A Senate committee grilled embattled Valeant executives Wednesday, questioning the company’s business practices of serial acquisitions and price hikes.
The Senate Special Committee on Aging questioned outgoing CEO J. Michael Pearson, former interim CEO and CFO Howard Schiller, and Bill Ackman of Pershing Square, Valeant’s major investment backer.
Pearson said the company’s practice of buying companies and increasing drug prices was a mistake. “Valeant was too aggressive and I as its leader was too aggressive in increasing the prices of the drug in its portfolio,” Pearson said during his opening remarks.
The company is also under investigation by the Securities and Exchange Commission in connection with Philidor, a mail order pharmacy that “used aggressive tactics to get insurers and pharmacy-benefit managers to pay reimbursements for Valeant’s drugs over cheaper alternatives.” Valeant cut ties with the pharmacy in October 2015.
Valeant’s new chairman and CEO, Joseph C. Papa, former Perrigo CEO and pharma veteran starts today. The Wall Street Journal released details of his pay package, which includes a $1.5 million annual salary, a one-time payment of $8 million to offset his higher salary at Perrigo, $10 million in stock, and a potential $500 million bonus if Valeant’s stock price ever reaches $270 per share again.
Valeant’s stock price peaked at $262.52 per share on August 5, 2015. It closed at $33.00 on Friday in after-hours trading.
Our Take: The mood over at Valeant headquarters is understandably grim. For some jaw-dropping commentary on the state of affairs, head over to CafePharma. Of course, most of what is posted on their message boards are anonymous, so use your best judgment when believing the authenticity of each post. Here’s one that caught our eye:
“I want to let it be known that I have a high level position here and was asked this week to destroy evidence and case files for shady things that we have done before the new CEO arrives. This goes from employee disputes, lawsuit information, strip club and alcohol bills for execs, hit-men, fraudulent accounting, discrimination of employees, terminations of key employees, and the list goes on. I was told that I would be gotten rid of unless I did so. This was to ‘start fresh’ and give us a chance to survive I was told.”
If this is true, Mr. Papa is in for a rough ride.
We’ve previously warned about bipartisan scrutiny on pharma during this election year. Now that Congress has Valiant and Turing Pharmaceuticals in its sights, it is unclear how much more attention other drug manufacturers will get this year.