- Screenshot/ABC News
We thought we would just circle back to Wednesday’s Valeant Pharmaceuticals hearing in the US Senate to pull out a very important, and candid, quote from billionaire investor and board member, Bill Ackman.
It tells you two things, how close the massive former Wall Street darling – which has now come under scrutiny for dramatically hiking the prices of life-saving drugs – came to the brink of destruction, and how active Ackman has been in it.
In an unusually harsh line of questioning, Sen. Bob Casey (D-PA), who has been involved with Valeant in some way shape or form since 2014, pointed out that Ackman said that drug pricing was a “serious issue.”
However that wasn’t enough for the Senator. He continued saying: “Can you point to anything in your testimony here that points to social responsibility?”
Ackman, again, went back to his written testimony, which lacked the specifics Casey wanted.
“The first thing I’ve been doing is trying to make sure this company doesn’t go bankrupt,” said Ackman, adding that the company expected to file its annual report, which was due back in March, by Friday and had already done the work of replacing CEO Michael Pearson with incoming CEO Joe Papa.
Casey was still not satisfied. “I’ve heard of no policy … in regards to pricing that says, ‘It shall be the policy of this company to not do this.'”
Ackman said that he would “have that in weeks. Watch what we can do.”
“Yeah, it’s horrible. It’s wrong.”
We should note that Sen. Casey’s pointed questions drew surprise from his colleagues. He’s usually pretty chill.
But this is hardly a chill situation. Valeant has seen its stock fall almost 70% since last October, when government scrutiny over its acquisition heavy business model and pricing practices combined with accusations of malfeasance from a short seller to drag the stock down.
Ackman first teamed up with the company in 2014 in order to help it with its failed bid to acquire Allergan Pharmaceuticals. He became one of Valeant’s major shareholders in early 2015.
Over and over again, politicians were astonished by Ackman’s admissions that he didn’t realize that Valeant would jack up the prices of the drugs it acquired through M&A so high.
“One of the things with due diligence in this industry is that it’s really hard to find out prices for drugs,” Ackman said after stuttering a bit during Senator Claire McCaskill’s (D-MO) line of questioning.
That doesn’t mean Ackman is repudiating Valeant’s old acquisition-based, low R&D spending growth model though. In his written testimony submitted to the Senate record, he had this to say about it:
We believe that a drug company can do as much or more for innovation in pharma by acquiring other drug companies and licensing drugs than by developing drugs internally. Much of Valeant’s product portfolio has been built through acquisition where Valeant was the high bidder for smaller innovative companies and their products. As a result of these acquisitions, the selling company shareholders earned an attractive and in some cases spectacular return on their investment from the nearly $40 billion that Valeant has invested in acquisitions.
He didn’t say that out loud during his testimony, though. Wonder why.