Valeant subpoenaed in U.S. for drug pricing
The debate is political, but Valeant is in the cross-hairs after rising the prices of 2 drugs
Valeant Pharmaceuticals International Inc. says that two federal prosecutors have subpoenaed the Canadian drugmaker, seeking information on its drug pricing, distribution and patient assistance policies.
The federal subpoenas, disclosed late Wednesday, likely won't be the last, according to one analyst.
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It comes amid rising criticism of sky-high prices for new prescription drugs for cancer, hepatitis C and other illnesses, which carry list prices in the $100,000-a-year range. Condemnation by patients, doctors and insurers has been mounting steadily for a couple years, then escalated in the past several months over news Valeant and a handful of other drugmakers have been hiking the prices of old drugs many times over their prior cost.
Turing sparks the debate
The issue reached critical mass in late September. That's when former hedge fund manager Martin Shkreli's Turing Pharmaceuticals came under fire for increasing the price of Daraprim, the only treatment approved to treat a life-threatening parasitic infection, to $750 from $13.50 after buying rights to sell the drug.
Shkreli initially said the higher price was needed to fund future research on the 60-year-old drug, which some doctors said wasn't needed. After a firestorm of criticism from patient groups and politicians, Shkreli backed down and said he would reduce the price. He has yet to announce when or by how much.
Turing Pharmaceuticals is now facing an antitrust probe by New York Attorney General Eric Schneiderman.
Democratic frontrunners Hillary Clinton and Bernie Sanders have recently made unaffordable drug prices a 2016 presidential campaign issue and pledged to take on drugmakers during Tuesday's Democratic candidate debate. Some members of Congress have been demanding that drugmakers explain their actions.
"This is not going to be the last time you see subpoenas for documents" on drug pricing, predicted analyst Steve Brozak, president of WBB Securities.
Drugs firms in prosecutors' sights
Brozak and Edward Jones analyst Ashtyn Evans couldn't recall any similar subpoenas over the last decade.
"I can't see how this doesn't become a major political issue," he added, because patients are upset about how much more they're paying for drugs and medical treatment.
That's due not just to higher prices, but to many people switching to high-deductible insurance plans and those in traditional plans being saddled with a higher percentage of medicine and other costs.
Valeant drew Congress' interest following its purchase of the heart drugs Nitropress and Isuprel. The company, a serial acquirer of smaller drugmakers, immediately jacked up the drugs' prices, tripling one and raising the other sixfold last spring.
The company said that it received one subpoena recently from the U.S. Attorney's Office for the District of Massachusetts and another subpoena from the U.S. Attorney's Office for the Southern District of New York. Those are among several U.S. Attorney offices known for prosecuting drugmakers for crimes such as overcharging government health programs and marketing medicines for unapproved uses.
Valeant pledges cooperation
Brozak said the subpoenas probably were in the works well before the furor over Turing's price hike began four weeks ago.
Valeant Chairman and CEO J. Michael Pearson said his company will cooperate with the federal inquiries.
Pearson said the company's employees believe in "maintaining strong regulatory and financial controls and believe we have operated our business in a fully compliant manner."
In September, Democrats on the House committee on oversight and government reform sent a letter to the committee's Republican chairman seeking a subpoena forcing Valeant to turn over pricing information.
That move came after Sanders and fellow Democrat Rep. Elijah Cummings of Maryland, who have been investigating rising drug prices for a year, were rebuffed by Valeant when they asked the company for documents about the drugs' price hikes. At the time, Valeant claimed that information was "highly proprietary and confidential."
In a statement late Wednesday, Valeant said it responded to a letter from Sen. Claire McCaskill, a Democrat from Missouri, concerning Nitropress and Isuprel. It addressed pricing and reimbursement, along with patient assistance programs.