House Committee Grills Drug Executives Over Pricing Practices for Generics

Democrats and Republicans of the House Oversight Committee took executives of Valeant Pharmaceuticals and Turing Pharmaceuticals to task Feb. 4 over what members called a strategy of buying old drugs with no generic competition and “jacking up” the prices for profits.

The hearing quickly turned into a circus-like atmosphere, with members taking turns grilling Howard Schiller, who was serving as Valeant’s interim CEO at the time, and Turing Chief Commercial Officer Nancy Retzladd — using phrases like “preposterous” and “despicable” — over the pricing practices of their companies.

Members repeatedly questioned Retzladd over the company’s decision to raise the price of Daraprim from $13.50 a tablet to $750 a tablet — a 5,000 percent increase — despite only “nominal” R&D costs, as the drug has been on the market for years.

Retzladd frequently stated that anyone who needs Daraprim can get it, regardless of his or her ability to pay. She noted the differences between the list and wholesale prices, claiming that two-thirds of the 3,000 patients taking the drug pay only “a penny a pill,” as a result of government assistance.

She added that she was “comfortable” with the list price increase because of what she called the company’s commitment to patient assistance programs and reinvestment of the profits into R&D.

The frequent reference to patient assistance programs did not sit well with some members, with Ranking Member Elijah Cummings (D-Md.) slamming the company’s large investment in public relations following the increase rather than focusing on the lives of their patients. Retzladd said the public relations investment was to stem “the flow of misinformation.”

Retzladd also drew the ire of Chairman Jason Chaffetz (R-Utah) when she said Turing was operating at a net loss. Pointing to company documents, Chaffetz cited several of the company’s employees receiving significant pay raises.

Schiller, for his part, exhibited some degree of regret for his company’s policies. “We made mistakes; we are listening, and we are changing,” he said.

Schiller still defended the company against attacks over its decision to hike the prices of Isuprel and Nitropress by 525 percent and 212 percent, respectively. He added that Valeant hired an outside consulting firm following the purchase of the two drugs, which concluded that they are clinically valuable, and that their fixed reimbursement rates would justify their price increases without eliminating hospital profits.

He also touted the company’s discount partnership with Walgreens as “a significant step forward.”

Rep. Stephen Lynch (D-Mass.) suggested that Congress adopt a “poison pill amendment,” which would allow lawmakers to suspend the exclusivity period when drugmakers act like Turing or Valeant, and contract with a government research arm to produce the drug “at no cost to consumers.”

Meanwhile, CDER Director Janet Woodcock, who also testified, fended off several questions about speeding generics to market to compete with companies like Turing and Valeant. Chaffetz said he believes the FDA failed to meet its statutory responsibilities, and that it is “dramatically behind in its processing.”

‘Bad Boy’ Invokes the Fifth

Former Turing CEO Martin Shkreli invoked his Fifth Amendment right against self-incrimination when questioned by members, including Chaffetz and Rep. Trey Gowdy (R-S.C.). Shkreli was escorted out in just under an hour after being chastised by committee members for smirking and posing for pictures while refusing to answer questions.

Shkreli would later tweet, “Hard to accept that these imbeciles represent the people in our government.” — Michael Cipriano

 

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