Friday 28 October 2016

Vilified drug firm boss Martin Shkreli denies fraud charges

Published 18/12/2015 | 03:16

Martin Shkreli leaves court after his arraignment in New York (AP)
Martin Shkreli leaves court after his arraignment in New York (AP)

Martin Shkreli, the former hedge fund manager vilified across America for buying a pharmaceutical company and increasing the price of a life-saving drug has denied securities fraud charges and "expects to be fully vindicated".

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The 32-year-old entrepreneur's spokesman Craig Stevens said: "It is no coincidence that these charges, the result of investigations which have been languishing for considerable time, have been filed at the same time of Shkreli's high-profile, controversial and yet unrelated activities."

Shkreli, who has called himself "the world's most eligible bachelor" on Twitter and recently plunged into the hip-hop world by buying an unreleased album by the group Wu-Tang Clan - was arrested in a grey hoodie and taken into federal court in Brooklyn, where he pleaded not guilty. He was released on five million dollars' (£3.3m) bail.

If convicted, he could serve up to 20 years in prison. He left court without speaking to reporters but h ours later, he tweeted: "Glad to be home. Thanks for the support."

He was charged in a seven-count indictment unconnected to the drug price rises imposed by his company, Turing Pharmaceuticals.

The charges instead involve his actions at another drug company, Retrophin, which he ran as chief executive from 2012 to 2014.

The indictment said Shkreli and others orchestrated three inter-related fraud schemes from 2009 to 2014.

It said they fraudulently induced investors to sink their money into two separate funds and misappropriated Retrophin's assets to satisfy Shkreli's personal and professional debts. He is charged with securities fraud and conspiracy.

A second defendant, lawyer Evan Greebel, of Scarsdale, New York, is charged with conspiracy. He has pleaded not guilty.

Shkreli has found himself at the centre of a storm over drug pricing in the last few months and he has not been afraid to throw on more fuel.

It began after Turing Pharmaceuticals, spent 55 million dollars (£37 million) in August for the US rights to sell Daraprim, a 62-year-old drug for a rare parasitic infection, and promptly raised the price from 13.50 dollars (£9) to 750 dollars (£504) per pill.

The drug is the only approved treatment for toxoplasmosis, a disease that mainly strikes pregnant women, cancer patients and Aids patients.

The move sparked outrage that resounded from the presidential campaign to the punk rock world and turned him into the new face of corporate greed.

Doctors and medical groups said the price rise was cutting patients off from life-saving treatment, activists protested outside Turing's offices, and the episode helped prompt a Senate hearing on drug prices.

Democratic US presidential front-runner Hillary Clinton called it price gouging and said the company's behaviour was "outrageous".

Republican White House hopeful Donald Trump called Shkreli "a spoiled brat" and Bernie Sanders returned a donation from him.

Indie record label Collect Records said it was severing ties with Shkreli, who had been an investor.

Shkreli said the company would cut the price of Daraprim. But last month Turing reneged. Instead, the company is reducing what it charges hospitals for Daraprim by as much as 50%.

While most patients' co-payments will be 10 dollars (£6.70) or less a month, insurance companies will be stuck with the bulk of the tab, potentially driving up future treatment and insurance costs.

Shkreli has said that insurance and other programmes allow patients to get the drug despite the cost, and that the profits are helping fund research into new treatments.

But he has also unapologetically emphasised a business-is-business argument for the price jump. In fact, he recently said he probably should have raised it more.

"No one wants to say it, no one's proud of it, but this is a capitalist society, a capitalist system and capitalist rules," he said in an interview at the Forbes Healthcare Summit this month.

"And my investors expect me to maximise profits, not to minimise them or go half or go 70% but to go to 100% of the profit curve."

Shkreli's public profile added another dimension when it recently emerged that he bought the only copy of a Wu-Tang Clan album, Once Upon A Time In Shaolin, which the group sold on the condition that it not be released publicly.

He said he paid two million dollars (£1.3 million).

In August, Retrophin sued Shkreli for more than 65 million dollars (£44 million), accusing him of using his control of the company to enrich himself and to pay off the claims of financial fund investors he had defrauded.

Press Association

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