This week presidential candidate Hillary Clinton released a video in which she calls out Valeant Pharmaceuticals for its “predatory pricing.”
Valeant also released a statement earlier this week confirming that it is under investigation by the US Attorney’s Offices for Massachusetts and the Southern District of New York, the SEC, and Congress.
The statement added, “With respect to the SEC investigation the Company confirmed that it received a subpoena from the SEC in the fourth quarter of 2015 and, in the normal course, would have included this disclosure in its 2015 10-K. We do not have further detail to provide at this time.”
The release comes weeks after the company’s interim CEO, Howard Schiller, testified at the Full House Committee on Oversight and Government Reform.
How did we get here?
According to a report from the Department of Health and Human Services’ inspector general, skyrocketing generic drug prices have cost taxpayers an additional $1.4 billion over the last decade.
“It’s such a complicated marketplace,” John J. Lewin III, PharmD, MBA, FASHP, FCCM, FNCS, and Division Director, Critical Care and Surgery Pharmacy, at The Johns Hopkins Hospital told Outsourcing-Pharma.com.
“It’s hard to know for sure exactly how we got into this position,” he added. “It’s multifactorial, and there isn’t one single magic bullet.”
Part of the issue has been consolidation in the generic drug industry over the years, which has made it harder for smaller firms to compete in a healthy marketplace.
“Quality issues with generic manufacturing plays into drug shortages and consolidation, and people getting out of the market,” explained Lewin.
Companies are also exciting the market as generics don’t carry the price premium that brand names do, in addition to the regulatory hurdles of getting into the marketplace. This is creating virtual monopolies with one or two companies making a particular product.
“When you have a marketplace and product and no one else is making it, you can charge whatever you want for it,” said Lewin.
“What we’re ending up with in the generic industry is single source products in some cases,” he added. “A natural response to that is to charge whatever they can get.”
Lewin explained that hospitals, such as Johns Hopkins, are affected as they have to pay more for medications, which affects investments into outreach programs and technologies that improve patient care.
“Patients and providers are paying extra for someone’s innovation in business practices on Wall Street, not innovation in medicine,” he added.
To address these issues, Lewin said that there needs to be a more thorough investigation into what has created the current environment.