If you Google the words "Valeant Pharmaceuticals" and "cratered," nearly 10,000 results appear.
Little wonder: Valeant's CEO just bailed out after returning from medical leave, it is delaying fourth quarter earnings, and its stock price has dropped 90 percent over the past seven months.
Valeant more or less brought this upon itself by being one of the poster children for the outrageous price hikes in the drug sector, which has been roiling healthcare delivery in the U.S in recent years. The other primary poster child, former Turing Pharmaceuticals CEO Martin Shkreli, left the company after he was indicted on federal fraud charges in connection with his tenure at other firms including a pharmaceutical maker.
In short, the free market finally decided to push back on these firms and their practices.
There was little choice. Valeant had entered the practice of acquiring the rights of old-line drugs, some on the market since the Truman Administration, and raising their prices ten-fold or more. It acquired the rights to 20 drugs since 2010, according to The Motley Fool. It had hiked up the prices of its branded drugs an average of 66 percent last year alone.
That, and Shkreli's unapologetic decision to jack up the price of another 1950s-era drug, Daraprim, more than 50-fold, sparked widely broadcast television hearings. Shkreli had ignored the advice of his own legal counsel against such a price hike, according to The New York Times. In one instance, a young couple were forced to try and scrape together $360,000 to purchase the drug in order to treat their infant daughter's case of toxoplasmosis. The University of North Carolina sold them its surplus instead–for $48 a month.
For now, the spending on drugs in the U.S. has moderated, relatively speaking. Spending on prescription drugs rose at a 6.3 percent annual clip in January, according to the Altarum Institute. That's down from the 11.7 percent annualized increased experienced in January 2015.
Marketplace, the business radio show, made a wry observation this week: "At some level ... there's this unspoken agreement that it's ok to make money, hell, lots of money. But if it seems to cross from profit to greed, that's not tolerated, even in our healthcare system where we pay more for drugs than anywhere else."
Still, there remain widespread drug shortages in the hospital setting, which seem to a cynic like myself, suspicious. Opacity about the deeper supply chain of big pharma should be examined more closely. It's not unlike the opacity of hospital pricing--an issue and its effects of which I have covered extensively in the past.– Ron(@FierceHealth)
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