U.S. FTC focuses on deal with Japanese company in Shkreli trial

FILE PHOTO: Former drug company executive Martin Shkreli exits U.S. District Court after being convicted of securities fraud in the Brooklyn borough of New York City, U.S., August 4, 2017. REUTERS/Carlo Allegri/File Photo

NEW YORK (Reuters) – The U.S. Federal Trade Commission on Tuesday kicked off the trial of its civil case against Vyera Pharmaceuticals founder Martin Shkreli, grilling a company executive about a deal with a Japanese supplier that the FTC said helped Vyera maintain its monopoly on the life-saving drug Daraprim.

The FTC and several U.S. states have accused Shkreli of using illegal tactics to keep competitors out of the market for Daraprim after hiking its price to $750 per tablet, from $17.50, a move that made him infamous as “Pharma Bro” in 2015. The non-jury trial, before U.S. District Judge Denise Cote in Manhattan federal court, is expected to last about six days.

The FTC began by calling Nicholas Pelliccione, Vyera’s head of research and development. Pelliccione testified that Vyera’s 2017 exclusivity agreement with Japan’s Fukuzyu Pharmaceutical Co, the sole U.S. supplier of Daraprim’s active ingredient, blocked other manufacturers from buying the ingredient.

However, he said he did not believe that was the “main reason” for the deal.

Shkreli, who is serving a seven-year prison sentence after being convicted of securities fraud in an unrelated case, is not attending the trial. Vyera last week settled with the FTC and the states for $40 million.

Shkreli’s lawyers said in a court filing last year that the claims about Shkreli’s personal role in the alleged scheme were “vague, conclusory and not supported by specific factual assertions.”

Vyera, founded in 2014 as Turing Pharmaceuticals, acquired Daraprim from Impax Laboratories Inc in 2015. The drug treats toxoplasmosis, a parasitic infection that threatens people with weakened immune systems.

In addition to the Fukuzyu deal, the FTC and states say Vyera blocked generic drugmakers from obtaining samples to develop their own versions of Daraprim. The first generic version was approved last year.

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