Blue Cross Alleges Vyera, Shkreli Monopolized Market for Daraprim

Blue Cross Blue Shield is taking action against Martin Shkreli and his former company, alleging that the defendants illegally increased the price of drug Daraprim by more than 4,000% after effectively monopolizing the drug’s market.

In a proposed class-action complaint filed Thursday in the Southern District of New York, Blue Cross claimed that Vyera Pharmaceuticals and its parent company, Phoenixus AG, along with former executives Shkreli and Kevin Mulleady, engaged in anticompetitive conduct to control the market for Daraprim, the only Food and Drug Administration-approved treatment for parasitic infection toxoplasmosis, inflating the drug’s price from $17.50 per tablet to $750 per tablet.

“Because Daraprim lacked patent and regulatory protections, Defendants understood that such an astronomical price increase would cause competitors to develop generic versions of Daraprim and sell them at lower prices,” the complaint contended. “To prevent this, and to make their planned price increase commercially viable, Defendants executed a scheme to thwart generic competition and force Daraprim purchasers to pay grossly inflated prices — all while concealing and misleading the public about their anticompetitive conduct.”

Blue Cross alleged that the defendants blocked generic competitors from producing the drug through contractual restrictions that would not allow distributors to sell Daraprim to generic manufacturers. The defendants also allegedly gained control of the market for Daraprim’s active ingredient, pyrimethamine, through purported agreements with pyrimethamine suppliers so that generic manufacturers could not access the suppliers. Vyera maintained 100% of the market share for pyrimethamine products since it bought the rights to Daraprim in 2015 until March 2020 when the first generic became available, the complaint said.

“Absent Defendants’ anticompetitive and deceptive conduct, multiple generic competitors would have entered the Daraprim market sooner and at lower prices, rendering Defendants’ price hike unsustainable — such that they would not have pursued it in the first place,” the complaint stated.

Vyera’s monopoly has potentially grave consequences for patients with toxoplasmosis, Blue Cross argued, adding there is no reasonable substitute for the drug: “(S)ince Defendants’ 4,000-plus percent price increase, hospitals are reluctant to keep Daraprim in stock, which can lead to dangerous delays when patients present with acute toxoplasmosis.”

The plaintiff requests an order enjoining the defendants from continuing the purported conduct and that the proposed class members be awarded damages, among other relief.

Robins Kaplan is representing Blue Cross.