NEW YORK—Shares of Valeant plummeted Monday after U.S. Democratic lawmakers called for an investigation into giant drug price increases enacted by the Canadian company.
By early afternoon, shares of Valeant Pharmaceuticals International were down 14.7% at $170.18 after Maryland Democrat Elijah Cummings asked a House of Representatives oversight committee to issue a subpoena on Valeant.
Valeant was down more than other pharmaceutical stocks, such as Bristol-Myers Squibb (-4.4%) Pfizer (-3.3%) and Gilead Sciences (-4.0%). Pharma stocks have been under pressure in the last week due to media reports scrutinizing runaway drug prices.
On September 23, Democratic presidential contender Hillary Clinton announced a plan to limit "price-gouging" on prescriptions, highlighting a price increase on one drug from $13.50 per pill to $750 made by Turing Pharmaceuticals.
Cummings, the senior Democrat on the House Oversight and Government Reform Committee, said Valeant had refused to explain increases in the price of heart drugs Nitropress and Isuprell by 212% and 525%, respectively, after the company acquired the rights to the drugs in February 2015.
"Since Valeant Pharmaceuticals has refused to provide any documents to Congress to explain its massive price increases for these two heart drugs, we request that the Committee issue a subpoena to turn over this information," the congressman said in a letter to Rep. Jason Chaffetz, a Utah Republican who chairs the committee.
Cummings also asked Chaffetz to invite Valeant chief executive Michael Pearson to testify at a hearing next week.
Separately, Pearson offered reassurances to company employees Monday that the company's prospects were bright despite a big drop in Valeant shares over the last week.
"This is not the first time we have faced questions about our business model and strategy in the market, and it likely won’t be the last," Pearson said in a letter to employees.
Pearson said Valeant's business model does not depend on large price increases and that fears about low reimbursement from U.S. government programs are also misplaced because Valeant gets only about 15% of its revenues in reimbursements from Medicaid and other U.S. programs.
Copyright Agence France-Presse, 2015