Martin Shkreli accused of violating lifetime ban from pharma industry in FTC and state contempt claim

The Federal Trade Commission (FTC), along with seven states, has taken significant legal action against Martin Shkreli, a former pharmaceutical executive infamous for his role in hiking the price of the life-saving drug Daraprim. The agencies have petitioned a federal court in New York to hold Shkreli in contempt, asserting that he has “flagrantly and repeatedly violated” a court order issued in 2022 that permanently barred him from the pharmaceutical industry.

Since his release from prison in May 2022, following a separate conviction for financial fraud, the FTC alleges that Shkreli has engaged in trading activities involving at least 60 stocks within the pharmaceutical sector. Additionally, Shkreli reportedly utilized various social media platforms, including YouTube and Twitter, to express his opinions on pharmaceutical business practices, which is claimed to contravene the existing legal restrictions placed upon him.

The court filing calls for judicial action that could involve the divestment of any pharmaceutical stocks held by Shkreli and imposes penalties that reflect his profits from illegal trading, including interest but excluding any potential offset from losses. Furthermore, it suggests escalating penalties for any future infractions, which could extend to financial fines or possibly incarceration.

This case stems from Shkreli’s previous actions while leading Vyera Pharmaceuticals, where he was found to have orchestrated a monopolistic strategy that significantly raised the price of Daraprim from .50 to 0 per tablet. Alongside the lifetime ban from the pharmaceutical sector, the court mandated that he pay over million in financial penalties. The ruling was upheld by the 2nd Circuit U.S. Court of Appeals in early 2024, and the Supreme Court refused to hear his appeal in October 2024.

As part of their legal strategy, the FTC’s motion has also requested that Shkreli’s sister and his partner be compelled to preserve all related evidence, suggesting their potential involvement in facilitating Shkreli’s alleged breaches of the court’s injunction.

The FTC has reiterated that the enforcement of a permanent industry prohibition carries weight only when violations are met with appropriate consequences. This action underscores the agency’s commitment to ensuring compliance with judicial orders, particularly in cases that have broader implications for public health and the pharmaceutical marketplace.

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