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Martin Shkreli, former CEO of Turing Pharmaceuticals LLC, departs the U.S. Capitol after appearing before a House Oversight and Government Reform hearing on "Developments in the Prescription Drug Market Oversight" on Capitol Hill in Washington February 4, 2016. Photo by Joshua Roberts/REUTERS

Shkreli’s old company is sued for breaching sales contract for Daraprim

Turing Pharmaceuticals is being sued for more than $20 million by the drug maker that sold it the rights to Daraprim, the medication that former Turing CEO Martin Shkreli made famous when he raised its price by 5,000 percent.

In its lawsuit, Impax Pharmaceuticals claims Turing breached their sales contract by failing to reimburse $20 million in Medicaid rebates and provide pricing data for the drug, which is called Daraprim. Since Impax still holds a unique drug code, the company remains obligated to submit and verify pricing data to Medicaid and, subsequently, pay rebates. Impax claims Turing ignored repeated requests for the data.

As a result, Turing has “hindered [Impax’s] ability to comply with its reporting obligations to the federal government, threatening its goodwill with the regulators that are most critical to its business,” Impax alleged in its lawsuit, which was filed Monday in federal court in New York.

Impax wants to revoke Turing’s right to sell the drug and collect the $20 million in rebates, along with unspecified damages.

The lawsuit is the latest twist in a sensational saga that transformed Shkreli, a 32-year-old former hedge fund manager, into one of the most vilified Americans. Shortly after purchasing Daraprim last fall, Turing raised the price from $17.63 to $750 per tablet. The drug is used to treat a rare parasitic infection called toxoplasmosis, which can be fatal, especially for people with AIDS or weakened immune systems.

Turing was not the only company to buy drugs and quickly jack up prices. But Shkreli’s move was viewed as especially troubling because there are no generic alternatives available for the drug and Turing thwarted generic competition.

In its lawsuit, Impax claimed it did not have any warning that Turing would raise the price and emphasized that it has not benefited from the price hike. Nonetheless, Impax maintained that it “found itself subject to significant liability due to Turing’s actions.”

We asked Turing for comment and will pass along any reply.

As for Shkreli, he was ousted from Turing last winter after he was arrested on unrelated charges of securities fraud in connection with his tenure running another drug company called Retrophin. He pleaded not guilty. In February, he smirked his way through the congressional hearing on drug pricing, but has since kept a low public profile.

The hearing, however, did reveal that Shkreli anticipated a blockbuster product just as Turing raised the price, according to a company memo released by the House Committee on Government Oversight and Reform. On August 27, 2015, he wrote in an e-mail that “I think it will be huge. We raised the price from $1,700 per bottle to $75,000 … So 5,000 paying bottles at the new price is $375,000,000- almost all of it is profit and I think we will get 3 years of that or more.”

A compounding pharmacy recently began selling a version of Daraprim for $1 a tablet.

This article is reproduced with permission from STAT. It was first published on May 2, 2016. Find the original story here.

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