Feb 19 • 4M

Chapter 11, Part 3: "Justice" is Zugzwang

As soon as the FTC case against Martin Shkreli was unsealed, I knew he was “f-ked.” Here is why.

My experiences uncovering the story of, and falling in love with, Martin Shkreli.
Episode details

In case you’re unfamiliar, the title of this section references a chess term. It’s a German word for that specific kind of tight spot where no matter what move you make, you end up worse off. And that was exactly the situation Martin Shkreli found himself in, on a 3D chess board, after he was sued by the Federal Trade Commission and a pack of attorneys general in January 2020.

The agencies had been poking into Martin for a while, looking for antitrust violations ever since he drew so much attention to himself by raising the price of Daraprim as CEO of Turing Pharmaceuticals in 2015. But as far as anyone could tell, not much progress was made in the probes for years. Then came a blessed break for them – a story in the Wall Street Journal alleging that Martin had been “running” Turing (then named Vyera) while incarcerated with a contraband cell phone. 

Justice is blind. Allegedly.
Justice is blind. Allegedly.

The investigators seized on the material, dug around for some more, and found jailhouse emails and other communications from Martin suggesting that he had directed his former colleagues to obstruct generic competition. Even though the obstruction didn’t work for very long – a generic version of Daraprim won FDA approval in 2020 – and the generic wasn’t priced much lower than the tens of thousands of dollars per bottle Martin charged, the agencies had enough evidence to sue both Vyera and the much-hated “Pharma Bro.” 

As a legal reporter for Bloomberg, I had covered several big antitrust cases. They tended to be polite, dignified and slow-moving affairs. The matters were complex, and often required many highly-paid lawyers digesting millions of pages of documents. “Discovery,” the period when information is exchanged, and litigating back-and-forth over motions in court could easily go on for several years or more. 

There never seemed to be much of a rush. Federal judges showed appreciation for the caliber of legal professionals and the sophistication of the matters at issue. They bent over backwards to be fair, encouraged amicable settlements, and gave everyone ample opportunity to fully prepare and present their case to the best of their abilities.

But of course, that was not the experience for Martin Shkreli. 

In December 2021, while still in prison for securities fraud during the Covid pandemic, struggling to get unmonitored time on the phone to speak with his attorneys, and denied a request to delay the proceedings until his release just six months later, he was forced to go to trial. The FTC and the group of attorneys general had rejected multiple attempts by him to settle, he said. I could understand the rationale: Why settle when they were on the cusp of such a glorious victory?

To me, it looked like they were about to get into a boxing ring with a much weaker opponent whose arms and legs had been shackled. And I knew they would crow proudly about their efforts in the media after rendering him the financial equivalent of bloody and unconscious. I was disappointed and disgusted by the tactics, even if their supposed “cause” of helping patients was good, but not surprised.

Much like when the Wall Street Journal reported on Martin’s contraband cell phone, after the journalist had supposedly promised Martin he wouldn’t, I had an overwhelming urge to say “I told you so.” Back when the case was unsealed in January 2020, and I saw which judge had it, U.S. District Judge Denise Cote of Manhattan federal court, I had one immediate, overarching thought. 

As before, I didn’t think he appreciated my ominous prediction. “You got Cote,” I told Martin in early 2020. “You’re f-ed.” 

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