Activist hedge fund investor and recent Valeant Pharmaceuticals (VRX) board appointee Bill Ackman on Wednesday slammed the company’s steep drug price hikes in testimony before the U.S. Senate Special Committee on Aging, going so far as to say the cost bumps “contributed to healthcare inflation and called into question the company’s commitment to the patients it serves.”
Ackman also pledged to push the company to lower the prices of a number of its popular treatments.
“Valeant has been appropriately criticized for substantially raising the prices of certain off-patent prescription drugs suddenly and without apparent justification,” said Ackman in his opening statement. “These issues are worthy of inquiry. As a recent member of Valeant’s board, I am committed to ensuring that this approach to drug pricing is never repeated at Valeant.”
Valeant has been at the center of a political firestorm over prescription medication costs and pharmaceutical companies, which depend more on acquiring or licensing existing therapies (and then raising their prices) rather than fueling R&D into new drugs.
Federal prosecutors are currently investigating the firm’s distribution model and company executives such as outgoing CEO Michael Pearson and former CFO Howard Schiller have been hauled in for Congressional questioning on the price increases. Wednesday’s hearing featured Pearson, Schiller, and Ackman, whose hedge fund Pershing Square owns a 9% stake in Valeant.
The drugmaker’s stock has plummeted 66% year-to-date and 83% over the last 12 months.
For a full timeline of the Valeant saga, click here.
Ackman consistently defended Valeant’s overall viability and decision to eschew a risky R&D-heavy strategy in favor of a what he called a more efficient acquisition and licensing model. But he also stressed his disapproval of big price increases for old medications like the heart drugs Nitropress and Isuprel and promised that such pricing practices would change, especially with the arrival of new incoming CEO Joseph Papa of Perrigo (PRGO).
“I regret that we didn’t do more due diligence on pricing at Valeant,” he said, noting that it’s often difficult to nail down exactly what U.S. Drugmakers charge different providers and payers for their products. “It’s horrible, it’s wrong,” he added when asked by committee ranking chair Sen. Claire McCaskill (D-Missouri) about a specific cost bump.
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Ackman said he would recommend an overall 30% price cut for Nitropress and Isuprel to Valeant’s board in the coming days.