Markets Wired

The Federal Trade Commission has filed a complaint in federal court against Vyera Pharmaceuticals, LLC, alleging an elaborate anticompetitive scheme to preserve a monopoly for the life-saving drug, Daraprim.

Daraprim is the gold standard treatment for a rare, potentially fatal parasitic infection known as toxoplasmosis. In most people, toxoplasmosis is easily contained by the immune system and causes no symptoms, according to the complaint. But for those with compromised immune systems—such as individuals with HIV/AIDS, cancer patients, or recipients of organ transplants—toxoplasmosis can lead to deadly infections of the brain and lungs.

“Daraprim is a lifesaving drug for vulnerable patients,” said Gail Levine, Deputy Director of the Bureau of Competition at the Federal Trade Commission. “Vyera kept the price of Daraprim astronomically high by illegally boxing out the competition.”

The complaint, which the FTC filed jointly with the New York State Office of the Attorney General, alleges that when Vyera acquired Daraprim, the drug had been an affordable, life-saving treatment for more than 60 years. Vyera immediately raised the list price from $17.50 to $750 per tablet, which significantly impacted access to care. Because the defendants knew the increase would attract generic competition, they maneuvered to preserve the Daraprim revenue stream, according to the complaint. They illegally restrained trade through restrictive distribution agreements that ensured that would-be generic entrants could not buy samples of Daraprim, the complaint alleges. Without samples, generics were unable to conduct the FDA-mandated bioequivalence tests necessary for obtaining approval. The defendants also prevented competitors from accessing a critical ingredient used to manufacture Daraprim.

In addition, the defendants signed “data blocking” agreements preventing several distributors from selling Daraprim sales data to third-party data reporting companies, the complaint alleges. Generic companies rely on this data to assess whether a given development project is worth pursuing. With these agreements, the defendants sought to keep potential generic competitors from accurately assessing the market.

The complaint alleges that consumers and other purchasers of Daraprim likely would have saved tens of millions of dollars by purchasing generic versions of Daraprim. Instead, as a result of the defendants’ anticompetitive conduct, there is no generic version on the market today.

The FTC’s complaint also names as defendants Martin Shkreli and Kevin Mulleady, who allegedly were directly responsible for orchestrating the anticompetitive scheme, as well as Phoenixus AG, Vyera’s parent company.

The complaint seeks equitable monetary relief to provide redress to purchasers who have overpaid for the drug. The complaint also seeks remedial injunctive relief to restore competitive conditions to the market, halt any ongoing anticompetitive conduct, and prevent the defendants from engaging in similar conduct in the future.

The Commission vote authorizing the staff to file the complaint was 5-0. Commissioners Rohit Chopra and Rebecca Kelly Slaughter issued concurring statements. The complaint was filed on Jan. 27, 2020, in the U.S. District Court for the Southern District of New York.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about how competition benefits consumers or file an antitrust complaint. Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.