Big US pharmacies square off on Daraprim supplies | Business News

Big US pharmacies square off on Daraprim supplies

23 Dec 2015 | Author: | No comments yet »

Drug C.E.O. Martin Shkreli Arrested on Fraud Charges.

As Turing Pharmaceuticals Chief Executive Officer Martin Shkreli contends with charges of securities fraud, major U.S. pharmacies are moving to assure patients of continued access to the company’s key drug, Daraprim. Hundreds of people on Twitter said they hoped the FBI has seized the album as part of the operation, opening up the possibility of the record being obtained using public information laws and eventually being played publicly.NEW YORK — He’s the enfant terrible of pharmaceuticals, a 32-year-old CEO who unapologetically raised the price of the only approved drug for a rare disease from $13.50 to $750 per pill.Martin Shkreli, a boastful pharmaceutical executive who came under withering criticism for price gouging vital drugs, denied securities fraud charges on Thursday following an early morning arrest, and was freed on a $5 million bond.

Shkreli was arrested on Thursday for engaging in what U.S. prosecutors said was a Ponzi-like scheme at his former hedge fund and a pharmaceutical company he previously headed. But the FBI dashed the hopes of hip hop lovers, writing on its official Twitter account: “Breaking: No seizure warrant at the arrest of Martin Shkreli today, which means we didn’t seize the Wu-Tang Clan album.” After purchasing the album, it was revealed that Shkreli had controverially bought the rights to life-saving drug Daraprim and increased the price by 5,000%. While the 32-year-old has earned a rare level of infamy for his brazenness in business and his personal life, what he was charged with had nothing to do with skyrocketing drug prices.

He’s an unabashed self-promoter who livestreams his daily life and boasts he’s “the world’s most eligible bachelor” and “the most successful Albanian to ever walk the face of this Earth.” And he’s an equally unabashed provocateur who jousts online with his critics. He is accused of repeatedly losing money for investors and lying to them about it, illegally taking assets from one of his companies to pay off debtors in another. “Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company,” Brooklyn U.S. Leading pharmacy chain Walgreens Boots Alliance, currently the exclusive U.S. supplier of Daraprim, said it has inventory of the drug, which has a list price of $750 per dose. But growing public backlash against that price has resulted in the entry of new competitors – compounding pharmacies able to produce similar versions for a fraction of the cost.

Agents of the Federal Bureau of Investigation arrested Shkreli at his Midtown Manhattan apartment at about 6:30 a.m. and forced him to walk through a gaggle of photographers outside FBI headquarters. CVS Health, the No. 2 U.S. drug benefit manager, told Reuters on Thursday it can provide an alternative to Daraprim that is compounded by Avella Specialty Pharmacy, at a price of $30 per 30 pills.

It treats a rare parasitic disease that strikes pregnant women, cancer patients and AIDS patients. (The criminal case doesn’t involve Turing or Daraprim.) But it sparked outrage that resounded from medical centers to the presidential campaign: Hillary Clinton termed it price-gouging, while Donald Trump called Shkreli “a spoiled brat.” Shkreli grew up in Brooklyn, the son of immigrant parents who worked at janitorial jobs. The CVS arrangement is similar to one between Imprimis Pharmaceuticals, a compounding pharmacy based in San Diego, and Express Scripts Holdings, the largest U.S. manager of prescription drug plans, to offer lower-cost pyrimethamine, the generic version of Daraprim.

Shkreli has emerged as a symbol of pharmaceutical greed for acquiring a decades-old drug used to treat an infection that can be devastating for babies and people with AIDS and, overnight, raising the price to $750 a pill from $13.50. Instead, such pharmacies can prepare medications only for individual patients once they have a prescription, and must comply with state and federal regulations.

Meanwhile, several major medical groups have started to urge doctors to seek out such lower-cost alternatives to Daraprim, providing detailed instructions on how to do so. His company, Turing Pharmaceuticals, and others, like Valeant Pharmaceuticals, have come under fire from lawmakers and consumers for profiting from steep price increases for old drugs. By his early 20s, Shkreli had his own hedge fund — and had a reputation as an outspoken short seller, or investor who bets a stock’s price will decline. Walgreens said in an emailed statement that it has “urged Turing to expand the number of specialty pharmacies to promote greater access, and it is our understanding that they will be doing so in the near future.” Turing officials could not be reached for comment.

But the criminal charges brought against him actually relate to something else entirely — his time as a hedge fund manager and when he ran his first biopharmaceutical company, Retrophin. Undeterred, Shkreli launched a new fund — it also collapsed, prosecutors say — and launched himself in 2011 into the pharmaceuticals business as CEO of Retrophin, which also has drawn scrutiny over sharp drug price hikes. The move sparked widespread criticism – first by medical groups such as the Infectious Diseases Society of America and the HIV Medicine Association, followed by presidential candidates Hillary Clinton, Bernie Sanders, and Donald Trump. It was eventually settled. “I had two guys parked outside of his house for six months” watching him, Shkreli told the rap news site HipHopDX in a tough-talking, expletive-filled interview published Wednesday, the day before his arrest. After dropping out of an elite Manhattan high school, he worked as an intern for Jim Cramer’s hedge fund as a 17-year-old and quickly impressed with his ability to call stocks.

