Politicians have thrown no shortage of attacks as the presidential primary season heats up, but Valeant Pharmaceuticals (VRX) was quick to parry one strike made Tuesday by Democratic candidate Hillary Clinton.
Clinton accused the troubled drug maker of "predatory pricing" of its medications and gouging needy customers, as she recounted the story of a woman whose costs for Valeant's migraine medications skyrocketed from $180 for 10 shots in the 1980s to $15,000 for the same dosage.
"What we have to do, I think, is defend the Affordable Care Act and fix it," Clinton said in a campaign video Tuesday, "And the company is one of these companies that is absolutely gouging American consumers and patients," she said. "I'm going after them; we are going to stop this. This is predatory pricing."
Hours later, Valeant posted on its corporate website that its pricing policy reflects its mounting costs for drug development.
"When we make decisions about the pricing of any one drug, we do so in the overall context of our portfolio of over 1,600 products, including more than 200 prescription drugs in the United States, and the need to fund our robust research and development programs, our expanding U.S. manufacturing base, and our patient assistance programs," the company said. "In 2016, we expect to invest approximately $400 million on R&D and $1 billion in our patient assistance programs that seek to ensure that out-of-pocket expenses do not prevent eligible patients from receiving medicines they need."
The chart below, provided by Valeant, shows Perrigo's generic version of the migraine medication outselling Valeant's version by 250 to 1.
The company said the drug Clinton mentioned (D.H.E. 45, an injectable treatment) has become increasingly expensive as Valeant lost market share to rival drug makers, and the woman needing the drug should have viable generic alternatives to select from.
"After being made aware of this patient's story in January, we reached out to her to see if we could provide any assistance with the cost of the medicine, as we do for many patients through our patient assistance programs," the company said. "The product was acquired in 2005, and a generic version of D.H.E. 45 has been available since 2003. Due to that competition, Valeant's share of the overall market for D.H.E. 45 has declined significantly. In fact, we now have less than 1% percent of the market for this drug."
Valeant expects net revenues of just $1 million to stem from the treatment in 2016, with just 200 units sold, according to its statement.
"Whenever the sales volume of a drug declines, manufacturers must consider pricing adjustments to keep production of the drug viable," the company said. "Patients are able to choose generic versions of the drug, however, at significantly lower prices."
Valeant is being investigated by the SEC for alleged financial misstatements and is coming off a February selloff in which shareholders dumped shares after Valeant announced it would postpone its annual earnings results, raising red flags and uncertainty to an already speculative market. (Shares are down 69% over the past 12 months.)
"Ever since we first learned that Valeant may be using unorthodox methods to sell drugs, there's been a cloud over this stock's head," Real Money's Jim Cramer said in a Tuesday article. "I had heard a lot about price gouging and Valeant, but, frankly, a bunch of companies had been raising prices for drugs and Valeant just seemed like a more aggressive actor in the play."