Martin Shkreli Resigns as CEO of Turing Pharmaceuticals, Interim Boss Announced

23 Dec 2015 | Author: | No comments yet »

How Pharmacies Are Dealing with Daraprim After Martin Shkreli’s Arrest.

Turing Pharmaceutical CEO Martin Shkreli is free on $5 million bail after being arrested on Thursday for securities fraud, PEOPLE has confirmed. 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.Martin Shkreli, the former hedge fund manager under fire for buying a pharmaceutical company and ratcheting up the price of a life-saving drug, is escorted by law enforcement agents in New York on Dec. 17, 2015, after being taken into custody following a securities probe.(Photo: AP) The reviled poster boy of drug price hikes perpetuated a Ponzi scheme on investors in hedge funds and a pharmaceutical company he founded and previously led, federal prosecutors and regulators alleged Thursday.

Shkreli, who was arrested Thursday morning on securities fraud charges, has effectively waved a red flag for months in front of federal prosecutors, keeping himself in the media glare with a hugely controversial price hike of a drug that benefits AIDS patients, pregnant women and cancer patients, attacking his critics, including presidential contender Hillary Clinton, and lighting up Twitter with outrageous statements. Shkreli’s arrest was not related to drug prices, but instead stems from allegations by federal prosecutors that he illegally took stock from Retrophin — a biotechnology company he started in 2011 and was ousted from in 2014 — to pay off unrelated business debts. Leading pharmacy chain Walgreens Boots Alliance WAG 0.00% , currently the exclusive U.S. supplier of Daraprim, said it has inventory of the drug, which has a list price of $750 per dose. In doing so, the 32-year-old Shkreli acted contrary to what most criminal defense lawyers and public relations managers recommend for someone in the cross-hairs of a United States Attorney’s office. “I would think that members of his legal team and the communication team would advise him not to do the things that he has done, particularly in light of an ongoing criminal investigation,” said Judy Smith, a PR crisis management expert who represented President Bill Clinton’s former mistress Monica Lewinsky. “Most people that are aware they are under a criminal investigation would not behave in such a public way,” said Smith, whose career inspired the hit ABC series “Scandal.” “The risk of it is that it attracts and invites attention, review and investigation of ongoing business practices in a very public way, quite frankly.” The spectacle that Shkreli created around himself and his company Turing Pharmaceuticals since late summer, even as the criminal probe proceeded, raised the question of whether he had any idea of the risk he was running — or whether his conduct was part of a plan to beat the rap in Brooklyn federal court and generate business.

Shkreli is of course the CEO who in August bought the rights to a life-saving anti-parasite drug and in September raised its price from $13.50 to $750 a pill, instantly becoming the world’s most hated business leader. 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.

His arrest yesterday was for entirely different alleged behavior, securities and wire fraud in connection with his previous roles as CEO of another pharma firm, Retrophin, and as the manager of two hedge funds. CVS Health CVS 0.35% , 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. Retrophin also disclosed it had received subpoenas from federal prosecutors in Brooklyn, a clear sign that authorities were interested in possible criminal conduct at the company. The CVS arrangement is similar to one between Imprimis Pharmaceuticals, a compounding pharmacy based in San Diego, and Express Scripts Holdings ESRX -0.80% , the largest U.S. manager of prescription drug plans, to offer lower-cost pyrimethamine, the generic version of Daraprim.

Investigators alleged that Shkreli, 32, siphoned millions of dollars from Retrophin to repay investors he’d defrauded in two defunct hedge funds that focused on health care investments: MSMB Capital and MSMB Healthcare. He was also accused of using company funds to settle personal disputes with investors, unjustly enriching himself with company funds and forming false ties to consultants. Shkreli has kept up media appearances since then, suggesting he would cut Daraprim’s price, then avoiding doing so, then saying he would cut the price, but only for certain health providers. For example, Shkreli told one investor on Dec. 2, 2010, that his hedge fund held $35 million assets, even though it had only had $700, the criminal indictment alleged. 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. Sounds very grand, but his funds were minuscule and never held more than a few million dollars; prosecutors say Shkreli lost most or all of it in short order. 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.

On Thursday, the Securities and Exchange Commission unsealed a civil case against Shkreli, accusing him of orchestrating “widespread fraudulent conduct” from 2009 through 2014. The lightly-bearded defendant, dressed in a black vee-neck tee shirt and blue jeans, said nothing in court beyond identifying himself, indicating he understood the charges and entering a not guilty plea. He said the MSMB-related transactions “involve complex accounting matters that the EDNY” — prosecutors of Eastern District of New York — “and SEC fail to understand.” “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,” spokesman Craig Stevens said. Even his arrest would have gone unnoticed – the numbers just aren’t that big – except that he had already become famous for his re-pricing of the anti-parasite drug, Daraprim, and for his obnoxiously defiant, smirking response to the widespread outrage over the move.

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. The Food and Drug Administration-approved drug is used to treat toxoplasmosis, a parasitic disease that afflicts people with weakened immune systems, such as individuals suffering from AIDS and pregnant women. As the story mushrooms, it’s discovered that Shkreli is a prolific and offensive tweeter, providing new fodder to keep the story going almost daily. 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. Kenneth Feinberg’s law firm has awarded compensation in several high-profile cases, including the 9/11 attacks, the BP oil spill, and General Motors’ ignition-switch problem.

A separate securities fraud case filed in December 2014 by Retrophin investors accused Shkreli, Retrophin and other company officials of making false or misleading statements about the firm’s finances. Car and Driver The decision to release Apple Pay in early 2016 will put Tim Cook’s company into competition with Pony Ma’s Tencent and with Alipay, run by Ant Financial, which spun off from Jack Ma’s Alibaba.

The complaint said his actions included: • Fraudulently conspiring with Greebel to get Retrophin to issue stock and deliver cash compensation for phony consulting contracts to cover up disputes with MSMB investors over the hedge fund’s performance. Fortune Joshua Tetrick’s company, Hampton Creek, has faced accusations of false advertising because U.S. rules say mayonnaise must include eggs, and its Just Mayo product doesn’t. Noah Bookbinder, executive director of Citizens for Responsibility and Ethics in Washington, a nonprofit that called for federal investigations into Shkreli in 2012, said in a statement that the arrest “shows that the law applies to everyone.

We commend the DOJ for sending a clear message that these types of action will not be tolerated.” Shkreli has gained a measure of public attention by cultivating a flamboyant persona on Twitter, where he aggressively defended Turing’s price hikes. The deal with FDA includes shrinking the egg image on the label and increasing the size of the words “egg-free.” CNN Money By recognizing a second miracle attributed to the late nun involving the recovery of a Brazilian man with multiple brain tumors, Pope Francis clears the way for Mother Teresa’s sainthood. He also posted long YouTube videos that showed him sitting at his computer, with electric guitars and amplifiers in the background, as he mused about his businesses, his love of rap music and other matters.

Shkreli famously paid $2 million earlier this year for the one-of-a-kind double album featuring the Wu-Tang Clan, an iconic, Staten Island, N.Y. rap band he favored.

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