Pharma eyes are watching Capitol Hill on Thursday, where drug-price hikes will go on trial in a much-publicized congressional committee hearing. Valeant interim CEO Howard Schiller and ex-Turing Pharmaceuticals chief Martin Shkreli will get a grilling, though Schiller is the only one expected to answer any questions.
The hearing comes amid a hot debate over drug prices in the U.S. Shkreli touched off a firestorm last September when a 5,000% price hike on toxoplasmosis treatment Daraprim hit the media. That price increase spawned a tweet from Hillary Clinton promising action against high drug prices. The controversy spread to Valeant ($VRX) and two big price hikes it took on the heart drugs Nitropress and Isuprel after purchasing Marathon Pharmaceuticals.
Shkreli, usually talkative and unapologetic, has said he'll plead the Fifth at the hearing, held by the House Committee on Oversight and Government Reform. Outside the courtroom, his new lawyer has ordered him to keep his mouth shut, because he's facing securities charges.
Schiller has his upfront testimony ready to go, and he's expected to not only defend his company's price increases but to suggest that the impact of those price-hikes on patients aren't its fault. He's also likely to point to changes Valeant has made since the brouhaha over its Nitropress and Isuprel price hikes began, including a discount deal with the pharmacy chain Walgreens ($WBA).Rep. Elijah Cummings
Unlike most committee hearings in Washington, this one has captured the popular imagination thanks to public outrage and constant pressure from lawmakers, including Sen. Claire McCaskill, presidential candidate Sen. Bernie Sanders, and Rep. Elijah Cummings, a committee member who pushed hard for the chance to question price-raising drug executives. Cummings has broader targets than Turing and Valeant; he's pushing for action on generic drug price hikes as well as high sticker costs on branded meds.
Valeant released a statement earlier this week defending its prices on Nitropress and Isuprel, saying consultants had concluded that they were underpriced. Wednesday the company issued another memo attempting to explain some apparently contradictory statements about sales growth driven by price increases. Amid an M&A spree over the past several years, the company has raised prices on a raft of drugs besides Nitropress and Isuprel.
Schiller, who is running the company while CEO Michael Pearson is on medical leave, himself noted last May that price represented about 60% of the company's growth, but Pearson stated on an April 29 earnings call that volume was a bigger driver of sales growth. The company said that Pearson's statement was true when applied to the company's top 20 products, but not total revenue.Turing Chief Commercial Officer Nancy Retzlaff
Turing's Chief Commercial Officer, Nancy Retzlaff, is also on the docket to testify on Thursday, Reuters says, and her written testimony states that Turing discounted the price of Daraprim by 50% in November. She also stated that much of Turing's Daraprim profits will be funneled back into R&D. The company raised Daraprim's price from $13.50 a pill to $750 in August, and at the time Shkreli defended the hike as a move to maximize returns for shareholders. Later, he said Daraprim proceeds would be invested in R&D for better toxoplasmosis treatments.
Schiller's prepared remarks highlight the company's patient-assistance programs and call on Medicare to allow copay discounts on branded meds, The Wall Street Journal notes. It's a practice that private payers dislike because it circumvents incentives to push patients toward lower-cost generics and alternative brands. Medicare deems copay discounts as kickbacks that prompt patients to use expensive branded drugs, driving healthcare costs higher.
Copay discounts were at the center of another Valeant controversy, over a cozy relationship with specialty pharmacy Philidor. That pharmacy administered the company's copay discount programs and allegedly used questionable tactics to bill for Valeant drugs after filling the scripts at low to no cost to patients.
Ahead of the committee meeting, the committee released documents showing that Valeant and Turing pushed prices higher to meet profit targets. After the hikes stirred controversy, the documents show, the companies tried to deflect media attention toward their R&D costs and patient-assistance programs and away from the price hikes themselves.
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