MONTREAL – Valeant Pharmaceuticals International Inc. interim CEO Howard Schiller may have been cut down to size by the U.S. Congress on Thursday over the company’s drug price hikes, however, you wouldn’t realize it by exploring the stock, which actually climbed during the hearings.
“I don’t even think this can be a hearing, this can be a scandal: a complete abuse of power as well as an abuse of the pharmaceutical industry,” said Democrat U.S. Representative Carolyn Maloney, to Schiller, adding that she’d lost sleep considering patients who couldn’t afford Valeant’s Isuprel and Nitropess heart medications, which had price increases of 525 per cent and 212 percent respectively after being purchased through the Laval, Que.-based drugmaker.
This company has changed quite a bit
Still, Valeant shares were up 3.38 percent to $134.14 at 1:22 p.m. in Toronto, immediately following the Developments in the Prescription medication Market hearings by the U.S. House Committee on Oversight and Government Reform. They closed up 3.5 per cent at $97.52.
“(The boost is) probably due to lack of new damaging revelations,” Veritas Investment Research analyst Dimitry Khmelnitsky told the Financial Post.
The Valeant presented by Schiller on Thursday was completely different than the company formed when it merged with Biovail Corp. nearly six years back.
“We grew very quickly. We are acknowledging mistakes, we’re likely to change. We’re likely to be an accountable corporate citizen and area of the healthcare community,” said Schiller at the hearing in Washington, D.C.
“The corporation has changed quite a bit.”
The committee reviewed a lot more than 75,000 pages of documents from Valeant and says they show that CEO Michael Pearson decided to buy the two life-saving heart drugs with intends to dramatically hike prices and drive up his company’s revenue and profit.
“We don’t bet on science, we bet on management,” said Pearson in 2010 once the Aliso Viejo, Calif.-based Valeant was acquired by Mississauga’s Biovail for US$3.2 billion.
Pearson continues to be on medical leave since being admitted to hospital late 2015 with severe pneumonia.
Schiller began the hearing seated at the table using the man who had been the catalyst for turning Valeant into a poster child for giant pharma price hikes – ex-CEO of Turing Pharmaceuticals, Martin Shkreli.
But, Shkreli didn’t need to face the pressure for very long and was taken off the hearing within the first couple of minutes after refusing to testify and invoking the 5th Amendment.
Shkreli quickly took to Twitter to insult lawmakers – “Hard to accept that these imbeciles represent the people in our government,” he wrote – and left Turing’s chief commercial officer Nancy Retzlaff to face the scrutiny alongside Schiller.
Hard to accept these imbeciles represent the folks in our government.
– Martin Shkreli (@MartinShkreli) February 4, 2016
Democratic U.S. Representative Elijah Cummings first requested documents from Valeant and Turing last summer. Both companies initially refused to comply, prompting Cummings along with other Democrats to request that their Republican colleagues issue subpoenas for that information.
Valeant stocks have plunged from highs of $346.32 in August 2015 and currently sit at less than half that value following a perfect storm of price hike concerns, criticisms of R&D spending cuts, as well as short-seller attacks relating to specialty pharmacies and relationships with insurance companies.
Schiller told the Congressional panel that drug price increases were developed by taking a look at numerous criteria including clinic value, alternative therapies available and patient access.
“Obviously the correct answer is subjective. In certain of those situations we’ve talked about we have clearly first got it wrong,” said Schiller.