Hospitals say Valeant may be blowing off the government more than we thought
(From left, former Valeant CEO Michael Pearson, former CFO Howard Schiller, and Pershing Square Capital Management CEO Bill Ackman.Reuters)
The reporters over at Bloomberg reached out to 23 hospital systems and purchasing groups from the country's biggest hospitals to ask them if Valeant Pharmaceuticals is keeping a promise it made to Congress a few months ago.
The short answer is: mostly no.
In a hearing, executives from the company, along with board member and billionaire investor Bill Ackman, promised to lower the price of two heart drugs — Nitropress and Isuprel — by 30%.
Bloomberg wanted to know if that had happened. Of the 23 the entities Bloomberg contacted, only one said it was getting the discounts it negotiated with Valeant. Eleven said they weren't getting discounts on one or both of the drugs. The rest didn't respond.
"The drugmaker's chief executive officer says the discounts are available to all, and hospitals may not be seeing them yet because of how the supply chain works. In some cases, the hospitals said Valeant's contract offers were undesirable. In others, they were unable to get a response from the drugmaker. Others appeared not to know that they might need to negotiate with Valeant for discounts, rather than get them automatically.
"'Despite their promises to Congress, we've seen no reduction in cost nor any improvement in communication,' said Scott Knoer, chief pharmacy officer at the Cleveland Clinic. Knoer said his organization contacted Valeant repeatedly about a discount and didn't have their calls returned."
Valeant's stock price has plunged by around 90% since last October. That's when allegations of malfeasance from a short-seller, combined with government scrutiny about Valeant's drug pricing practices, sent investors fleeing for the exits.
(Investing.com)
Also at this hearing, former Valeant CEO Michael Pearson offered a 10% reduction for many drugs.
But at a Wells Fargo healthcare conference earlier this month, current CEO Joe Papa basically said that's not happening either.
"Papa explained that since becoming Valeant's CEO, the company has taken price cuts on only two drugs: Isuprel and Nitropress; and that Valeant has provided an average discount in the mid-teens to customers of these two products," analyst David Maris wrote in a note to clients.
So, yeah — hearing? What hearing?
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