Valeant shares plunge to 2-year low as U.S. launches new drug price probe
Valeant shares fell to their lowest level in more than two years on Thursday as Republican and Democratic Senators announced a new probe into pricing policies at drug companies.
Valeant shares were trading below $78 US a share at midmorning, down 15 per cent on the day. That's the lowest level the stock has been since the spring of 2013. It closed down 14.7 per cent at $78.77 US.
Three months ago, Valeant was the most valuable company in Canada, but the company has lost almost two-thirds of its value since then as it has been rocked by two negative stories: American outrage over the pricing of generic drugs, and allegations from a short seller that the company's accounting practices don't add up.
The Senate's special committee on aging requested documents and information Wednesday from Turing, Valeant Pharmaceuticals and two other drugmakers already under scrutiny for recent price spikes.
The Senate's special committee on aging, which is headed by Maine Republican Senator Susan Collins and Missouri Democratic Senator Claire McCaskill, has scheduled a hearing for next month, demanding Valeant and three other drug companies appear to explain their pricing policies amid recent spikes.
The senators called for a face-to-face meeting with Turing Pharmaceuticals CEO Martin Shkreli, "as soon as it is practicable." A former hedge fund manager, Shkreli has become the public face of the pricing controversy, after his company raised the price of the anti-infection drug Daraprim by more than 5,000 percent.
The drug, which Turing acquired in August, is the only U.S.-approved treatment for a deadly parasitic infection that can affect pregnant women and patients with HIV.
Turing said in an emailed statement: "We are reviewing the committee's request and, as we have and continue to do with similar congressional inquiries, we look forward to having an open and honest dialogue about drug pricing."
There's also a request to issue subpoenas to collect documents from Turing and Valeant. Both firms have refused to turn over documents requested by Democrats on the House oversight committee.
"We need to get to the bottom of why we're seeing huge spikes in drug prices that seemingly have no relationship to research and development costs," said McCaskill, in a statement. She added that some of the increases resemble "little more than price gouging."
The committee also sent letters to Retrophin Inc. of San Diego and Rodelis Therapeutics of Alpharetta, Georgia. The lawmakers question Retrophin about its decision to raise the price of a kidney drug, Thiola, from $1.50 per tablet to $30 per tablet. Company shares tumbled roughly 13 percent in trading Wednesday to $18.90.
The letter to Rodelis questions the company's price increase on a tuberculosis drug by more than 2,000 per cent to $10,800 per bottle.
Valeant's involvement in the pricing probe predates its recent accelerated stock slide, which has been mainly caused by questions raised by short-selling firm Citron Research about the company's ties to specialty pharmacy Philidor Rx Services. Philidor said last week it would shut down after Valeant and several major customers said they would no longer do business with them.