Congressional Democrats Seek Subpoena of Valeant Over Drug Prices

By Jonathan D. Rockoff 

Democrats on the House oversight committee are asking the committee chairman to force Valeant Pharmaceuticals International Inc. to provide documents explaining hefty price increases for two heart drugs.

Valeant refused early this month to provide documents sought by Rep. Elijah Cummings (D., Md.) and Sen. Bernie Sanders (I., Vt.) explaining the 525% and 212% price increases the company took on the two drugs the day it acquired their rights, saying the requested information was "highly proprietary and confidential."

On Monday, Rep. Cummings, ranking member of the House Committee on Oversight and Government Reform, and its 17 other Democratic members sent a letter to the committee's Republican chairman asking him to issue a subpoena compelling Valeant to furnish the documents.

The Democrats also asked the chairman, Rep. Jason Chaffetz (R., Utah), to ask Valeant CEO Michael Pearson to testify before the committee.

Valeant shares fell more than 15% on Monday amid news of the Democrats' request for a subpoena, after falling more than 12% over the previous several days amid increasing criticism from politicians about drug price increases.

"We 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-price 'specialty drugs,' " the Democrats wrote in their letter, quoting from an article in The Wall Street Journal in April about the industry practice, which used Valeant's drug-price increases as an example.

The Democrats wrote they are also seeking the testimony of Martin Shkreli, CEO of Turing Pharmaceuticals AG, which raised the price of anti-parasite drug Daraprim more than 50-fold after buying the U.S. rights in August. After an onslaught of criticism, Mr. Shkreli later said Turing will cut the drug's price from its current $750 a tablet.

Valeant and Turing declined to comment on the Democrats' letter.

It is up to Mr. Chaffetz to decide whether the committee will issue a subpoena or hold a hearing, but it is far from certain he will. The Democrats wrote in their letter that Mr. Chaffetz had declined to sign the initial request to Valeant seeking documents and other information about the price increases for the two heart drugs, Nitropress and Isuprel.

Mr. Chaffetz didn't immediately respond to a request for comment.

Earlier on Monday, Mr. Pearson, in a letter Valeant employees, dismissed Wall Street's concerns regarding the company's growth prospects. He said just 15% of Valeant revenues come from U.S. government reimbursements, and that the company generally relies on selling more drugs to up its sales, not price increases.

"Valeant is well-positioned for strong organic growth, even assuming little to no price increases," Mr. Pearson wrote.

Hospitals use Isuprel during procedures to treat heart-rhythm problems, and give Nitropress to emergency patients whose blood pressures have increased to life-threatening levels. Rep. Cummings and Sen. Sanders sought documents such as sales contracts for the ingredients used to make the two drugs and information such as the total gross revenues from sales of the drugs.

Valeant didn't provide any documents, but said in a letter dated Sept. 3 that it raised the prices because the drugs were "significantly underpriced" and the company has patient-assistance programs to help patients get the drugs if they face financial obstacles.

Write to Jonathan D. Rockoff at [e-mail]

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(END) Dow Jones Newswires

September 28, 2015 15:41 ET (19:41 GMT)

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