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Distribution Network for Daraprim May Violate Antitrust Laws

— October 14, 2015

New York’s AG is investigating Martin Shkreli of Turing Pharmaceuticals for possible violation of antitrust laws. It seems Big Pharma’s bad boy has set up a distribution network for the anti-parasitic drug, Daraprim, that will all but eliminate the possibility of generic competition. Needless to say, AG Eric Schneiderman is not pleased.

The Big Pharma bro everyone loves to hate, Martin Shkreli, is back in the news. This time, he’s attracted the attention of the New York Attorney General’s office. Suffice to say, Eric Schneiderman is not pleased with Shkreli’s latest antics. The distribution network for Daraprim may violate antitrust laws.

Shkreli first attracted national attention when his company, Turing Pharmaceuticals, bought the rights to Daraprim. The anti-parasitic drug is crucial in treating toxoplasmosis, a serious infection that could be fatal to those with compromised immune systems, such as chemotherapy and AIDS patients. Turing’s first move was to raise the price of Daraprim (for which no generics are currently available) from $13.50 per pill to $750 per pill.

Big Pharma’s bad boy thought this was perfectly reasonable and even defended the move by quipping that the drug is still a bargain because it saves lives. After intense public outcry, including presidential hopeful Hillary Clinton, who vowed to reform the corrupt industry, Shkreli backpedalled saying he would lower the price to an undisclosed amount.


The antitrust bureau chief for AG Schneiderman, Eric Stock, sent Shkreli a letter this week. In it, Stock requested that Shkreli contact his office “immediately” to discuss concerns that the restrictive distribution channel Turing set up violates antitrust laws by deterring other companies from developing a generic for Daraprim.

Stock wrote, “We understand that Turing is not permitting Daraprim to be sold in retail pharmacies, but rather is distributing it only through a small number of specialty pharmacies.”

Indeed, Turing forces doctors and patients who need Daraprim to get in touch with Walgreens Boots Alliance, Inc.’s specialty pharmacy. That is the only option available on the Daraprim website.

Stock and Schneiderman are worried, rightly so, that this plan will prevent a generic version of Daraprim from being developed. You see, generic companies need samples of Daraprim (or any other drug) in order to conduct the studies they need for regulatory approval of the generic version. Since only doctors and patients can get the drug from the specialty pharmacy, Shkreli has effectively cut off any possibility of competition.

Stock’s letter went on to say: “Turing’s actions may be restraining competition unlawfully, and have the potential to greatly impede access to a drug that is critical for the public health.”

It’s not the first time Shkreli has run afoul of the law. Federal prosecutors in Brooklyn, New York are currently investigating the 32-year-old “vulture-capitalist” in connection with his former company, Retrophin, Inc. That potential case involves securities violations.


Turing Drug Distribution Probed by N.Y. After Price Hike

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