Blue Cross Blue Shield of Minnesota Settles Case Against ‘Pharma Bro’s’ Former Company
Martin Shkreli at a February 2016 congressional hearing C-SPAN's YouTube account

Blue Cross Blue Shield of Minnesota Settles Case Against ‘Pharma Bro’s’ Former Company

Martin Shkreli has agreed to pay millions back to health insurers, including Blue Cross Blue Shield of Minnesota.

A drug company formerly run by a man nicknamed “Pharma Bro” has reached a settlement to pay up to $28 million back to health insurers, including Blue Cross Blue Shield of Minnesota.

The settlement was submitted Friday, Jan. 28, in a class-action lawsuit that alleges anti-competitive practices by Vyera Pharmaceuticals, its parent company Phoenixus AG, and two former executives – Martin Shkreli and Kevin Mulleady.

The complaint, originally filed by Blue Cross on behalf of other third-party payers across the country in March of 2021, alleges the defendants monopolized the pharmaceutical market for Daraprim, a medicine used to treat a life-threatening parasitic infection.

In 2015, Vyera Pharmaceuticals – formerly Turing Pharmaceuticals – under the leadership of Martin Shkreli, purchased the rights to drugs including Daraprim. 

The price of Dataprim went from $17.50 to $750 per pill – an increase of more than 4,000 percent. The drug treats a rare parasitic disease suffered by pregnant women, cancer patients, and AIDS patients.

Vyera and Phoenixus agree in Friday’s settlement – which is pending approval with the federal district court in the Southern District of New York – to abandon their allegedly anticompetitive practices and pay up to $28 million to a proposed class of third-party payers that purchased Daraprim. It is unclear how much of the payout will go to Blue Cross Blue Shield of Minneasota.

“Blue Cross and Blue Shield of Minnesota believes that drug companies need to be held accountable for the uncontrollable rise of prescription drug costs,” Dana Erickson, president and CEO at Blue Cross and Blue Shield of Minnesota, said in a Monday news release. “We look forward to finalizing this settlement in the courts so that funds may be distributed appropriately to impacted members of the class.”

Vyera Pharmaceuticals and Phoenixus AG did not immediately respond to a request for comment on the settlement.

However, a proposed settlement statement on the case states: “Defendants deny any wrongdoing and liability. They agreed to the settlement to resolve the controversy and to avoid the burden and expense of further litigation.”

The settlement also requires Shkreli, a former executive nicknamed “Pharma Bro” by media outlets, to abide by the injunctive relief entered against him in a related lawsuit brought by the Federal Trade Commission, along with several states.

On Jan. 14, weeks after a seven-day bench trial in December, U.S. District Judge Denise Cote ordered Shkreli be banned from the pharmaceutical industry for life. He and Vyera Pharmaceuticals were also ordered to return $64.6 million in profits reaped from raising the price of Daraprim.

The December bench trial included recordings of conversations that Judge Cote said showed Shkreli continued to exert control over Vyera Pharmaceuticals from behind bars and discussed ways to thwart generic versions of Daraprim.

In a 135-page opinion by the judge, Cote wrote Shkreli “was no side player in, or a ‘remote, unrelated’ beneficiary of Vyera’s scheme” but was rather “the mastermind of its illegal conduct and the person principally responsible for it throughout the years.”

In 2015 Shkreli was arrested on securities fraud charges related to two failed hedge funds he ran before getting into the pharmaceutical industry. He resigned from his role as CEO of Turing (now Vyera Pharmaceuticals) a day after his arrest and was later convicted of lying to investors and cheating them out of millions of dollars.

Shkreli is now serving a seven-year sentence at a federal prison.