Valeant Addresses Questions on Pricing; Receives Subpoenas

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Senator McCaskill deemed J. Michael Pearson’s response letter on drug pricing “inadequate.”

Valeant revealed on Oct. 14, 2015 that it received subpoenas from the U.S. Attorney's Offices for the District of Massachusetts and the Southern District of New York. The company said in a press release that it intends to cooperate with investigators on all questions regarding its patient assistance programs, product distribution, and pricing decisions.

After receiving the subpoenas, the pharmaceutical company issued answers to some questions from Senator Claire McCaskill (D, MO) first posed in a letter to Valeant in August 2015 and again in a letter dated Sept. 23, 2015. The response letter to McCaskill, signed by Valeant CEO J. Michael Pearson, focused on the reimbursement process for hospital procedures involving the two drugs. Specifically, the letter attested that Valeant’s price increases for Isuprel and Nitropress have had “limited impact on the average hospital’s costs” and that an independent consultant hired by the pharma company determined that payment amounts for the drugs in question were “significantly higher than the costs of the drugs used.” J. Michael Pearson also wrote that Valeant received “no additional net revenue” as a result of the price jump for Isuprel after reimbursement by the US Department of Veteran Affairs and that after federal discounts, the total net revenue for Nitropress after its price increase was “only $317,588.” Essentially, Pearson stressed in the letter that when prices were lower for both hospital-administered drugs, health systems recouped a larger share of the “fixed reimbursements that they received from government and commercial payers for the procedures in which these drugs were used.”

In a press release on her website, Senator McCaskill called the response “inadequate” and said the letter did not answer any of her specific questions. She wrote, “It appears obvious to me that Valeant has been anything but responsive or transparent-it refused to take any action until served with federal subpoenas, and is still refusing to provide answers to many of the questions I’ve asked.”


Sources: Valeant, Senator McCaskill