WASHINGTON (AP) — Senate lawmakers investigating price hikes by the embattled drugmaker Valeant Pharmaceuticals will also question one of the company's leading investors, hedge fund manager William Ackman.
The Senate Aging Committee holds its third meeting on drug prices on Wednesday, responding to escalating costs that have squeezed patients and strained health care budgets across the country.
The committee previously announced that it would question outgoing Valeant CEO Michael Pearson, who pioneered the company's business model of buying cheap drugs and hiking prices.
The committee said Tuesday it will also question Ackman, a billionaire activist investor who has been one of Valeant's leading champions on Wall Street. Ackman's Pershing Square Capital fund holds a 9 percent stake in Valeant and two chairs on the company's board of directors. In recent months Ackman has criticized the company's handling of multiple issues that have pummeled its shares amid mounting controversy.
As Senate lawmakers prepared to question Valeant, House Democrats suggested the company had inappropriately delayed its own investigation. According to a memo obtained by The Associated Press, Valeant withheld a number of documents from investigators which it claimed were protected by attorney-client privilege. However, the company ultimately turned over the materials after prodding from congressional staff, raising "obvious questions about why Valeant withheld these documents," according to the memo, circulated to Democrats on the House Committee on Oversight and Government Reform.
Along with Pearson and Ackman, the Senate Aging committee is scheduled to hear from Valeant's former chief financial officer and current board member, Howard Schiller. He also served as interim CEO for two months while Pearson recovered from a recent case of pneumonia. Committee staff said they issued subpoenas to compel Schiller and Pearson to appear.
Valeant's stock soared for several years under Pearson's growth-through-acquisition strategy, which focused on buying older, niche drugs and repeatedly hiking prices. Pearson's approach — which shunned the costly R&D investments of traditional drugmakers — made Valeant a favorite of Wall Street investors, including Ackman.
But the company's tactics eventually attracted scrutiny. In recent months Valeant has been swamped by a host of problems including three ongoing federal probes of its accounting and pricing practices, massive debt and shareholder lawsuits in the U.S. and Canada.
The company, based in Laval, Quebec, has repeatedly delayed filing its fourth-quarter and full-year 2015 results due to misstated sales from a now-defunct specialty pharmacy. Those delays put Valeant in danger of defaulting on agreements with its creditors and bondholders.
On Monday the Canadian company further distanced itself from Pearson by announcing that Perrigo Co. CEO Joseph Papa would become its new CEO. He is expected to officially replace Pearson early next month.
The intense scrutiny of Valeant has triggered repeated sell-offs of company shares, which have lost nearly 90 percent of their value since reaching peak levels last August.
This story has been corrected to show that Schiller's first name is Howard, not Robert.