Valeant Pharmaceuticals Intl Inc (NYSE:VRX), outgoing CEO, Michael Pearson, is to appear before a Senate panel as part of an ongoing probe into the company’s pricing practices. According to reports, the executive is to make it clear that it was wrong to buy drugs and asset pipelines in order to immediately increase their prices.
Accompanying the outgoing executive at the hearing will be activist investor William Ackman and fellow board member Howard Schiller. The hearing comes just days after the drug maker confirmed the appointment of Perrigo CEO Joseph Papa, as the successor of Mr. Pearson.
The admission comes as a surprise given that Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has always defended its pricing practices. In a letter to a Senate panel last year, the company defended the manner in which it acquired heart drugs from Marathon Pharmaceuticals and immediately initiated astronomical price increases.
Isuprel is one of the drugs whose price was jacked up 720%. The Canadian company also increased the price of Nitropress from $214.83 a dose to $880.88.
Pearson has already acknowledged that they should not have bought the two drugs given the amount competition they were likely to face with the arrival of other generic drugs.
“We should have abandoned the transaction with Marathon when it became clear that the expected arrival of generic competition made the economics of the deal dependent on significant price increases,” said Mr. Pearson.
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is facing a string of probes in the US most of which continue to spook investors. Irregular drug pricing is not the only charge facing the pharmaceutical giant. The Securities and Exchange Commission is also carrying out probes on the company’s accounting practices.
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) was forced to delay the filing of its annual report amidst the accounting malpractices allegations. It is, however, unlikely it will delay the filing beyond April 29, as the same would have a catastrophic impact on an already battered stock.