House Dems demand Valeant CEO testify on price hikes with Shkreli, stock plunges
- On February 10, Valeant bought the rights to CVD meds Nitropress and Isuprel and increased their prices by 525% and 212%, respectively.
- All 18 Democrats on the House Oversight and Government Reform Committee are now asking committee chair Rep. Jason Chaffetz (R-UT) to request Valeant CEO Michael Pearson's testimony at a hearing next week on drug price increases. They also want Chaffetz to subpoena the Canadian drug maker to turn over all documents related to the February price increases of Isuprel and Nitropress.
- Valeant's stock plummeted about 16% on Monday after the Democrats' demands became public (it has since stayed relatively flat in early morning trading on Tuesday). And one big reason for that, other than the spectre of government scrutiny of Valeant's pricing practices, is that Pearon is being asked to testify alongside Martin Shkreli at next week's hearing. Shkreli became a national flashpoint last week after it was revealed that his company, Turing Pharma, had bought a toxoplasmosis drug used by HIV/AIDS patients called Daraprim and hiked the price by 5,000%.
This is what Malcolm Gladwell might call a tipping point. In one fell swoop, there is a cacaphony of outrage from patients, the media, the government, and presidential candidates over unprecedented price hikes and a business model that relies on taking old drugs, "contemporizing" their marketing, and increasing their prices aggressively. Even industry trade group BIO has chosen to show its displeasure with the Daraprim debacle by kicking Turing Pharma and Martin Shkreli out.
Now, Valeant shares are taking a beating as investors get spooked by the idea of a major pharma CEO like Pearson being associated with a controversial and highly criticized individual like Shkreli. While stocks in general did not have a stellar day on Monday, biotech indices were hit hard in particular, falling anywhere from 4% to 6% (although they have regained some footing as of Tuesday morning).
Pearson has not made any comments to the media regarding the request for his testimony and Valeant's documents. Rather, he sent out an internal letter to employees reinforcing Valeant's "unique" business model and reliance on organic growth. Notably, there was no mention of Isuprel or Nitropress.
Democratic presidential candidate Hillary Clinton is keeping the spotlight on this issue via social media with a series of tweets and Facebook posts cajoling Shkreli to bring the price of Daraprim down and decrying the price hike strategy (Shkreli has said he will lower the price, but it's unclear to what extent). She has proposed a pharma reform plan that includes a provision decreasing the exclusivity period for biologics from the current 12 years to seven years.
In addition, Clinton wants to force drug companies to set aside a portion of their revenues to fuel R&D and institute a monthly out-of-pocket prescription drug cap of $250.00 for sick Americans and those with chronic illnesses.
In short: Biopharma better get ready. Because widespread attention on this issue isn't going away anytime soon.