FTC Challenges Martin Shkreli Over Pharma Industry Ban Violation

The Federal Trade Commission and seven states asked a federal judge Tuesday to hold Martin Shkreli in contempt after alleging he violated a 2022 court order that permanently banned him from the pharmaceutical industry. The FTC and states said Shkreli traded at least 60 pharmaceutical industry stocks and publicly commented on pharmaceutical companies after his release from prison in May 2022. The filing described the alleged conduct as "flagrantly and repeatedly violated" the 2022 order, which followed a civil case involving an alleged scheme to maintain a monopoly involving Daraprim.

The FTC asked the judge to order Shkreli to "divest any pharmaceutical company stocks he currently owns" and seek repayment tied to profits from stock trading without accounting for losses, according to the filing.

The filing also requested that Shkreli "pay a fine equal to his profits from any pharmaceutical company stock trading (plus prejudgment interest) without the ability to account for offsetting losses." The FTC further asked the court to impose future penalties if violations continue, including a requirement that Shkreli "face clear and escalating consequences for any future violations, including financial penalties and potential incarceration."

FTC Commissioner Mark Meador addressed the enforcement action, saying the agency was seeking consequences for violations of a court order. "A lifetime industry ban is only effective if breaches are met with consequences commensurate with the seriousness of the order." Meador, FTC Commissioner, said.

The civil order came after a court found Shkreli had engaged in conduct related to Daraprim, an anti-parasitic drug, and ordered him to give up more than $64 million. FTC Bureau of Competition Director Daniel Guarnera said the original case affected prescription drug costs and competition for lower-cost alternatives. "After a full trial, the court found that Martin Shkreli's conduct drove up prescription drug costs for American patients and blocked the entry of lower-cost generics," Guarnera, director of the FTC's Bureau of Competition, said.

Guarnera added that court orders must be followed after they are issued.

"When judgment is entered by a court, whether it's a settlement or an order following a trial, defendants must fulfill their obligations," Guarnera said. Guarnera said the FTC would continue enforcing violations of court decisions. "Today's action should serve as notice that the FTC will not hesitate to enforce violations of court orders." Guarnera said.

The civil matter is separate from Shkreli's 2017 conviction on securities fraud charges involving hedge funds he operated and another drug company he founded. He was sentenced to seven years in federal prison in 2018 and released in 2022.