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Supreme Court rejects Martin Shkreli appeal on pharma fine

Former drug company executive Martin Shkreli and his lead attorney Benjamin Brafman arrive at U.S. District Court for the fourth day of jury deliberations in his securities fraud trial in the Brooklyn borough of New York City, U.S., August 3, 2017. 

Amr Alfiky | Reuters

The Supreme Court on Monday rejected a bid by notorious ‘pharma bro’ Martin Shkreli to hear his appeal of a $64 million financial penalty on the fraudster for blocking competition to a lifesaving drug whose price he had raised by more than $700 per pill.

Shkreli’s request that the Supreme Court take his appeal of a federal court decision was his last chance to overturn the penalty related to the drug Daraprim.

The Supreme Court in rejecting that request did not explain its reason for doing so. There were no noted dissents by any justice to the decision.

Shkreli’s lawyer had asked the Supreme Court to take the appeal to resolve a so-called circuit split between the appeals court that upheld his financial penalty and two other federal appeals court circuits that the attorney said would have limited his financial liability in the case.

The attorney, Thomas Huff, told CNBC, “Although we were disappointed in the disposition, we also think it is just a matter of time before the Supreme Court overturns the Second Circuit’s outlier approach to equitable disgorgement — an approach that in this case permitted a district court to order Mr. Shkreli to ‘disgorge’ over $64 million in profits that never touched his possession or control.”

“If and when the Supreme Court does so, Mr. Shkreli will have a strong argument for modifying the order accordingly,” Huff said in an email.

CNBC has requested comment from the Federal Trade Commission, whose lawsuit against Shkreli led to the penalty.

People pass outside the U.S. Supreme Court on October 7, 2024 in Washington, DC. 

Kent Nishimura | Getty Images

Shkreli gained national infamy in 2015 when his drug company hiked the price of Daraprim by more than 4,000%. The drug is used to treat parasitic infections in pregnant women, babies, people with HIV and others.

In 2020, while Shkreli was serving a prison sentence for financial crimes unrelated to Daraprim, he and his company Vyera Pharmaceuticals were sued by the FTC for allegedly illegally blocking competition to Daraprim. The FTC and a group of state attorneys general who joined in the lawsuit said Shkreli’s actions cost consumers tens of millions of dollars every year.

In January 2022, a Manhattan federal court judge ruled in the FTC’s favor, banned Shkreli for life from the pharmaceutical industry and ruled that he had to disgorge $64.6 million in profits he earned from raising Daraprim’s price.

The 2nd U.S. Circuit Court of Appeals, in a unanimous decision by a three-judge panel, upheld that penalty this past January.

Shkreli in June asked the Supreme Court to hear his appeal of that ruling, but only as it applied to the financial penalty. There is no automatic right to appeal to the Supreme Court.

Shkreli’s attorney, Huff, in his application to the Supreme Court, said that the 2nd Circuit’s ruling conflicted with rulings by the 5th and 11th federal appeals court circuits, which “limit a defendant’s liability in disgorgement to his or her personal gain from wrongdoing.”

“Conversely, the Second Circuit has concluded that a defendant can be ordered to ‘disgorge’ profits that he he or she never received, possessed, or controlled, but that instead accrue to other parties,” the application said.

Huff wrote that Shkreli had not personally realized any profits from the conduct deemed to be anticompetitive, but that they were instead realized by his corporate co-defendants in the case.

Huff argued that the Supreme Court should hear Shkreli’s appeal to resolve the so-called circuit split on the question of a defendant’s financial liability.

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