial.
The Plaintiffs filed this action on January 27, 2020 and brought claims for violations of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 - 2, § 5(a) of the FTC Act, 15 U.S.C. § 45(a), and various state statutes.2 They brought these claims against Shkreli, Vyera Pharmaceuticals, LLC and its parent company Phoenixus AG ("Phoenixus"; together, "Vyera"), and Kevin Mulleady ("Mulleady"), former Vyera CEO and member of the Phoenixus Board of Directors (collectively, "Defendants"). The Defendants’ motion to dismiss was largely denied through an Opinion of August 18, 2020.3 See Fed. Trade Comm'n v. Vyera Pharms., LLC, 479 F. Supp. 3d 31 (S.D.N.Y. 2020).
Two decisions in 2021 addressed the Plaintiffs’ requests for equitable monetary relief.4 A June 2, 2021 Order granted the FTC's motion for leave to withdraw its prayer for equitable monetary relief pursuant to the Supreme Court's decision in AMG Cap. Mgmt., LLC v. Fed. Trade Comm'n, ––– U.S. ––––, 141 S. Ct. 1341, 1352, 209 L.Ed.2d 361 (2021). An Opinion of September 24 denied the Defendants’ motion for partial summary judgment on the nationwide scope of the States’ prayer for equitable monetary relief, and granted the Plaintiffs’ cross-motion for summary judgment on the same issue. See Fed. Trade Comm'n v. Vyera Pharms., LLC, No. 20CV00706 (DLC), 2021 WL 4392481, at *5 (S.D.N.Y. Sept. 24, 2021).
Only Shkreli proceeded to trial; on the eve of trial Vyera and Mulleady settled with both the FTC and the States. Before those settlements were reached, the parties’ submitted their Joint Pretrial Order, proposed findings of fact and conclusions of law, motions in limine, and pretrial memoranda on October 20. Following rulings on redactions, these submissions were filed on November 29.
As is customary for this Court's non-jury proceedings, and with consent of the parties, the direct testimony of those witnesses under a party's control were submitted with the Joint Pretrial Order.5 The parties also served copies of all exhibits
and deposition testimony that they intended to offer as evidence in chief at trial.6
Prior to trial, the motions in limine were decided. On November 5, Shkreli's motion in limine to preclude evidence relating to Retrophin, Inc. ("Retrophin"), a pharmaceutical company that Shkreli and Mulleady founded in 2011, was denied. Id., 2021 WL 5154119 (S.D.N.Y. Nov. 5, 2021). On November 10, motions by Shkreli and Mulleady to exclude the testimony of current and former employees of Vyera were addressed in an Opinion that set forth the standards that would govern the admissibility of such testimony. Id., 2021 WL 5236333 (S.D.N.Y. Nov. 10, 2021). An Opinion of November 12 denied the Defendants’ motion to exclude certain testimony of Plaintiffs’ expert Professor C. Scott Hemphill ("Hemphill"), an economist and Professor of Law at New York University, and granted the Plaintiffs’ motion to exclude certain opinions offered by Dr. Anupam B. Jena ("Dr. Jena"), a physician, economist, Professor of Health Care Policy and Medicine at Harvard Medical School, and Internal Medicine Specialist in the Department of Medicine at Massachusetts General Hospital. Id., 2021 WL 5279465 (S.D.N.Y. Nov. 12, 2021). Opinions of November 15 granted the Plaintiffs’ motion to exclude designated deposition testimony of Rule 30(b)(6), Fed. R. Civ. P., deponents that were not based on personal knowledge, id., 2021 WL 5300019 (S.D.N.Y. Nov. 15, 2021), and excluded testimony from Defendants’ expert Justin McLean, id., 2021 WL 5300031 (S.D.N.Y. Nov. 15, 2021). An Opinion of November 16 struck most of the testimony offered by Defendants’ expert Sheldon Bradshaw. Id., 2021 WL 5336949 (S.D.N.Y. Nov. 16, 2021).7 On November 18, the Plaintiffs’ motion to exclude portions of testimony by Defendants’ expert John S. Russell ("Russell"), Managing Partner for ASDO Consulting Group, a pharmaceutical consulting company, was largely granted. Id., 2021 WL 5403749 (S.D.N.Y. Nov. 18, 2021).
At trial, eleven fact witnesses and four expert witnesses called by the Plaintiffs testified. The Plaintiffs’ fact witnesses included one current Vyera executive -- Nicholas Pelliccione ("Pelliccione"), Vyera's Senior Vice President of Research and Development ("R&D") -- and four former executives and employees: Howard Dorfman, Vyera's General Counsel between December 2014 and August 2015; Christina Ghorban, Vyera's Head of Marketing and Business Analytics between April 2015 and October 2016; Dr. Eliseo Salinas ("Dr. Salinas"), Vyera's President of R&D between June 2015 and April 2017 and interim CEO between April and July 2017; and Mulleady, who worked at Vyera from October 2014 to June 2016, was appointed to Vyera's Board in June 2017, served as Executive Director and then CEO between October 2017 and February 2019, and was chairman of the Phoenixus...
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