Federal Trade Commission v. Vyera Pharmaceuticals, LLC, 1:20-cv-00706

Background

In 2015 Martin Shkreli’s company Vyera acquired U.S. rights to Daraprim and raised the price to $750 per pill, a ~4,000% increase. Daraprim (pyrimethamine) was the sole FDA‑approved treatment for toxoplasmosis.
Shkreli implemented restrictive distribution and exclusive supply agreements to block access to the Reference Listed Drug (RLD) and API, impeding generic manufacturers’ ability to perform FDA bioequivalence testing.
The court found Vyera’s scheme delayed generic entry for at least 18 months, produced at least $64.6 million in excess profits, and harmed patients and competitors.
After a bench trial the court found Shkreli individually liable under the Sherman Act and the FTC Act, ordered disgorgement of $64.6 million payable jointly and severally, and imposed a lifetime ban on his participation in the pharmaceutical industry.
Shkreli appealed and moved under Fed. R. Civ. P. 62(d) to stay or modify the injunction pending appeal; the court denied the motion.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Stay pending appeal under Rule 62(d) (four‑factor test)	Plaintiffs: stay is unwarranted because Shkreli cannot show likelihood of success or irreparable harm; injunction protects public and prevents re‑entry risk	Shkreli: injunction should be stayed pending appeal	Denied — Shkreli failed to show likelihood of success and irreparable harm; other factors favor maintaining injunction
Scope, vagueness, and punitive nature of the injunction	Plaintiffs: injunction is lawful and tailored to prevent anticompetitive conduct	Shkreli: injunction is overbroad, punitive, and vague	Denied — court previously rejected these objections and Shkreli raised no new arguments
Anticompetitive‑effects standard and market definition	Plaintiffs: evidence shows substantial foreclosure in the FDA‑approved pyrimethamine market	Shkreli: court applied wrong standard (cites American Express), market definition improper	Denied — even under stricter standard plaintiffs proved substantial impact; market properly defined as FDA‑approved pyrimethamine
Causation for delayed generic entry	Plaintiffs: Vyera’s restrictive agreements caused the delays	Shkreli: delays due to generic firms’ independent business decisions and timing of supplier contracts	Denied — trial record supports causation; scheme intentionally produced the delay
Joint and several disgorgement liability	Plaintiffs: equitable disgorgement of Vyera’s unlawful profits against Shkreli is appropriate	Shkreli: Liu and related authority preclude joint and several disgorgement absent direct receipt of profits	Denied — equitable discretion permits disgorgement tied to wrongdoing and First Jersey/SEC precedent support liability
Irreparable harm, public interest, and modification request	Plaintiffs: public interest and risk of re‑entry into anticompetitive conduct weigh against stay or narrowing	Shkreli: will suffer irreparable harm and CREATES Act mitigates public risk; seeks narrowing to only bar exclusives/restrictive distribution	Denied — no evidence of irreparable harm; CREATES Act does not eliminate risk; modification denied

Key Cases Cited

Nken v. Holder, 556 U.S. 418 (stay is an intrusion and movant bears burden to justify stay)
SEC v. Citigroup Global Markets Inc., 673 F.3d 158 (2d Cir.) (four‑factor standard for stays pending appeal)
New York v. United States Dep't of Homeland Sec., 974 F.3d 210 (2d Cir.) (likelihood of success and irreparable harm are critical stay factors)
Thapa v. Gonzales, 460 F.3d 323 (2d Cir.) (sliding‑scale relationship among stay factors)
Ohio v. American Express Co., 138 S. Ct. 2274 (2018) (standard for foreclosure and anticompetitive effects in two‑sided markets)
New York ex rel. Schneiderman v. Actavis PLC, 787 F.3d 638 (2d Cir.) (test for substantial foreclosure in exclusionary agreements)
Liu v. SEC, 140 S. Ct. 1936 (2020) (limits and standards for equitable disgorgement remedies)
SEC v. Contorinis, 743 F.3d 296 (2d Cir.) (disgorgement limited to property causally related to wrongdoing)
First Jersey Securities, Inc. v. 101 F.3d 1450 (2d Cir.) (district court equity power to fashion disgorgement remedies and treat corporate gains as benefitting controlling individuals)
Grand River Enterprises Six Nations, Ltd. v. Pryor, 481 F.3d 60 (2d Cir.) (irreparable harm requires injury that cannot be remedied)