In an effort not to be held in contempt of court, Martin Shkreli, a former pharmaceutical executive and convicted fraudster, presented an eyebrow-raising argument to a federal judge on Friday, explaining that his company Druglike, which he previously described as “drug discovery software” designated platform” was not involved in drug discovery. As such, he argued that he was not violating his blanket lifetime ban from the pharmaceutical industry.
Last month, the Federal Trade Commission and seven states asked a federal judge in New York to contempt Shkreli for allegedly failing to cooperate in an investigation into whether he violated the ban. The FTC said Shkreli failed to provide requested documents related to Druglike and to meet for an interview on the matter.
In the delivery on Friday Shkreli claims he responded to FTC requests “promptly and in good faith.” He acknowledged that when the FTC contacted him about the investigation last October, he did not have an attorney and did not know how to appropriately respond to the FTC’s investigation. However, he continued to categorically deny that Druglike had violated his lifetime ban.
For example, on November 9, Shkreli responded to an email from an FTC attorney who asked Shkreli to provide financial documents and records related to Druglike, as well as a verified statement confirming that his involvement in Druglike does not violate his ban. Shkreli did not provide any of the requested documents, instead writing informal responses including:
Druglike is in no way a pharmaceutical company. It’s not even close to the outer limits of what is described in the order. It is patently ridiculous to even consider this as falling 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 filed a lawsuit against Shkreli over his infamous 2015 plan that abruptly increased the price of a life-saving antiparasitic Daraprim by more than 4,000 percent — from $17.50 per tablet to $750 per pill.
According to the 2022 court order in the case, Shkreli was to pay back $64.6 million in profits from the program (which he failed to do due to lack of funds) and was barred from any involvement in the pharmaceutical industry rest of his life.
In particular, the order states that he is prohibited from:
“Participating in or directing the research, development, manufacture, commercialization, distribution, marketing, importation, or sale of any drug or compound [active pharmaceutical Ingredient]whether through paid or unpaid employment, consulting, counseling, board membership or otherwise.”
In this case, “development” is defined as “all pre-clinical and clinical research and development activities related to a drug product, including the discovery or identification of a new chemical entity … .” (emphasis added)
However, Druglike, co-founded by Shkreli, aimed to discover and identify new chemical substances that could be drugs. Shkreli introduced the company in July 2022 and released a demo website, whitepaper and a press releasetouting it as “a Web3 drug discovery software platform” that would “democratize the cost, access and rewards of computational drug discovery.”
The press release quotes Shkreli as saying, “Druglike will remove barriers to early-stage drug discovery” and may 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 binding two molecules.” . He also revealed that Druglike was “legally dissolved,” but he is the co-founder and current collaborator of “his successor, DL Software,” which he describes as one and the same as Druglike.
In a particularly odd footnote in the affidavit, Shkreli added a tense argument in which he compared his drug discovery software to an online prescription compilation tool.
Druglike is a software tool similar to a recipe maker on a website that allows users to enter and save their own recipes and calculate the nutritional value and cost per serving of the recipe. It does not and cannot tell a user how the different ingredients affect the flavor or popularity of the recipe. A recipe creation software does not research, develop, manufacture, commercialize, or market any specific food, recipe, or restaurant, and the measured results are entirely determined by data input and user preferences. Like such prescription-building applications, Druglike does not offer any influence or preference over the results, it merely calculates the information the user is looking for.
It is not yet known whether this argument will affect the judge and the FTC. But for now, Shkreli must primarily convince the judge that he cooperated in good faith with the FTC’s investigation. Shkreli was able to find an attorney in November, and the FTC gave Shkreli until December 2 to submit the requested documents and a formal response regarding Druglike.
FTC Attorney Christine Tasso documents submitted on January 20, 2023, in which she stated that she had not received any of the requested documents, nor had she heard a response from Shkreli’s new attorney, Brianne Murphy. On Friday, Murphy filed her own affidavit, explaining that she missed the December 2 deadline and a December 5 voicemail from Tasso because she fell ill around Thanksgiving and subsequently between December 13 and 24 December was hospitalized. Murphy added that she is now working with the FTC to submit the requested information and schedule an appointment for the FTC to interview Shkreli.
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