Martin Shkreli violated lifetime pharma industry ban, FTC and states say in contempt claim

The Federal Trade Commission and seven states asked a federal judge in New York on Tuesday to hold notorious "Pharma bro" Martin Shkreli in contempt, alleging he "flagrantly and repeatedly violated" a 2022 civil court order that had banned him for life from the pharmaceutical industry.

The FTC and the states allege that Shkreli, since being released from prison in May 2022 for unrelated financial crimes, violated that court order by publicly trading in at least 60 pharmaceutical industry stocks and "publicly broadcasting his opinions about the business and management of many Pharmaceutical Companies through livestreaming and posting on numerous social media platforms, including YouTube, X, and Reddit," a court filing says.

The contempt filing asks a judge to order Shkreli to "divest any pharmaceutical company stocks he currently owns" and "pay a fine equal to his profits from any pharmaceutical company stock trading (plus prejudgment interest) without the ability to account for offsetting losses."

The filing in U.S. District Court in Manhattan also asks that a judge make Shkreli "face clear and escalating consequences for any future violations, including financial penalties and potential incarceration."

FTC Commissioner Mark Meador said in a statement, "A lifetime industry ban is only effective if breaches are met with consequences commensurate with the seriousness of the order."

The court order stems from a finding that Shkreli organized an anti-competitive scheme to perpetuate his company Vyera Pharmaceuticals' monopoly in the anti-parasitic drug Daraprim. Shkreli had hiked the price of Daraprim from $17.50 per tablet to a whopping $750 per pill.

In addition to banning him from the drug industry for life, a judge ordered Shkreli to disgorge more than $64 million. The 2nd Circuit U.S. Court of Appeals upheld the permanent injunction against Shkreli in January 2024, and the Supreme Court declined to take his appeal of the order in October 2024.

CNBC has requested comment from an attorney for Shkreli.

In addition to the FTC, the states that joined Tuesday's court filing are New York, California, Illinois, North Carolina, Ohio, Pennsylvania and Virginia.

The filing asks the judge to order Shkreli's sister, Leonora Izerne, and his "significant other, Chelsea Voss," to preserve all evidence relating to potential violations of the injunction against Shkreli because both women "appear to have assisted or be assisting Shkreli in violating the Permanent Injunction."

The civil case that led to the order is unrelated to the criminal case that ended with Shkreli's conviction in 2017 on securities fraud charges related to hedge funds he once operated and another drug company he founded. Shkreli was sentenced to seven years in federal prison in 2018, and was released in 2022 with credit for time locked up before he was sentenced and other factors.

"After a full trial, the court found that Martin Shkreli's conduct drove up prescription drug costs for American patients and blocked the entry of lower-cost generics,"Daniel Guarnera, director of the FTC's Bureau of Competition, said in a statement on Tuesday.

"When judgment is entered by a court, whether it's a settlement or an order following a trial, defendants must fulfill their obligations," Guarnera said. "Today's action should serve as notice that the FTC will not hesitate to enforce violations of court orders."