States Allowed To Seek Disgorgement Order In “Pharma Bro” Antitrust Case

New York and other states will be allowed to seek a nationwide disgorgement order if they win at trial on their claim that Vyera Pharmaceuticals and its former chief executive Martin Shkreli participated in an anticompetitive scheme to maintain a price boost for the life-saving drug Daraprim.

US District Judge Denise Cote in Manhattan federal court said in her ruling on Friday, September 24, that New York law permitted the state to move to recoup alleged ill-gotten corporate gains nationally.

The ruling was a blow to Swiss pharmaceutical Vyera and its parent, Phoenixus AG, which wanted to limit the reach of any pursuit of disgorgement to sales tied to victims within the plaintiff states.

Morgan, Lewis & Bockius partner Steve Reed, a lawyer for Vyera and Phoenixus, did not immediately return a message seeking comment on Monday. Duane Morris partner Christopher Case, who is representing Shkreli, also didn’t immediately return a message seeking comment.

New York, joined by six states and the Federal Trade Commission, sued Vyera, Shkreli and other defendants last year alleging anticompetitive efforts to suppress generic competition to maintain a price hike from US$17.50 to US$750 per tablet of the antiparasitic drug Daraprim. The drug is used to treat the potentially fatal infection toxoplasmosis.

The plaintiffs plan to seek recovery of Vyera’s net profits tied to US sales of Daraprim. A bench trial is scheduled to start in December.

A representative from the New York attorney general’s office did not immediately respond to a message on Monday seeking comment.

“The court can and should confirm its authority to grant the equitable monetary relief sought by the plaintiff states based on federal law alone,” lawyers for the plaintiff states stated in a court filing on August 28. The defendants “have not cited any authority for the proposition that a federal district court’s hands are tied.”

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