TRENTON, N.J. – The ranking Democrat on a powerful congressional committee investigating soaring drug prices is turning up the heat on beleaguered Valeant Pharmaceuticals, demanding it supply previously requested and additional documents on questionable business practices.
Rep. Elijah E. Cummings, D-Maryland, has been seeking documents about Valeant’s drastic price increases for two life-saving heart medications for four months. More recently, he’s requested interviews with several Valeant executives about the company not disclosing its relationship with a specialty mail-order pharmacy, Philidor.
In a letter to Valeant CEO Michael Pearson released early Wednesday, Cummings, the top Democrat on the House Committee on Oversight and Government Reform, asked Pearson to provide the interviews and witnesses by Jan. 8, 2016, ahead of a hearing by the committee on increasing prices for medication.
“Your refusal to provide any documents or witnesses is obstructing this congressional investigation and preventing a full understanding of your company’s suspect actions,” the letter states.
The letter requests eight additional sets of documents by Jan. 8, all of them related to Valeant’s dealings with Philidor.
Its release was timed to Valeant’s Investor Day on Wednesday, when it is to discuss with analysts and investors its business operations, research programs and other information about the company.
Cummings wrote that Valeant appears to have violated U.S. securities law by withholding from shareholders and regulatory agencies information about its relationship with Philidor until Oct. 19.
Valeant has been accused of using Philidor to create a network of “phantom pharmacies” to steer pharmacy benefit managers toward Valeant’s more expensive drugs, rather than cheaper alternatives.
Among additional allegations reported in the press, Cummings’ letter notes, Valeant allegedly had its executives help run Philidor’s billing and other operations, had the right to appoint employees to Philidor and access its books, records and facilities, and has a “joint steering committee, composed of members from Valeant and Philidor.”
In October, Valeant cut ties with Philidor, saying it had lost confidence in the company.
Cummings’ letter, which was also sent to each Valeant board member, states that the congressmen believes the “majority of Valeant’s Board of Directors had direct knowledge of the Philidor relationship before it was disclosed to shareholders — including personally touring Philidor’s facilities.”
Valeant had previously disclosed that it had purchased an option to buy Philidor, which it used to help deliver drugs more quickly to patients through the mail.
The Laval, Québec company first drew scrutiny from regulators and politicians for its strategy of buying smaller drug developers, hiking drug prices and then slashing spending on research on new drugs. Among the more egregious examples, Valeant bought the life-saving heart drugs Nitropress and Isuprel in February, then tripled the price of one and raised the other sixfold.
With rising drug prices a top concern for consumers and a big issue in the 2016 presidential campaign, investors began selling off Valeant shares, which had peaked at nearly $264 in August. The stock’s slide worsened in the fall, when the Philidor allegations emerged, and shares fell to a low of barely $69.
Shares rebounded on Tuesday, after Valeant announced a new distribution deal with Walgreens meant to replace its former sales through Philidor, along with plans to line up more pharmacies to sell its products. Valeant shares ended the day up more than 16 per cent at $109.59.
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