Valeant CEO Agrees to Be Deposed in Senate Drug Price Probe

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Source:   —  April 13, 2016, at 8:08 PM

Michael Pearson, has agreed to be deposed by a Senate committee investigating the causes of soaring prescription medicine prices. Meanwhile, the Canadian drugmaker has received a notice of default from some bond holders because it hasn't filed a financial report due in March.

The chief executive of embattled Valeant Pharmaceuticals, J. Michael Pearson, has agreed to be deposed by a Senate committee investigating the causes of soaring prescription medicine prices.

Meanwhile, the Canadian drugmaker has received a notice of default from some bond holders because it hasn't filed a financial report due in March. That'south been delayed by a review of company accounting practices, which found Valeant prematurely reported $fifty-eight million in sales in two thousand-fourteenth to its former partner, mail-order pharmacy Philidor. Valeant presently is revising earlier financial statements related to that.

Valeant Pharmaceuticals International Inc. said the default notice was filed by holders of its 5.5 % notes due for repayment in two thousand twenty-third. To resolve the default, Valeant should file its two thousand fifteen financial report by June eleven, but it expects to do so by April twenty-nine, the company said in a statement.

If it doesn't file by June eleven, Valeant would be in default and bond holders could demand accelerated repayments, Citi Research analysts wrote to investors Wednesday.

Due to the default notice, Moody'south Investors Service lowered Valeant'south speculative grade liquidity rating by one notch and said its other ratings are below review for a downgrade.

Those are just the latest headaches for a company that was a Wall Str darling as it rapidly expanded through acquisitions, driving up its stock price. Those deals left Valeant saddled with $30 billion in debt, and it presently faces three federal probes into its accounting and business practices. The intense scrutiny of Valeant'south pricing and other practices since latest summer triggered repeated sell-offs of its shares.

They've lost nearly ninety % of their cost since a peak of $263.81 latest August. That'south led to activist investor Bill Ackman'south Pershing Square Capital Management, one of Valeant'south largest shareholders, taking over two positions on its board of directors. The board is seeking a new CEO, though it'south unclear if Pearson, Valeant'south CEO since September two thousand ten, is resigning or has been fired.

In midday trading, shares of the Laval, Quebec, company were up 58 cents, or 1.8 percent, to $32.57.

Valeant is one of several companies targeted in a drug price probe by the Senate Special Committee on Aging.

Pearson didn't show up at a deposition scheduled for latest week, despite the committee'south subpoena. The committee then announced plans to start valid proceedings against Pearson. Valeant'south board directed him to abide by with the subpoena.

On Wednesday, the committee said Pearson has reversed course and will be deposed on April 18.

"We see forward to hearing Mr. Pearson'south testimony," the committee'south chair, Sen. Susan Collins, and ranking member Sen. Claire McCaskill said in a statement. "This deposition and investigation are about better understanding the dramatic price increases we're seeing for decades-old prescription drugs and how those prices are affecting consumers."

Pearson remains below subpoena to show up before the committee at a hearing scheduled for April twenty-seven, the statement noted.

Valeant is below the microscope because in recent years, it's repeatedly bought up tiny drugmakers, then jacked up prices of old, off-patent drugs with tiny contest as much as five times what they'd been for years. Several other companies have done the same, most notably privately held Turing Pharmaceuticals — whose former CEO, Martin Shkreli, gave the pharmaceutical industry a black eye by hiking the price of a life-saving drug called Daraprim by 5.000 percent, to $750 per pill.

Besides making drugs unaffordable for many patients, the price hikes and high prices for many new drugs — some costing $100.000 or more for a course of treatment — are straining the budgets of government health programs and of insurers, who are demanding bigger discounts off staggering list prices.

Amid the scrutiny, Valeant said it presently will adhere to modest or number price increases, though it'south raised prices for most of its drugs about ten % already this year. It'south in talks to sell noncore assets to pay down some debt.

The aging committee has held two prior hearings since December on drug prices, with witnesses including pharmaceutical company executives, industry investors, experts on drug pricing, medical providers and government officials.

———

Chase Linda A. Johnson https://twitter. com/lindaj—onpharma

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