Valeant Pharmaceuticals' ($VRX) public reprimand must have worked. After balking at the idea last week, CEO Michael Pearson agreed to give a deposition to the Senate Special Committee on Aging.
Letters have been flying back and forth for months as the committee sought information for its drug-pricing investigation and the company resisted. The lawmakers eventually issued a subpoena to Pearson and set a public hearing for April 27.
But the battle came to a head Monday, when Sen. Susan Collins, who chairs the committee, and Sen. Claire McCaskill said they would move to hold Pearson in contempt for skipping out on a deposition scheduled last Friday.
Valeant smacked Pearson as well, with a public statement saying its board had ordered the CEO to cooperate. Now, Pearson is scheduled to be deposed on Monday, April 18, the committee said Wednesday, and contempt proceedings are put on hold.
"We look forward to hearing Mr. Pearson's testimony," Collins and McCaskill said in a joint statement. "This deposition and investigation are about better understanding the dramatic price increases we're seeing for decades-old prescription drugs and how those prices are affecting consumers--and we're committed to being thorough in that pursuit."
Pearson is still scheduled to appear at the April 27 hearing. Valeant is searching for a new CEO, and Pearson plans to stay until he is replaced.
The Senate committee zeroed in on Valeant after the company jacked up prices on two cardiovascular drugs it acquired in its Marathon Pharmaceuticals buyout. McCaskill, ranking member of the committee, 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.
In a letter to Pearson last fall, McCaskill said Valeant's response to her questions provided "limited information" on the revenue it generated from the hefty price increases on CV meds Isuprel (up 525%) and Nitropress (up 212%). Valeant completely left out the other info McCaskill requested--total expenses associated with the drugs, contracts related to the purchase of their APIs, dates and amounts of specific price tweaks, et cetera. "Your failure to provide a complete response to my requests is deeply disappointing," she wrote at the time.
Meanwhile, Pearson took another shot from Rep. Elijah Cummings, who has been leading his own pricing probe in the House of Representatives. The ranking member of the Committee on Oversight and Government Reform, Cummings wrote Pearson to demand documents and information about its still-murky relationship with Philidor Rx Services. The specialty pharmacy had handled insurance reimbursements and distribution for a range of Valeant drugs until allegations of shady activity forced the company to cut ties.
Cummings claims that Valeant used Philidor to mask its price increases and circumvent the usual insurance claim process. In addition to other documents Cummings requested in November, the committee demanded transcripts of interviews with current and former Valeant employees who reportedly helped run Philidor.
"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.
The pressure from both congressional committees has helped put drug pricing on center stage in this year's presidential campaign. Fueled by media coverage of large individual price increases on one hand, and repeated but gradual hikes on the other, the public debate continues to heat up.
Drugmakers are trying to fight back by pointing out their enormous investments in R&D and the value their new treatments offer to the healthcare system. Mainstream pharma companies have also tried to distance themselves from the likes of Valeant, which grew by M&A and spends little on R&D, and from other controversial price hikes, including the infamous 50-fold increase on the toxoplasmosis drug Daraprim, engineered by pharma bad-boy CEO--or ex-CEO--Martin Shkreli.
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