Valeant Pharmaceuticals International Inc. was too aggressive in raising prices, outgoing Chief Executive Officer Mike Pearson will tell U.S. senators on Wednesday at a committee hearing to examine the cost of prescription drugs.
“It was a mistake to pursue, and in hindsight I regret pursuing, transactions where a central premise was a planned increase in the prices of the medicines,” Pearson said in prepared testimony for a Senate Special Committee on Aging hearing to be held Wednesday. “The company was too aggressive –- and I, as its leader, was too aggressive –- in pursuing price increases on certain drugs.”
Wednesday’s hearing is the latest in a series by the committee probing the price of prescription drugs in the U.S. and the actions by drugmakers. Along with Pearson, the panel will hear from former Chief Financial Officer Howard Schiller and Bill Ackman, the investor whose Pershing Square Capital Management LP is one of Valeant’s biggest holders. Pershing has two seats on Valeant’s board, and Ackman has been among the company’s biggest defenders.
Pearson is leaving the drugmaker after months of turmoil, which began with a controversy over the price increases of two cardiac drugs by 525 percent and 212 percent. Since its August peak, Valeant has lost more than 85 percent of its stock market value, failed to file its annual report, said it is being investigated by the U.S. Securities and Exchange Commission, and said that Schiller, who also sits on the company’s board, had engaged in improper conduct that led to financial misstatements. On Monday, Valeant said Perrigo Co.’s former CEO Joseph Papa will take over as its CEO in early May.
Pearson defended the company’s broader conduct.
“Price increases in a small segment of our company have overshadowed our activities,” he wrote, referring to about 1,800 products he said Valeant makes and sells. The “narrow focus” on a few drugs whose price Valeant raised dramatically “has given Congress and the public a misimpression that our strategic focus revolved around acquiring older, off-patent drugs, which in fact was not the case,” he said.
Of more than 250 brand-name drugs surveyed at several companies, only prices for 10 Valeant products rose at double-digit rates in each of the first three quarters of 2015, according to a Bloomberg Intelligence analysis.
The committee’s hearing is scheduled to begin at 3:30 p.m. in Washington.
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