Company to Pay $40M Over Allegations it Raised Price of Exclusive Drug By 4000 Percent

Vyera Pharmaceuticals LLC and its parent company, Phoenixus AG, agreed to pay up to $40 million in a settlement after the Federal Trade Commission and seven U.S. states sued them for increasing the price of Daraprim by about 4,000 percent.

After obtaining rights to Daraprim in 2015, Vyera raised the price from $17.50 to $750 per pill. This left some patients paying as much as $16,000 in co-payments.

The lawsuit also accused Vyera of preventing competitors from making a cheaper generic version of the drug, creating a "a web of anticompetitive restrictions."

The drug is used to treat toxoplasmosis, a disease resulting from infection with Toxoplasma gondii, a common parasite. It can be deadly to people with weakened immune systems and can cause complications for children born after their mothers were infected during pregnancy.

Martin Shkreli, Vyera's former CEO who allegedly was the mind behind the price gouge, reportedly wrote in an email to a contact that acquiring the drug "should be a very handsome investment for all of us."

The Tuesday settlement requires the companies to pay the $40 million to customers they overcharged over a 10-year period. It will also make Daraprim more easily available to potential competitors.

Martin Shkreli, pharmaceuticals
Vyera Pharmaceuticals, a company once owned by Martin Shkreli, will pay up to $40 million to settle allegations that it jacked up the price of a life-saving medication by roughly 4,000% after obtaining exclusive rights to the drug. Above, Shkreli speaks on Capitol Hill in Washington on February 4, 2016, during the House Committee on Oversight and Reform Committee hearing on his former company's decision to raise the price of a lifesaving medicine. Susan Walsh, File/AP Photo

The company was sued in federal court in New York by the FTC and seven states: New York, California, Illinois, North Carolina, Ohio, Pennsylvania, and Virginia.

The lawsuit alleged that Vyera hiked the price of Daraprim and prevented other companies from creating cheaper generic versions by, among other things, blocking their access to a key ingredient for the medication and to data the companies would want to evaluate the drug's market potential.

An after-hours email message to Vyera seeking comment wasn't immediately returned. But after the lawsuit was filed last year, the company called its claims meritless and denied that its actions froze out potential competitors.

Former Vyera CEO Kevin Mulleady agreed to pay $250,000 if he violates the settlement, which in general bars him from "working for, consulting for, or controlling a pharmaceutical company" for seven years, according to an FTC statement.

The settlement doesn't stop litigation against Shkreli, who was dubbed the "Pharma Bro" and allegedly masterminded the scheme as Vyera's first CEO. The lawsuit filed against him by the FTC and the states is scheduled for trial next week.

Shkreli currently is serving a seven-year prison sentence for a securities-fraud conviction related to hedge funds he ran before getting into the pharmaceuticals industry.

The Associated Press contributed to this report.

12_30_Shkreli_01
The Tuesday settlement requires the companies to pay the $40 million to customers they overcharged over a 10-year period. It will also make Daraprim more easily available to potential competitors. Above, Martin Shkreli, the alleged mastermind behind the price gouging. Lucas Jackson/Reuters