Senate told Valeant drug price hikes hurt patients
Berna Heyman told a Senate committee Wednesday that her annual co-payment for a lifesaving drug needed to treat an ailment known as Wilson disease stayed below $700, a manageable cost, until 2013.
That's when Valeant Pharmaceuticals International (VRX), an embattled Canada-based drugmaker, raised the price on Heyman's medication, said the retired Virginia librarian. By 2014, her projected co-pay topped $10,000 a year, with her health insurer paying more than $260,000, she said.
"The drug is essential. People can die without it," Heyman testified at the Senate Special Committee on Aging hearing. "The drug company deserves the right to make a profit. But it is unconscionable that one company, Valeant, can hold Wilson disease patients hostage."
The ailment is a rare genetic disorder that if left untreated causes a crippling and sometimes fatal buildup of copper in those struck by the illness.
Heyman was one of three witnesses who questioned or criticized Valeant's business strategy of generating rapid growth by buying other drugmakers and then raising prices on some decades-old medications acquired through the transactions. The Senate panel spotlighted Valeant for its third hearing on sudden price spikes involving drugs for which the new corporate owners paid none of the medications' research and development costs.
For instance, Valeant hiked prices on Nitropress, a drug used to treat dangerous heart conditions, by nearly 310% after acquiring the medication in a corporate acquisition, said Sen. Susan Collins, R-Maine, the committee's chairwoman. The company similarly imposed a 720% price increase on Isuprel, another heart drug, and a nearly 3,200% increase on Syprine, the medication needed by Heyman.
"We can find nothing to explain these dramatic price increases beyond Valeant's desire to take advantage of monopoly drugs," said Collins. "To protect the American public, we must act to address these market failures."
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Valeant CEO J. Michael Pearson, who is scheduled to leave the firm in early May, said he and the company "made mistakes" by being "too aggressive" in "pursuing price increases on certain drugs."
"In hindsight I regret pursuing transactions where a central premise was an increase in the prices" of the medicines, Pearson testified.
He also said congressional focus on a just a few of the company's drugs prompted a mistaken public impression that Valeant's strategic focus revolved on acquiring older, off-patent drugs. "That, in fact is not the case," he said.
Additionally, Pearson said Valeant "maintains a robust patient assistance program" that includes financial aid for the lifesaving drug needed by Heyman, as well as other medications.
Heyman testified Valeant denied her financial assistance when she sought help from the company because she was covered by Medicare. As a result, she switched to another firm's alternative drug, which has annual costs of about $480, none of it covered by her health insurance.
"Is this treatment sufficient for me? We are still monitoring its effectiveness," Heyman said.
Similarly, Sen. Claire McCaskill, D-Mo., the Senate committee's ranking minority member, said a random survey of some U.S. hospitals found none that received discounts Valeant said the company offered for Nitropress or Isuprel.
William Ackman, the New York billionaire and recently named Valeant board member whose hedge fund is among the drugmaker's biggest shareholders, said he called for a Thursday meeting where the board would consider price cuts for the four drugs discussed during the Senate hearing.
"Pricing will be top of mind," for Valeant going forward, said Ackman.
McCaskill, however, questioned why Ackman failed to analyze Valeant's drug-pricing record more closely before launching his hedge fund's multi-billion dollar investment in the company.
Valeant loses more than half its value on lower forecasts, default risk
The criticism comes as Valeant tries to reverse a months-long stock plunge amid multiple investigations of its drug-pricing and distribution policies. Along with the Senate panel, a House committee, the Securities and Exchange Commission and federal prosecutors in Massachusetts and New York are investigating Valeant.
The company's shares have lost more than 86% of their value since reaching a high of $262.52 in early August. The plunge resulted in part from a prominent short-seller's contentions last year that Valeant partnered with a mail-order pharmacy in a bid to create "a network of phantom pharmacies" that would steer pharmacy benefit managers to the drugmaker's more expensive medications.
Valeant denied the allegations. But the special committee the firm created to investigate identified accounting issues that prompted the drugmaker to restate $58 million in earnings.
The company on Monday announced that Pearson will be succeeded by Joseph Papa, who previously headed Perrigo (PRGO), an Ireland-based health care firm.