|Valeant CEO J. Michael Pearson|
Last week, Valeant ($VRX) CEO J. Michael Pearson wrote a letter to worried employees explaining that Isuprel and Nitropress--two meds that have drawn the company into the drug-pricing spotlight because of recent price hikes--don't contribute to its growth plans.
What he didn't mention: The company has jacked up prices on 54 other meds this year alone by an industry-leading average of 65.6%, according to a Deutsche Bank analysis. Last year, it hiked the prices on 62 drugs--by 50%, on average.
Some of those increases were big ones. This year's largest jumper was Glumetza, which is now 550% more expensive than it was on Jan. 1. As of July 31, the drug's list price stood at $10,020 for 90 tablets, up from $896 in January 2013.
Valeant's Zegerid price vaulted upward by 529.9%, and Cuprimine's rose by 330%, meaning that Isuprel and Nitropress--whose prices Valeant punched up by 536.7% and 236.6%, respectively--are hardly alone.
|Sen. Bernie Sanders|
But it's those two that have caught the attention of lawmakers and presidential candidates lately. In August, Rep. Elijah Cummings (D-MD) and Sen. Bernie Sanders (D-VT)--a presidential hopeful--wrote to Pearson requesting documents and details on the pricing moves for the duo.
And last week, all 18 Democratic members of the House Committee on Oversight and Government Reform sent a letter requesting that Committee Chairman Jason Chaffetz issue Valeant a subpoena. They also called for Pearson to testify before the committee, along with Turing Pharma CEO Martin Shkreli, whose 5000%-plus Daraprim price hike recently ignited the public's fury and brought drug pricing onto the national stage as a hot-button campaign issue.
Of course, those companies aren't alone in their strategies. Last year, Mallinckrodt ($MNK) raised the prices on four drugs by an average of 50%. Overall, specialty pharma's price increases on branded drugs averaged out to 22%.
Investors have clearly taken note, though, and their concerns have given pharma and biotech stocks a recent beating. Valeant champion Pershing Square, a hedge fund led by the drugmaker's former deal partner, Bill Ackman, posted a 12.5% loss last month, Reuters reported last week.
Pearson nonetheless maintains that the company can keep expanding with or without its pricing tactics. "Valeant is well-positioned for strong organic growth, even assuming little to no price increases," he wrote in the employee letter. The company's "core operating principles include a focus on volume growth and a concentration on private and cash pay markets that avoid government reimbursement in the U.S. and across the world."
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