In September 2015 we wrote about controversial American businessman Martin Shkreli, a former hedge fund manager turned US pharmaceutical businessman, who bought the rights to the drug Daraprim and subsequently raised the price by 5000%.
Daraprim is prescription medication used to treat serious parasite infections (toxoplasmosis).
Toxoplasmosis can be deadly in those with compromised immune systems, such as HIV or Aids patients and those who are pregnant or have cancer.
His company, Turing Pharmaceuticals AG, bought the life saving drug, moved it to a closed distribution system and this pushed the price out of out of reach of most people - from $13.50 to $750.
Shkreli wat criticised by US presidential candidate Hilary Clinton on Twitter where she publicly asked him to cut the cost, but he dismissed her tweet with the words 'lol'.
"So glad to see Turing CEO taking this so seriously," said Clinton spokesman Ian Sams. "The guy lol-ing is preventing doctors from effectively treating patients due to his greed."
Shortly afterwards, alarmed members of the public, several non-profit organisations and other high-profile doctors began expressing concern on Twitter and other social media sites, calling for a boycott of Daraprim.
However, this proved difficult considering that Daraprim is the only drug approved by the U.S Federal Drug Administration for the treatment of toxoplasmosis.
See the Twitter exchange between Clinton and Shkreli here:
The securities fraud probe of Shkreli, who is now chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc, stems from his time as manager of hedge fund MSMB Capital Management and CEO of biopharmaceutical company Retrophin Inc, a person familiar with the matter said.
Bloomberg reports that the federal case against
Shkreli, 32, has nothing to do with drug pricing. Prosecutors charge
that he illegally took stock from Retrophin Inc., a biotechnology firm
he started in 2011, and used it to pay off debts from unrelated business
Reuters witnessed Shkreli's arrest by the FBI at the luxury Murray Hill Tower Apartments in midtown Manhattan.
Shares of KaloBios fell 53 percent to $11.03 in premarket trading.
Shkreli, 32, was expected to be charged on Thursday for illegally using Retrophin assets to pay off debts after MSMB lost millions of dollars, the source said.
The probe, by federal prosecutors in Brooklyn, dates back to at least January when Retrophin said it received a subpoena from prosecutors seeking information about its relationship with Shkreli.
That subpoena also sought information about individuals or entities that had invested in funds previously managed by Shkreli, Retrophin said in a regulatory filing.
MSMB Capital Management was founded in 2009, and Shkreli announced its closure in 2012. Retrophin was founded in 2012, and Shkreli was its CEO until the company fired him in September 2014.
Retrophin in August sued Shkreli in federal court in Manhattan for $65 million, claiming he had used his control over Retrophin to enrich himself and pay off claims of investors in MSMB, which he had also defrauded.
Shkreli has denied the allegations.
At least two separate Congressional probes have been launched since September on the pricing issues of Daraprim, which had long been available as a generic drug used to treat toxoplasmosis in AIDs patients.
Turing is under investigation by the New York state attorney general for antitrust concerns.
At a Senate hearing on drug pricing last week, a doctor who treats babies with life-threatening toxoplasmosis testified that a course of treatment with Daraprim went from about $1,200 to a whopping $69,000 - that's over R1 mil.
Update: Shkreli plead not guilty to the charges and was released on a $5million bond on Thursday 17 December.