Feds investigating Valeant's drug pricing, patient assistance programs
- The New York Times reports that U.S. attornerys in Massachusetts and Manhattan have issued a pair of federal subpoenas to Valeant Pharmaceuticals requesting information on the company's drug pricing, distribution, and patient support programs.
- Valeant is one of the main drug makers that has come under fire in the wake of intense media and political focus on pharmaceutical price hikes for older medications after news broke of Turing Pharma's 5,000% price bump for a 62-year-old drug. In fact, a recent analysis found that the company heavily relies on steep price hikes in order to make up for falling market demand and drive revenues. An amalgam of other companies, including Pfizer, Horizon Pharma, Allergan, and others are also facing increased scrutiny surrounding the practice.
- Earlier this week, New York Attorney General Eric T. Schneiderman initiated an investigation into Turing Pharma's Daraprim price hike to determine whether or not the company violated antitrust laws by attempting to thwart generic competition and restrict distribution.
Industry analysts have been warning that the drug pricing issue won't be going away anytime soon. And they continue to be proven right.
The specific aspects of Valeant's business that are drawing federal scrutiny are related to its patient assistance program. Pharma companies use these programs in order to reduce patients' co-pays for pharmaceutical products - but those products must be financed by private insurers or government programs like Medicare and Medicaid. As the New York Times notes, just because Valeant has been issued subpoenas does not mean that any charges are forthcoming.
Valeant, for its part, says that it will full cooperate with the investigation. "All of us at Valeant firmly believe in maintaining strong regulatory and financial controls and believe we have operated our business in a fully compliant manner," said CEO J. Michael Pearson in a statement.
The bigger point here is that federal and state regulatory authorities are turning a discerning eye towards biopharma's pricing practices. It's unclear at this point is any major charges will be levied against pharmaceutical giants.
But the ongoing scrutiny is certainly giving many presitigious firms a black eye - so it's not surprising that companies like Valeant and Allergan have already begun to reconsider their "acquire-and-hike" strategies for drugs.