A music fan since his days in a high school rock band, Shkreli recently emerged as the $2 million buyer of the sole copy of what’s been called the world’s rarest album: the Wu-Tang Clan’s “Once Upon a Time in Shaolin,” which the group auctioned to only one person on the condition that it not be put to commercial use. “I’m staring at a Picasso in my living room right now that’s no different from the Wu-Tang box, except it’s about 20 times more expensive,” he told HipHopDX. Shkreli’s lawyers had informed their client their hourly legal fees had increased by 5,000 percent. “Personally, I think Martin Shkreli has become wealthy at the expense of the public good. Some rap aficionados lamented that the album was in his hands, and the group noted the sale agreement was made before the furor over Daraprim this fall. I don’t believe for a second that his manipulation of drug prices fuels valuable research as he has claimed,” said Katie Uva, a 2006 alumna of Hunter College High School in Manhattan where Mr. It is the preferred treatment for a parasitic condition known as toxoplasmosis, which can be deadly for unborn babies and patients with compromised immune systems including those with HIV or cancer.

Still, Shkreli mused to HipHopDX about delving further into the rap world: bailing out up-and-coming artist Bobby Shmurda, who is jailed in a drug-gang case, and even writing raps of his own. Shkreli was president and CEO at Retrophin, which says it focuses on treatments for serious, catastrophic, or rare diseases, until October 2014, when he was fired by the company’s board. A spokesman said the campaign would not keep money “from this poster boy for drug company greed.” All the criticism seemed at first to have some impact and Shkreli said he would lower the price. Imprimis CEO Mark Baum said that even if Turing’s other investors decided to remove Shkreli, that alone would not be enough to change the fortunes of Daraprim.

He takes often to Twitter and message boards, bragging about his business strategies, musical tastes and politics; he live-streams from his office for long stretches. Shkreli as a somewhat shy person who could often be found lingering in the school’s hallways, playing chess, his guitar or looking at stocks in the newspaper.

He received the credits needed for his high school diploma through a program that introduced him to Wall Street, placing him at an internship at the Wall Street hedge fund Cramer, Berkowitz & Company. He also denied the charges regarding the MSMB entities, which he said involve complex accounting matters that prosecutors and the SEC fail to understand, according to the statement. “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,” according to the statement. “The government suggested that Mr. Shkreli started Retrophin, which quickly adopted a controversial business strategy, acquiring old, neglected drugs used for rare diseases and quickly raising their prices.

Greebel, the arrested lawyer, made sure Retrophin’s outside accountants were unaware of Shkreli’s financial maneuvers and helped him concoct the consulting agreements used to repay the hedge fund investors, the U.S. said. Shkreli and Evan Greebel, the lead outside counsel for Retrophin, used $3.4 million in Retrophin funds and stock to settle the investors’ claims, even though Retrophin had no responsibility, the indictment says. Greebel created fraudulent consulting agreements for the investors, thinking they could pay the money back without upsetting the auditor, the indictment states.

He called the company’s allegations “completely false, untrue at best and defamatory at worst.” “Every transaction I’ve ever made at Retrophin was done with outside counsel’s blessing,” he said on the investment blog in February, without identifying the lawyers. Widely admired for his intellect and sharp eye, he set up Retrophin to develop drugs and acquire older pharmaceuticals that could be sold for higher profits. Turing, which is less than a year old and has raised $90 million in financing, has followed a similar strategy with the purchase of drugs, including Daraprim.

Shkreli recently bought a majority stake in KaloBios Pharmaceuticals Inc. after Turing received a warning from the New York attorney general that the distribution network for Daraprim may violate antitrust laws. KaloBios recently acquired the license for benznidazole, a standard treatment for Chagas, a deadly parasitic infection most common in South and Central America. The firm announced plans to increase the cost from a couple hundred dollars for two months to a pricing structure like that for hepatitis-C drugs, which can run to nearly $100,000 for 12 weeks. With the federal charges and regulatory actions, Shkreli could be banned from running a public company, which could put the future of KaloBios into question. Even as he defends his strategy on his never-ending Twitter feed, arguing that no one is denied the drugs or pays more than $10 out of pocket, a fair trade-off for more research, he asserts, he still makes time to heckle his critics.

Last week, he tweeted: “Should one of my companies change its name to Wu-Tang Pharmaceuticals? (Lawsuits be damned.)” And then there are the bizarre, hourslong live streams, including a conversation he had on Monday with a girl who identified herself as a student at Hunter.

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