WASHINGTON – U.S. Senator Claire McCaskill, the top-ranking Democrat on the Homeland Security and Governmental Affairs Committee, issued the following statement after public reports that Pershing Square Capital Management had sold their stake in Valeant Pharmaceuticals:
“I hope this serves as a warning to investors that the model of acquisition and price hikes in the pharmaceutical industry is a loser. If America is going to continue to be the world leader in finding treatments and cures for diseases, it will be due to the scientists and researchers who pour their time and energy into helping people—not individuals like Bill Ackman who see the industry as just another way to make a quick buck.”
During an investigation of predatory behavior in the pharmaceutical industry last year, McCaskill sharply questioned officials and investors of Valeant Pharmaceuticals about the company’s business strategy—including Pershing Square Chairman Bill Ackman and former Valeant CEO Michael Pearson—which relied upon aggressive corporate acquisitions and price hikes. The hearing also included testimony from individuals and experts who explained the negative impact for individuals caught in Valeant’s ‘price-gouging’ practices.
Valeant consistently acquired pharmaceutical companies that were the only producer of off-patent drugs, often then slashing the research and development spending for those companies and raising the prices on their recently-acquired drugs by hundreds or thousands of percentage points. Valeant’s entire research and development budget was consistently below 5 percent of their total sales—dramatically lower than most other companies in the pharmaceutical industry.