Valeant & Shkreli-led Turing bought drugs to hike prices, documents allege
Federal lawmakers have released excerpts from thousands of documents detailing how two drugmakers hiked prices to squeeze more revenue from some life-saving medicines, a practice that has recently sparked public outrage.
The congressional review of more than 300,000 pages from Turing Pharmaceuticals and Valeant Pharmaceuticals highlights the internal strategies the companies used to dramatically raise prices of drugs for patients with heart problems or conditions such as AIDS.
The new documents were released Tuesday by Rep. Elijah Cummings, D-Maryland, ahead of a hearing Thursday to examine spikes in prices for several drugs. Cummings has used his ranking position atop the House Committee on Oversight and Government Reform to investigate several companies that have bought previously low-cost drugs and jacked up their prices many times over.
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Cummings said in a statement that the documents show "that many drug companies are lining their pockets at the expense of some of the most vulnerable families in our nation."
The document release comes after Turing's former CEO Martin Shkreli last year became the poster child of pharmaceutical-industry greed after hiking the price of a life-saving drug called Daraprim by more than 5,000 per cent. Daraprim is the only approved drug for a life-threatening parasitic infection called taxoplasmosis, which mainly strikes patients with weakened immune systems, including those with cancer and AIDS. The patent on the drug expired decades ago.
Company presentations released Tuesday show that as early as last May, Turing planned to turn Daraprim into a $200-million-a-year drug by dramatically increasing its price. Turing purchased the six-decade-old drug from Impax Laboratories in August for $55 million and promptly raised its price.
Shkreli said in an email to one contact: "We raised the price from $1,700 per bottle to $75,000. Should be a very handsome investment for all of us."
But anticipating a possible backlash, the company warned in an internal memo: "HIV patient advocacy may react to price increase ... HIV community is highly organized, sensitive and action-oriented."
House staffers said they received more than 250,000 pages of documents from New York-based Turing as part of its investigation.
In addition, the committee reviewed more than 75,000 pages of documents from Canadian drugmaker Valeant and says they show that CEO J. Michael Pearson decided to buy two life-saving heart drugs, Nitropress and Isuprel, to dramatically hike prices and drive up his company's revenue and profit.
Nitropress and Isuprel treat abnormal heart rhythms, congestive heart failure and hypertension. Laval, Quebec-based Valeant Pharmaceuticals International Inc. bought the drugs for $350 million from Marathon Pharmaceuticals about a year ago and then tripled the price for one and increased the other six-fold. A memo to members of the House Committee on Oversight and Government Reform from staff members noted that this came a couple years after Marathon imposed its own, steep price hikes.
The memo also said Valeant identified revenue goals first and then drug prices to reach those goals. The drugs generated $547 million in revenue and around $351 million in profits last year alone.
Valeant used patient assistance programs to distract attention and justify its price hikes, the memo noted. It cited correspondence from Valeant marketing executive Jeff Strauss, who reviewed a company response to a customer who complained about price increases. Strauss noted that Valeant was providing the drug to patients at a minimal cost of no more than $25 for a 30-day supply.
"These patients are not profitable for Valeant, therefore the price increases offset the costs associated with supporting this initiative" Strauss wrote. "Kind of hard to paint us as greedy if we have removed financial barriers for patients."
On Thursday, the House Committee is scheduled to hear testimony from Turing's chief commercial officer, Nancy Retzlaff and Valeant Pharmaceutical's interim CEO, Howard Schiller. Schiller was appointed to the position last month after Pearson was hospitalized with severe pneumonia.
Shkreli has indicated through his attorney that he plans to refuse to answer questions, citing his Fifth Amendment right to avoid self-incrimination.
The 32-year-old former hedge fund manager was recently charged with of securities fraud and conspiracy related to another pharmaceutical company he ran before founding Turing.
Cummings first requested documents from Valeant and Turing last August and September, respectively. Both companies initially refused to comply, prompting Cummings and other Democrats to request that their Republican colleagues issue subpoenas for the information.
Earlier this month, Republican Chairman Jason Chaffetz of Utah signed a subpoena for Shkreli and invited Valeant's interim CEO Howard Schiller to testify.