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The U.S. Supreme Court declined on Monday to review former pharmaceutical executive Martin Shkreli's challenge to a $64 million disgorgement order, which was imposed after his alleged scheme to raise the price of a life-saving drug by 4,000%. The court's refusal to hear Shkreli's petition marks the latest development in the long-running legal saga stemming from his involvement with Daraprim, a drug used to treat parasitic infections.

Shkreli's Appeal Rejected Without Explanation

Shkreli had sought to challenge the substantial disgorgement order, arguing that he shouldn't be held responsible for the profits his company allegedly gained through monopolizing the Daraprim market. However, the Supreme Court denied his petition without explanation, as is common practice, leaving the Second Circuit's ruling in place. This decision keeps Shkreli on the hook for up to $64 million in profits.

The petition arose from an antitrust lawsuit brought by the Federal Trade Commission (FTC) and several states, accusing Shkreli of orchestrating a scheme to block competitors and inflate Daraprim's price from $17.50 to $750 per tablet. In addition to the disgorgement order, Shkreli has been banned from the pharmaceutical industry for life, though he did not contest that aspect of the ruling in his Supreme Court appeal.

Antitrust Violations and Disgorgement Order

The case, which became a defining moment in the public's perception of pharmaceutical pricing practices, centers on Shkreli's actions as the head of Vyera Pharmaceuticals, formerly known as Turing Pharmaceuticals. Enforcers accused Shkreli of acquiring Daraprim in 2015 and then enacting a series of anticompetitive measures to block generic drug manufacturers from entering the market. These actions allegedly included restricting access to drug samples for regulatory testing and signing exclusive supply contracts for the active ingredient in Daraprim.

Vyera and its parent company, Phoenixus AG, settled the claims shortly before trial in December 2021, agreeing to pay between $10 million and $40 million. Another executive, Kevin Mulleady, also accepted a seven-year ban from most roles in the pharmaceutical industry.

U.S. District Judge Denise L. Cote found Shkreli liable for antitrust violations after a seven-day bench trial in January 2022. In addition to banning Shkreli from the pharmaceutical industry, Judge Cote ordered him to pay $64 million in disgorgement for the profits Vyera made from the price hike, with the amount offset by previous settlement payments.

Shkreli's $64M Disgorgement rehearing : Second Circuit Ruling Affirmed Disgorgement

In January, the Second Circuit upheld the lower court's decision, finding that Shkreli’s lifetime ban was necessary to protect the public from future anticompetitive behavior. The court also rejected Shkreli's argument that he couldn't be ordered to disgorge profits along with his company under New York law. The court deemed joint-and-several liability appropriate because Shkreli was seen as the mastermind behind the anticompetitive scheme, directly benefiting from the profits as Vyera's founder and largest shareholder.

State attorneys general who opposed Shkreli's Supreme Court petition in August underscored this point, describing him as the central figure behind the price hike and monopolistic practices that kept Daraprim out of reach for many patients.

Shkreli's $64M Disgorgement rehearing :  Shkreli's Legal Battles Continue

Shkreli, who served four years in prison for securities fraud in an unrelated case, has faced additional legal controversies, including a dispute with a cryptocurrency group over ownership of a one-of-a-kind Wu-Tang Clan album. The government auctioned the album as part of an effort to satisfy the $7.3 million judgment stemming from his fraud conviction.

Shkreli was represented in his Supreme Court petition by attorney Thomas M. Huff, while the states were represented by their respective attorneys general. The case, Martin Shkreli v. Federal Trade Commission et al., is docketed as 23-1338 in the Supreme Court of the United States.