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Shkreli's former company beats Impax demand to block drug sales

By Nate Raymond

NEW YORK, May 18 (Reuters) - Turing Pharmaceuticals does not have to recall thousands of bottles of a life-saving medicine that became the flashpoint of a pricing controversy after former Chief Executive Martin Shkreli raised its price by over 5,000 percent, a U.S. judge ruled on Wednesday.

U.S. District Judge Edgardo Ramos in Manhattan denied a request by Impax Laboratories Inc to enjoin Turing from selling over 3,500 Daraprim bottles and recall potentially thousands more that carried the label of one of Impax's units.

Impax, which sued Turing earlier this month, argued an injunction was necessary to protect it from significant regulatory liability linked to Turing's decision to raise the price of Daraprim.

But Ramos said that while Turing was likely to be ultimately found liable, Impax had failed to demonstrate it would be irreparably harmed.

"What we're left with is the very unfortunate situation for Impax, a situation which can be remedied with money," Ramos said.

The case stems from Turing's decision last year under Shkreli's leadership to raise the price of Daraprim, which has been available since 1953, by over 5,000 percent to $750 a pill from $13.50, sparking a public debate over drug pricing.

Shkreli stepped down as Turing's CEO in December after being indicted on charges that he engaged in a Ponzi-like scheme at a hedge fund and Retrophin Inc, a company he once headed. He has pleaded not guilty.

Turing acquired the rights to Daraprim, which is used to treat an infection called toxoplasmosis in AIDS patients, from Impax in August 2015 for $55 million, along with the rights to sell its existing inventory.

Because the bottles in the inventory bore Impax labeling, Impax was still required to report pricing data to the federal government and to pay rebates to federal and state Medicaid agencies arising from the drug's coverage.

Impax said Turing, as a result, was required to provide it with pricing information so it could compy with reporting requirements and cover any rebate liability. But it said Turing has failed to provide data and hindered its ability to meet reporting requirements.

Turing also refuses to pay its $30.4 million in rebate liabilities, Impax said.

Turing countered that an injunction could cause a public health crisis, as its stock of Daraprim under Turing's own label was insufficient to meet any demand increase.

"They are using this as a chance to get away from us," said Daniel Weiner, Turing's lawyer. "Everyone knows why no one wants to be in the room with us."

The case is Impax Laboratories Inc v. Turing Pharmaceuticals AG, U.S. District Court, Southern District of New York, No. 16-03241.

(Reporting by Nate Raymond in New York; Editing by Tom Brown)