November 4, 2015 / 1:51 PM / 3 years ago

UPDATE 4-U.S. Senate panel probing Valeant, Turing over drug costs

* Senate panel seeks information from four drugmakers on pricing

* Valeant shares fall 6 pct, Retrophin shares tumble 14 pct (Adds drug pricing task force, government panel formed)

By Caroline Humer and Sarah N. Lynch

NEW YORK/WASHINGTON, Nov 4 (Reuters) - A U.S. Senate panel on Wednesday launched a bipartisan probe into pharmaceutical pricing, seeking documents from four drugmakers including Valeant Pharmaceuticals and Turing Pharmaceuticals, companies embroiled in controversy over price hikes on lifesaving drugs.

The move followed a series of criticisms by lawmakers over eye-popping drug price increases, especially by companies with recently acquired generic drugs. Drug companies have said those hikes have brought the medicines in-line with their market value and also reflect costs of acquisition and development of new treatments.

The Senate’s Special Committee on Aging also requested information from Retrophin Inc and Rodelis Therapeutics, according to a statement from the panel’s Republican Chairwoman Susan Collins and Claire McCaskill, its top Democrat.

Valeant and Retrophin shares fell on the announcement but the wider U.S. biotech sector held steady. Healthcare experts have said it would take a much broader bipartisan push to introduce laws that would limit what drugmakers could charge for their medicines.

Also on Wednesday, Democratic members of a U.S. House of Representatives investigative committee asked Republicans to call a vote to subpoena Valeant and Turing.

These Democratic leaders called for an investigation of drug prices in September, emboldened by press reports of a more than 5000 percent overnight increase in a toxoplasmosis drug made by Turing and a more than 600 percent increase in a blood pressure treatment from Valeant.

House investigative committee Republican Chairman Jason Chaffetz, who could authorize an investigation, so far has blocked it. His spokesperson did not immediately respond to request for comment.

Retrophin shares fell 14 percent to $18.67 on Nasdaq on Wednesday. Valeant shares fell over 6 percent to $91.90 on the New York Stock Exchange.

The Nasdaq Biotech index was down 0.3 percent, and the Dow Jones pharmaceutical index was off 0.4 percent, about in line with the market.

Biotech shares did fall after Democratic Presidential candidate Hillary Clinton tweeted in September that drug price increases at Turing were “outrageous.” She later released a plan to restrict drugmaker profits.


Drug companies have said that they raise prices on the drugs because they were previously mispriced as compared to their value on the market. They also defend themselves by saying they need to invest in research and development of new drugs.

In a letter to Valeant Chief Executive Mike Pearson, the Senate committee chairs requested information on sodium drug Nitropress, which is used to treat high blood pressure. Its price rose by 625 percent to $1,346.62 per vial on the day Valeant acquired the drug, the letter said. It also cited an 820 percent increase to $36,811 for 25 pills of heart drug Isuprel and a 2,949 percent increase to $26,189 for 100 capsules of Cuprimine for rheumatoid arthritis.

Valeant said it planned to cooperate with the committee on the inquiry. Drug prices fluctuate due to factors “including the cost of development and acquisition and complexities in the health care cost reimbursement system,” spokeswoman Laurie Little said in an emailed statement.

Valeant is already the subject of a probe by federal prosecutors in New York and Massachusetts into drug pricing and patient assistance programs, and is also under scrutiny over separate allegations that it used specialty pharmacies to pad its revenue.

The Senate committee also sent a letter to Retrophin requesting information about Thiola, a drug that treats kidney disease, and whose price rose to $30 per tablet from $1.50 after Retrophin acquired licensing rights.

“Pharmaceutical pricing that strikes the right balance between affordability and enabling innovation is an issue of legitimate concern for patients and the industry,” Retrophin director of investor relations Chris Cline said in an emailed statement. The company said it was focused on developing its pipeline of drugs rather than acquiring and re-marketing old therapies.

The Senate committee also said it wanted to hear more about Turing’s Daraprim, an anti-infective drug used to treat toxoplasmosis among other diseases. Earlier this year Turing raised the price on the drug overnight to $750 per pill from $13.50.

Turing said in a statement that more than 60 percent of its revenues goes into research and development of new therapies. In September Turing said it would cut the price of Daraprim, but has not yet done so. The New York state attorney general’s office is also investigating Turing over whether its Daraprim price increases violated antitrust rules.

“The sudden, aggressive price hikes for a variety of drugs used widely for decades affect patients and health care providers and the overall cost of health care,” Collins said in a statement, adding that the Senate committee is probing the increases given the potential harm to patients.


Elsewhere, Democrats who sit on eight different committees announced on Wednesday they are launching a drug pricing task force to shine a spotlight on the skyrocketing costs of prescription drugs.

At a news conference in front of the U.S. Capitol, the Democrats pointed to signs with pictures featuring Valeant’s Pearson and Turing CEO Martin Shrekli. The goal of the task force is to shame the drug companies and put a spotlight on the issue, the members said. They also hope to convince the Republican majority to hold hearings and intend to push for new legislation to make prescription drugs more affordable.

“Prescription drug prices are skyrocketing and the American public is fed up,” Elijah Cummings, the top Democrat on the House Oversight Committee, said during the press conference. Cummings in May had asked Chaffetz to investigate Valeant’s price increase.

The Obama administration is also ramping up pressure on drugmakers, holding a public meeting later this month to address “the high and growing cost of drugs,” including specialty medications.

Reporting by Caroline Humer in New York and Sarah Lynch, Toni Clarke and Susan Heavey in Washington D.C.; Editing by Meredith Mazzilli

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