It’s about that time: Valeant ($VRX) CEO J. Michael Pearson will take the hot seat today at a Senate hearing on the company’s drug pricing. And when he gets there, he plans to repent.
Pearson will tell the Senate Special Committee on Aging that the company was "too aggressive" in pursuing price increases on certain meds, according to a prepared testimony. “It was a mistake to pursue, and in hindsight I regret pursuing, transactions where a central premise was a planned increase in the prices of the medicines,” Pearson said.
But the beleaguered helmsman isn't making a blanket apology. "Price increases in a small segment of our company have overshadowed our activities," Pearson said in the testimony. And a “narrow focus” on a handful of meds with price increases “has given Congress and the public a misimpression that our strategic focus revolved around acquiring older, off-patent drugs, which in fact was not the case,” he added.
Pearson won't be the only one in the hot seat. The committee will also grill Valeant’s former interim CEO Howard Schiller and the company’s largest shareholder and recent board appointee, Pershing Square CEO Bill Ackman, about “sudden, aggressive price spikes of decades-old prescription drugs,” it said in a statement.
The moment has been a long time coming for committee leaders Sen. Susan Collins (R-ME) and Sen. Claire McCaskill (D-MO). McCaskill has been hounding Valeant for months for information about its price hikes, including those for two cardio drugs, Isuprel and Nitropress. The company bought the meds and jacked up their prices 525% and 212%, respectively.
Valeant has riled the committee by dragging its feet on document handovers, and sometimes by stonewalling completely. Last fall, the company provided “limited information” about its decisions on pricing, and left out some info requested by McCaskill. Valeant dodged questions about its purchase of its active ingredients, total expenses associated with particular drugs, and dates and amounts of specific price changes. “Your failure to provide a complete response to my requests is deeply disappointing,” McCaskill wrote Valeant at the time.
Things went from bad to worse after Pearson earlier this month refused to give a deposition for the committee’s drug pricing investigation. The move prompted the Senate panel to launch contempt proceedings against him, even though Pearson’s lawyer defended his behavior. Valeant’s board encouraged Pearson, who will be replaced by new CEO Joseph Papa early next month, to cooperate with the Senate probe.
Bowing under pressure, Pearson agreed to give a deposition prior to the public hearing. Lawmakers grilled Pearson for at least 9 hours last week, Bloomberg reported.
Pearson is not the only one coming under fire for the company’s price hikes. Schiller, who took the reins when Pearson was out on a medical leave of absence, will also face some tough questions at Wednesday’s hearing. The former interim CEO already attended a congressional hearing on drug pricing earlier this year, where he got flak for Valeant’s price-setting ways.
The company plans to raise drug prices “within industry norms, and much less than” it did for Isuprel and Nitropress, Schiller told the House Committee on Oversight and Government Reform. “We’re changing and listening,” Schiller said.
But one of the committee members wasn’t buying it. "The only strategy I saw was, 'Let's increase the price of the drugs,'" Rep. Carolyn Maloney (D-NY) said at the time about Valeant’s price hikes.
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