By Reenat Sinay

Law360 (April 29, 2020, 4:24 PM EDT ) Former pharmaceutical executive Martin Shkreli's history of charging exorbitant prices for life-saving medication for personal gain came back to haunt him as federal prosecutors pounced on his bid to be released to home confinement in order to purportedly find a cure for COVID-19.

The U.S. Department of Justice told a New York federal court Tuesday that even if Shkreli, who is serving a seven-year sentence in a Pennsylvania low-security prison, managed to develop a treatment for the novel coronavirus despite his lack of scientific knowledge and lab experience, there is zero indication that he wouldn't hold it hostage for his own benefit.

"There is no evidence that he would in fact use it to 'contribute to the betterment of society,' as he claims, rather than to enrich himself to the maximum extent possible, including by concealing his work or declining to provide such a cure to others unless he were paid an exorbitant sum," the DOJ said. "Shkreli is best known for pricing a life-saving drug beyond the reach of ordinary Americans."

Before he was charged with multiple fraud schemes in late 2015, Shkreli came under fire earlier that year as then-CEO of Turing Pharmaceuticals for raising the price of a drug used by HIV patients by 5,000% from $13.50 per pill to $750.

He was convicted in 2017 of lying to investors in his hedge funds and conspiring to control the price of shares in what was then his biotech firm, Retrophin Inc. The company developed treatments for rare diseases.

Last week, Shkreli told the court that he has already "devoted countless hours" to researching a potential cure for COVID-19 and is talking with a private pharmaceutical company about working on a treatment based on his research.

But prosecutors said Tuesday that Shkreli sunk his own argument because if he can do the work from prison, there is no reason for him to be released to home confinement for the purpose of developing a treatment.

"Shkreli's contention that he must be released to work on a 'potential cure' is belied by his own submission," they said. "He does not explain why he cannot continue to develop and discuss any ideas he may have about COVID-19 from prison, as he has."

Beyond expressing doubts about the sincerity of Shkreli's intentions behind finding a possible cure, prosecutors also contended that the 37-year-old Shkreli isn't eligible for home release because he's healthy and young.

"Shkreli is young and in good health, has no documented medical conditions that could put him at increased risk of suffering complications from COVID-19 and is housed at a facility with no known cases of inmates or staff with COVID-19," prosecutors said.

As of Tuesday, 1,313 federal inmates and 335 prison staff had tested positive for coronavirus, according to the Bureau of Prisons. Federal Correctional Institution Allenwood Low, where Shkreli is incarcerated, has not yet confirmed any cases.

Shkreli told the court last week that he was at increased risk of contracting the virus in part because he suffers from allergies, which prompt him to touch his face. He also cited his asthma as a factor.

The government said that a late-March petition to the BOP for compassionate release made no mention of asthma "or any other physical condition," and that Shkreli has never reported the "alleged condition" to his probation officer, the BOP, the court or the government.

While he has reported taking the over-the-counter allergy medicine Claritin for seasonal allergies, there is no evidence that these allergies are "severe" or that they are a risk factor for contracting COVID-19, the DOJ added.

His petition was denied earlier this month because he was deemed to be at "low" risk of reoffending instead of "minimum" under a BOP risk assessment rubric called the Prisoner Assessment Tool Targeting Estimated Risk and Needs, or PATTERN.

Shkreli is currently appealing that decision and so has not yet exhausted all administrative remedies, the DOJ said.

Additionally, Shkreli's history of disciplinary problems while incarcerated weighs against early release, prosecutors asserted.

"Shkreli's multiple disciplinary infractions while incarcerated — which included failure to follow a direct order and two separate instances of deliberately circumventing BOP policy and deceiving BOP staff by sending money and mail through other inmates — demonstrate that Shkreli continues to believe that the rules do not apply to him," the government said.

Shkreli's attorney, Benjamin Brafman of Brafman & Associates PC, told Law360 on Wednesday that the DOJ's opposition was "very tragic and disappointing" and that he was "hoping for greater compassion" for a "man who can cure cancer."

A representative for the government declined to comment.

The government is represented by Claire S. Kedeshian, Laura D. Mantell and Thomas R. Price of the U.S. Attorney's Office for the Eastern District of New York.

Shkreli is represented by Benjamin Brafman, Marc A. Agnifilo, Andrea L. Zellan, Jacob Kaplan and Teny Geragos of Brafman & Associates PC.

The case is U.S. v. Shkreli et al., case number 1:15-cr-00637, in the U.S. District Court for the Eastern District of New York.

--Additional reporting by Jody Godoy. Editing by Jack Karp.

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