Valeant under Pressure From US Legislators

Shares of US-listed Canadian drugmaker Valeant came under additional severe pressure early this week when Democratic party members on the House of Representative committee on oversight and government reform called on the committee’s Republican leadership to issue a subpoena against the company.

The legislators want to force Valeant to hand over documents relating to what they called “massive price hikes” for generic cardiovascular drugs Isuprel (up 212%) and Nitropress (up 525%). They also called for Valeant chairman Mike Pearson as well as Martin Shkreli of Turing Pharmaceuticals to testify in front of the committee.

Shkreli came to public attention recently with his announcement of a 50-fold price increase for Daraprim (pyrimethamine), an off-patent drug for treating the deadly parasitic infection toxoplasmosis. Both companies increased prices shortly after acquiring rights to the medications.

“Valeant is using precisely the same business model as Martin Shkreli,” the committee members said, adding that both appear to be acquiring potentially life-saving drugs to maximize their own corporate profits. The legislators said they believe “it is critical to hold drug companies to account when they engage in a business strategy of buying old neglected drugs and turning them into high-priced ‘specialty’ drugs.”

A rebuke for Turing from US presidential candidate Hillary Clinton led all US-listed pharmaceutical and biotech stocks to plummet last week, with Valeant taking the worst hit. US investors are reported to be selling off pharmaceutical company positions amid concerns that the industry will face greater pricing pressures ahead of the November 2016 US presidential election.