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The outgoing CEO of Valeant Pharmaceuticals International ( VRX ) received a subpoena from the Senate on Monday to testify at a hearing on drug pricing, in the wake of new accusations of price-gouging from its former buyout target. The Senate Committee on Aging subpoenaed J. Michael Pearson to appear at a hearing on April 27, which will be the third in a series of such hearings investigating sharp increases in drug prices. Valeant has been a popular target for Congress on this issue; former Chief Financial Officer Howard Schiller testified before the House Committee on Oversight and Government Reform last month, defending Valeant’s massive price increases on heart drugs Nitropress and Isuprel. Last year, House Democrats also asked for documentation on the subject. The subpoena followed Friday’s news that shareholders of Sprout Pharmaceuticals, which Valeant acquired last year for $1 billion, sent a letter to Valeant accusing it of overpricing Sprout’s female-arousal drug Addyi, which they say sank its chances on the market. “Valeant predatorily priced Addyi at $800 a month even though Sprout had established a price point of approximately $400 a month for the drug based on market research,” the letter said, according to Bloomberg . “As a result of this predatory pricing, insurance companies refused to cover the drug, which has led to the drug not being affordable for millions of women.” The shareholders asked for documentation that Valeant was honoring the promises that it made to market the drug, as part of its buyout agreement. Valeant stock was down 7% in afternoon trading on the stock market today , near 29. While Valeant has become the poster child for aggressive drug pricing, the issue may already be becoming obsolete for the company, given the changes going on. Its 2016 guidance drastically missed expectations this month, partly because it stopped the drug hikes and agreed to a broad 10% price cut on the many drugs covered under its distribution agreement with Walgreens Boots Alliance ( WBA ). Pearson has also said that the company is no longer looking for “underpriced assets” and in fact won’t be doing any acquisitions in the near future. A week later, Valeant said it’s looking to replace Pearson , and is also trying to oust Schiller from the board, in a general overhaul of the business. Scalper1 News
Scalper1 News