WASHINGTON – American lawmakers investigating price hikes by embattled Quebec drugmaker Valeant Pharmaceuticals will also question one of the company’s leading investors, hedge fund manager William Ackman.
The U.S. Senate’s aging committee holds its third meeting on drug prices on Wednesday, responding to escalating costs that have squeezed patients and strained health-care budgets across the country.
The committee previously announced that it would question outgoing Valeant CEO Michael Pearson, the London, Ont.-born executive who built the company into one of Canada’s most valuable firm by pioneering its business model of buying cheap drugs and hiking prices.
The committee said Tuesday it will also question Ackman, a billionaire activist investor who has been one of Valeant’s leading champions on Wall Street. Ackman’s Pershing Square Capital fund holds a nine per cent stake in Valeant and two chairs on the company’s board of directors. In recent months Ackman has criticized the company’s handling of multiple issues that have pummeled its shares amid mounting controversy.
Also scheduled to appear is Valeant’s former chief financial officer and current board member, Howard Schiller. Committee staff said they issued subpoenas to compel Schiller and Pearson to appear.
Valeant’s stock soared for several years under Pearson’s growth-through-acquisition strategy, which focused on buying older, niche drugs and repeatedly hiking prices. Pearson’s approach — which shunned the costly R&D investments of traditional drugmakers — made Valeant a favourite of Wall Street investors, including Ackman.
But the company’s tactics eventually attracted scrutiny. In recent months Valeant has been swamped by a host of problems including three ongoing U.S. probes of its accounting and pricing practices, massive debt and shareholder lawsuits in the U.S. and Canada.
It’s also repeatedly delayed filing its fourth-quarter and full-year 2015 results due to misstated sales from a now-defunct specialty pharmacy. Those delays put Valeant in danger of defaulting on agreements with its creditors and bondholders.
On Monday, Valeant further distanced itself from Pearson by announcing that Perrigo Co. CEO Joseph Papa would become its new CEO. He is expected to officially replace Pearson early next month.
The intense scrutiny of Valeant has triggered repeated sell-offs of company shares, which have lost nearly 90 per cent of their value since reaching peak levels last August. Almost $100 billion has been erased from Valeant’s stock market worth.
Note to readers: This is a corrected story. A previous version misidentified Howard Schiller.