The US Senate is scheduled to hear the testimony of Michael Pearson, the CEO of Valeant Pharmaceutical, on Wednesday. He must explain to the panel regarding his decision to increase two life-saving drugs. Meanwhile, the company has appointed a new CEO to replace Pearson.
In his prepared testimony, as cited by Reuters, Pearson planned to admit his regrets regarding his decision to hike the price of two life-saving heart drugs. He will be telling the US Senate Special Committee on Aging that his decision was a mistake.
"The company was too aggressive- and I, as its leader, was too aggressive - in pursuing price increases on certain drugs," Pearson said in prepared testimony. "In hindsight I regret pursuing, transactions where a central premise was a planned increase in the prices of the medicines."
Pearson will be accompanied by Valeant's activist investor and board member William Ackman and board member Howard Schiller.
Los Angeles Times reported that Senate Aging Committee is to hold its third meeting on drug prices on Wednesday. The committee was established to investigate the escalating drug price that have squeezed patients and strained healthcare budgets across the country. The committee is one of two US congressional panels which also investigated Turing Pharmaceuticals and Martin Shkreli for raising anti-parasite drug Daraprim.
In 2015, Valeant acquired Isuprel and Nitropress, life-saving drugs from Marathon Pharmaceuticals. Isuprel is a trademark for Isoprenaline, a medication to treat bradycardia or slow heart rate and heart block. While Nitropress is a trademark of sodium nitroprusside which is used to treat patient with severe hypertension reducing blood pressure.
Following the acquisition, Valeant increased the price of Isuprel and Nitropess by more than 700% and 400% respectively. Michael Pearson was the CEO when the decision was made and he is planning on admitting his mistakes for the decision.
However, according to ABC News, his comments may not win much sympathy from the members of the Senate Committee, as they come days before Pearson is to be replaced as Valeant CEO. On Monday, the Canadian drugmaker has appointed Joseph Papa as its new CEO to replace Pearson starting next month.
Pearson who took helm of Valeant in 2008, had initiated more than 140 aggressive acquisition. His strategy was always the same: acquiring rights to older-niche drugs and hiking their prices.
His approach became investors' favorite because it skipped the expensive research and development and offering more reliable and cheaper business model. Pearson is also the pioneer of inversion strategy, which aimed to evade tax by merging with overseas company and moving the headquarter overseas. Many US companies have tried to make use of the tactic.
On Wednesday, Mike Pearson, soon to be the fomer CEO of Canadian pharmaceutical company Valeant, will testifiy before Senate. He plans to admit his mistake of increasing two life-saving drugs. Meanwhile, Valeant has already appointed a new CEO to replace him.
