Valeant Pharmaceuticals is backing down from its long-running strategy of buying older drugs and raising the prices, CEO J. Michael Pearson said Monday during the company’s quarterly earnings call.
“It’s likely we’ll pursue fewer if any transactions that are focused on mispriced products,” said Pearson.
The shift comes only days after t he drug maker received subpoenas from federal prosecutors demanding more information about how it prices and distributes its drugs, putting Valeant (VRX) on the hot seat in the latest drug price battle.
Drug prices have become a high-profile political issue as significant cost increases have focused attention on the pharmaceutical industry. The moves have sparked rival health plans from 2016 presidential candidates Hillary Clinton and Jeb Bush and attracted the attention of Congress members who are demanding more information on how companies price lifesaving and other critical treatments.
Valeant has bought up a string of older treatments over the past several years and boosted their prices. For instance, the cost of its heart drug Isuprel went up 720% from December 2013 to today. Its diabetes treatment Glumetza’s price increased 1,018% over about two years, and Cuprimine, a treatment for Wilson’s Disease (a rare liver ailment), now costs 2,849% more than it did in February 2013.
Those price increases have been a major revenue driver for Valeant. Last quarter, drug price gains accounted for 15% of the company’s U.S. Growth. About 19% of growth was due to increased volume. The company has said it will continue to break out what portion of its growth is a credit to price increases.
Before markets opened Monday, Valeant reported third-quarter profits of $2.74 a share, excluding one-time items, on sales of $2.79 billion. Revenues were up 36% year-over-year. Valeant’s stock fell 9.2% as of 2 p.m. ET, continuing its poor stock performance after it declined almost 9% last week.