The Story Breaks: September 2015
On September 20, 2015, New York Times reporter Andrew Pollack reported that Turing Pharmaceuticals, a startup led by former hedge fund manager Martin Shkreli, had raised the price of Daraprim from $13.50 to $750 per tablet. Daraprim had been on the market since 1953 and was the only FDA-approved treatment for toxoplasmosis. By the next morning, the Associated Press, Reuters, and cable news networks had picked up the story.
The acquisition itself had been reported six weeks earlier. On August 10, 2015, trade publications covered Impax Laboratories' sale of Daraprim's US marketing rights to Turing for $55 million.
Shkreli went on Bloomberg TV on September 21, 2015, to defend the increase. He said the drug was "underpriced relative to its peers" and compared its cost with cancer treatments that exceeded $100,000. He told CBS News the earlier price was unprofitable and said the profits would fund research into better toxoplasmosis treatments.
That same week, Hillary Clinton posted on Twitter about the price hike and announced a proposal to cap prescription drug spending. Biotechnology stocks fell sharply. The Daily Beast called Shkreli "the most hated man in America."
Congressional Pressure: October to November 2015
In October 2015, Senator Bernie Sanders and Representative Elijah Cummings sent a joint letter to Turing demanding that the company justify the price increase and turn over internal financial documents. They asked for data on R&D spending, patient access, and revenue projections.
On November 24, 2015, Turing announced a partial retreat. The company said it would offer hospitals a discount of up to 50% ($375 per pill), sell Daraprim in smaller 30-tablet bottles, and expand its patient assistance programme. The list price stayed at $750. Turing did not cut the retail price as Shkreli had earlier promised.
Shkreli Arrested: December 2015
On December 17, 2015, FBI agents arrested Shkreli at his Manhattan apartment. He was charged with securities fraud and conspiracy tied to his former hedge funds MSMB Capital and MSMB Healthcare and his earlier company Retrophin. The charges did not involve Daraprim pricing.
Photographs of Shkreli in a grey hoodie, escorted by federal agents, appeared on front pages and network broadcasts. Ron Tilles, Turing's board chairman, became interim CEO the next day. The Daraprim price did not change.
Congressional Hearings: Early 2016
The House Committee on Oversight and Government Reform held a hearing on February 4, 2016. Shkreli appeared but invoked the Fifth Amendment in response to every substantive question. He smirked, twirled a pencil, and turned away from Representative Cummings to pose for photographs.
After he was excused, while the hearing was still in session, Shkreli tweeted: "Hard to accept that these imbeciles represent the people in our government."
The Senate Special Committee on Aging held a second hearing on March 17, 2016. The committee had subpoenaed about 400,000 pages of internal Turing and Retrophin documents. Former General Counsel Howard Dorfman testified that the price increase was "not justified by any such actual expenditure" in research or education. Joshua and Shannon Weston testified that they were paying $28,000 per month for their infant daughter's toxoplasmosis treatment. Internal sales data also entered the public record: pills sold had fallen from 25,500 in August 2015 to 600 in December 2015.
Rebrand and Conviction: 2017
In September 2017, Turing rebranded as Vyera Pharmaceuticals under a Swiss parent company called Phoenixus AG. The price and the distribution restrictions remained in place.
On August 4, 2017, a federal jury convicted Shkreli on three of eight counts of securities fraud. The trial had begun in late June in US District Court in Brooklyn. Between his arrest and trial, Shkreli bought the sole copy of Wu-Tang Clan's album "Once Upon a Time in Shaolin" for $2 million. On March 9, 2018, a judge sentenced him to seven years in federal prison and ordered the forfeiture of $7.36 million in assets, including the album.
FTC Action and Generic Entry: 2020
On January 27, 2020, the FTC and seven state attorneys general filed an antitrust complaint against Vyera, Phoenixus, Shkreli, and former CEO Kevin Mulleady. The complaint alleged a three-part scheme to preserve the Daraprim monopoly: blocking generic manufacturers from obtaining drug samples, locking up the sole API supplier through exclusive contracts, and restricting sales data to discourage competitors. The FTC vote was unanimous, 5-0.
On February 26, 2020, the FDA approved the first generic pyrimethamine, manufactured by Cerovene. The anticompetitive practices described in the FTC complaint had delayed generic entry by about five years.
Settlement and Aftermath: 2021 to 2024
In December 2021, the FTC announced a settlement. Vyera agreed to supply Daraprim at no more than $1 per tablet to certain buyers and to pay up to $40 million over 10 years. Shkreli was ordered to pay $64.6 million in disgorgement of monopoly profits and received a lifetime ban from the pharmaceutical industry. Kevin Mulleady received a seven-year industry ban.
Shkreli was released from federal prison in about September 2022 after serving roughly five years of his seven-year sentence. In May 2023, Vyera filed for Chapter 11 bankruptcy. In January 2024, the Second Circuit Court of Appeals upheld the FTC's enforcement action and affirmed that restricted distribution systems used to block generic competition violate antitrust law.
Key Dates
| Date | Event |
|---|---|
| August 10, 2015 | Impax announces Daraprim sale to Turing for $55M |
| September 2015 | Price raised from $13.50 to $750 per tablet |
| September 20, 2015 | New York Times breaks the story (Andrew Pollack) |
| September 21, 2015 | Shkreli defends price on Bloomberg TV |
| September 2015 | Clinton tweets on drug pricing; biotech stocks drop |
| October 2015 | Sanders and Cummings demand Turing justify price |
| November 24, 2015 | Turing announces hospital pricing programme |
| December 17, 2015 | Shkreli arrested for securities fraud |
| February 4, 2016 | House Oversight hearing; Fifth Amendment; "imbeciles" tweet |
| March 17, 2016 | Senate Aging hearing; 400,000 pages of documents |
| August 4, 2017 | Shkreli convicted on 3 of 8 counts |
| September 2017 | Rebrand to Vyera Pharmaceuticals |
| March 9, 2018 | Sentenced to 7 years |
| January 27, 2020 | FTC files antitrust complaint with 7 state AGs |
| February 26, 2020 | First generic pyrimethamine approved (Cerovene) |
| December 2021 | FTC settlement: $1/tablet, $40M, lifetime ban for Shkreli |
| ~September 2022 | Shkreli released from prison |
| May 2023 | Vyera files Chapter 11 bankruptcy |
| January 2024 | Second Circuit upholds FTC enforcement |