Valeant CEO Michael Pearson spent long hours under questioning in Washington, DC, on Monday as a Senate committee continued its probe of the company’s pricing policies.
Lawmakers deposed Pearson for at least 9 hours, Bloomberg reported, in advance of a public hearing before the Senate Special Committee on Aging scheduled for April 27.
Pearson had dodged a previously scheduled deposition, prompting immediate pushback from Committee Chair Susan Collins and ranking member Claire McCaskill. The two senators started contempt proceedings against Pearson, and Valeant issued a public statement urging its CEO to cooperate.
Pearson is in the hot seat for Valeant’s pricing policies, including enormous price hikes on two of Valeant’s newly acquired drugs, Isuprel and Nitropress. McCaskill has been dogging Valeant for documents, information and executive testimony for months, but the company has been slow to comply--and, in some cases, stonewalled altogether.
Pearson failed to show up for an April 9 deposition despite a committee subpoena. His lawyer called that subpoena unfair, Bloomberg says.
That lack of response has done nothing to endear the company to McCaskill, or to her counterparts in the House who are also investigating drug pricing. Also last Wednesday, Rep. Elijah Cummings rapped Pearson and Valeant for failing to hand over certain documents to the House Committee on Oversight and Government Reform.
"Your refusal to cooperate fully with Congress is extremely troubling and reflects a pattern of obstruction that impairs our ability to protect the American people against your company's exorbitant price increases," Cummings wrote in his latest letter.
On Monday, Pearson entered the meeting at about 10 a.m., Bloomberg says. The meeting ended at 7 p.m. The CEO declined to comment for the news service.
The congressional pricing probes--which extend beyond Valeant to other companies that have instituted large and sudden price hikes on their drugs--are only part of the trouble afflicting the Canadian drugmaker. The company faces federal subpoenas relating not only to drug pricing but also to its relationship with specialty pharmacy Philidor Rx Services and its accounting for that relationship.
Valeant said it would restate earnings for 2014 and 2015 because of accounting missteps, and it still has not filed its required 10-K for 2015 and 10-Q for the first quarter of this year. The late filings put the company in default on certain bonds, and Valeant was forced to strike new agreements with creditors to avoid other defaults. The company will pay higher interest rates on its debt and additional fees, and agreed to limits on M&A until its debt is paid down. It says it's on track to file the missing 10-K by April 29.
Pearson agreed to step down from the CEO role last month as soon as his replacement is found. Meanwhile, the company is looking at selling one or more of its business units to raise cash to pay down debt.
- see the Bloomberg story
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