In an effort to avoid being held in contempt of court, former pharmaceutical executive and convicted fraudster Martin Shkreli made an eyebrow-raising argument to a federal judge Friday, stating that his company Druglike, which he previously described as a “drug discovery software platform,” was not engaged in drug discovery. As such, he argued he is not in violation of his sweeping lifetime ban from the pharmaceutical industry.
Last month, the Federal Trade Commission and seven states urged a federal judge in New York to hold Shkreli in contempt for allegedly failing to cooperate with an investigation into whether he violated the ban. The FTC said Shkreli failed to turn over requested documents related to Druglike and sit for an interview on the matter.
In the filing Friday, Shkreli claims that he responded to the FTC’s requests “promptly and in good faith.” He acknowledged that when the FTC contacted him about the investigation last October he did not have a lawyer and didn’t know how to properly respond to the FTC’s investigation. But, he continued to categorically deny that Druglike violated his lifetime ban.
On November 9, for instance, Shkreli replied to an email from an FTC lawyer, who requested Shkreli submit financial documents and records related to Druglike, as well as a verified statement attesting that his involvement with Druglike didn’t violate his ban. Shkreli did not provide any of the requested documents but instead wrote informal responses, including:
Druglike is not in any way, shape or form a pharmaceutical company. It is not even close to the outer bounds of what is described in the order. It is patently ridiculous to even consider it as within the scope of the order. Nevertheless, we are happy to answer questions to satisfy your curiosity.
Broad ban
The lifetime ban dates back to 2022 after the FTC and seven states brought a case against Shkreli for his infamous 2015 scheme that abruptly raised the price of a life-saving anti-parasitic drug, Daraprim, by more than 4,000 percent—from $17.50 per pill to $750 per pill.
According to the 2022 court order in that case, Shkreli was to pay back $64.6 million in profits from the scheme (which he hasn’t done due to lack of funds), and he was barred from participating in the pharmaceutical industry in any capacity for the rest of his life.
Specifically, the order states that he is banned from:
“Participating in or directing the research, Development, manufacture, commercialization, distribution, marketing, importation, or sale of a Drug Product or API [active pharmaceutical Ingredient], whether through compensated or uncompensated employment, consulting, advising, board membership, or otherwise.”
In this case, “Development” is defined as “all preclinical and clinical research and development activities related to a Drug Product, including discovery or identification of a new chemical entity … .” (emphasis added).
Yet Druglike, which Shkreli co-founded, was aimed at discovering and identifying new chemical entities that could be drugs. Shkreli debuted the company in July 2022, releasing a demo website, a white paper, and a press release, which touted it as “a Web3 drug discovery software platform” that would “democratize the costs, access, and rewards of computational drug discovery.”
In the press release, Shkreli is quoted as saying: “Druglike will remove barriers to early-stage drug discovery” and could be involved in “discovering the next breakthrough medicine.”
Defense
In an affidavit filed Friday, Shkreli described Druglike differently, calling it “professional software for chemists and physicists” that is a “calculator-like tool for scientific researchers to calculate the relative affinity and energetic cost of bonding two molecules.” He also revealed that Druglike has been “legally dissolved,” but that he co-founded and is a current employee of “its successor, DL Software,” which he describes as one and the same as Druglike.
In a particularly odd footnote in the affidavit, Shkreli included a strained argument comparing his drug discovery software to an online tool to compile recipes.
Druglike is a software tool much like a recipe builder on a website that allows users to enter and store their own recipes and calculate the nutritional value and per serving cost of the recipe. It does not, and cannot tell a user… how the various ingredients will impact the flavor or popularity of the recipe. A recipe building software does not research, develop, manufacture, commercialize or market specific foods, recipes or restaurants and the measured outcomes are entirely driven by the users’ data entry and preferences. Like such recipe building applications, Druglike offers no influence or preference on the outcomes but merely calculates the information sought by the user.
It’s still unknown if this argument will sway the judge and the FTC. But, for now, Shkreli mostly has to convince the judge that he cooperated in good faith with the FTC’s investigation. Shkreli was able to get a lawyer in November, and the FTC granted Shkreli an extension to December 2 to submit the requested documents and a formal response regarding Druglike.
FTC lawyer Christine Tasso filed documents on January 20, 2023, stating that she had not received any of the requested documents nor heard back from Shkreli’s new lawyer, Brianne Murphy. On Friday, Murphy filed her own affidavit, stating that she missed the December 2 deadline and a December 5 voicemail from Tasso because she fell ill around Thanksgiving and was subsequently hospitalized between December 13 to 24. Murphy added that she is now working with the FTC to submit the requested information and set up a time for the FTC to interview Shkreli.
