Valeant Pharmaceuticals International Inc., located in Quebec have been under tremendous public and scrutiny since hiking the prices of two lifesaving medications. These medications are Isuprel or Isoprenaline and Nitropress (CBC, 2015). Valeant purchased the rights to these two medication in February of 2015 from Marathon Pharmaceuticals. It was not until Valeant got its hands on these medications, both drugs increased four to six times more in price (CBC, 2015). With this amount of public scrutiny and legal issues, Valeant’s shares have dropped below US$80, and as much as 20 percent a share (Bloomfield, 2015). It has been recently discovered Valeant’s close ties to mail order pharmacy, Philidor RX Services LLC (Langley, 2015). It was discovered that this “pharmacy helped Valeant’s high price drugs, rather than lower-cost alternatives preferred by insurers, into the hands of patients” (Langley, 2015). The rises question of whether or not Valeant and Philidor worked as a team to rise these drug prices.
Valeant Pharmaceuticals Inc., their main purpose for these price hikes may simply be to make profit. That is a common trait for many companies, it is only common sense. The way corporate society is structured, the only way for a company to survive is to profit, to make capital. This is done, unfortunately, sometimes with casualties. There are definitely direct harms from the increased price of these drugs, for example, Valeant raised the price on a medication that treats Wilson’s disease, called Syprine, for patients on a regular day take up to 3 to 4 pills, a month supply may not last long for patients (CBC, 2015). Patients with Wilson’s disease taking Syprine had a set price of $13, 244 for one month’s supply, which is $200,000 a year to manage or cure this disease (CBC, 2015). Luckily, with push back from doctors Valeant decided to reduce the price. There are obvious direct harms that come from price hikes. Harms from reduced fulfillment of life to even fatal harm due to lack of financial accessibility for potentially many patients. The argument and rationale is that “the harms caused by capitalism are actually necessary for capitalism” (class notes, 2015). This is interesting because it is brutally true, many corporations (whom are greed ridden) may do whatever is necessary to make a quick buck or million.
Valeant used various types of neutralization (to neutral the situation, and not make it seem as bad as it is) to attempt to lessen the blow of public scrutiny and legal issues directly destroying Valeant’s reputation. Valeant seemed to exhibit “defense of necessity” in a statement from Mr. Pearson (CEO of Valeant) told Congress about the price hikes of the two cardiac care drugs under question, “sometimes older drugs are dramatically underpriced relative to their clinical value”(Langley, 2015).
Valeant also used “denial of injury”, in an email to the U.S Senates Special Committee, Valeant stated “The list price of any individual drug typically does not reflect the actual the amount paid by health care provider or insurance company, and Valeant devotes a significant portion of its revenue to patient assistance programs that are designed to make important medicines more affordable to the patients who need them” (Bloomfield, 2015). Valeant is basically saying that there is no injury from the price hikes because patients are not actually paying the actual amount of the price of the drug. To take the attention away from the price hikes they attempt to balance it but saying basically, “yes prices are high but we have programs in place to help patients get the medications they need, oh and yes we are so caring that we even use the revenue of the drugs to make sure these assistance programs are well equip with what they need to provide proper assistance to the patients in the program. The point of this is that Valeant is trying to prove that there corporation is not profit, hungry, and heartless.
Lastly, Valeant uses the “denial of responsibility” neutralizing technique. William Ackman is an investor in Valeant Pharmaceuticals. After losing almost $2 billion on Valeant, Mr. Ackman telephoned the CEO of Valeant, Mike Pearson, for explanations about Philidor and accounting issues (Langley, 2015), Mr. Ackman asked the CEO, “Mike, is there any fraud going on at the company”, with a reply from Mr. Pearson, “I do not know of any fraud, but the company would be investigating” (Langley, 2015). Valeant went on to tell investors later that there was no evidence of fraud but that they were creating a board committee to look at its ties with Philidor (Langley, 2015). By Valeant bringing Philidor into play they are disrupting the responsibility, if there is any illegal activity, between Valeant and Philidor. After investigating and discovery of improper behaviour at Philidor, Mr. Pearson released a statement: “We understand that patients, doctors, and business partners have been disturbed by the reports if improper behaviour at Philidor, just as we have been. We know the allegations have also led them to question Valeant and our integrity, and for that I take complete responsibility” (Langley, 2015). This statement draws attention away from Valeant and onto Philidor, also making Valeant look like angels compare to Philidor. Between the lines it looks like Mr. Pearson is saying that Valeant would never do such a horrendous crime, that they are the “good guys”. However, when CBC wanted a comment on the drug hikes at Valeant, Valeant did not respond (CBC, 2015).
Valeant shows superiority over Philior, by first working with them and then easily dragging their name through the mud to take the attention away from Valeant. In the New York Times article, it was stated “evidence strongly suggests that Philidor is controlled by Valeant” (Nocera, 2015). Valeant released a statement to this saying “Valeant has never had an ownership or control over Philidor” , interesting because Valeant purchased the option to require ownership in August 2013 ( Linde, 2015). There was a legal mechanism put in place to investigate whether Valeant was up to illegal activity or fraud. In an article it was stated “lawmakers in both houses of Congress have asked Valeant for documents related to the heart drugs Nitropress and Isuprel…” (Bloomfield, 2015).
Valeant was represented in the mainstream media and through political commentary in various not so tasteful ways. Valeant was called a “sleazy company” in an article (Nocera, 2015). In a report short teller Andrew Left stated “is this (Valeant) Enron part deux?” (Bloomfield, 2015). Hilary Clinton and Bernie Sanders, both Democratic presidential candidates are seeking for reforms to the drug industry (Bloomfield, 2015). A Valeant investor stated in an email to the CEO of Valeant, Mike Pearson, that “Valeant has become toxic” (Langley, 2015). Others have called Valeant a “hedge fund”, for example Pharmaceutical Research and Manufacturers of American, which is the drug industries main lobbying group (Bloomfield, 2015).
It is hard to pin point clear offenders or villians in this story, unfortunately like many cases like this one. It is easy to pin point the victims, which are the patients who need these medications to survive or maintain a fulfilling day-to-day life. As mentioned early, Valeant’s rationale for the price hikes are because these drugs are “small components of expensive surgeries” (Langley, 2015). Lastly, Valeant’s rationale is that they are not attempting to mainly profit off these drugs, but that the price hikes are subsequently a necessity. “Valeant is well –positioned for strong organic growth, even assuming little to no price increases” (CBC, 2015).
CBC News (2015, September, 29th) Valeant Pharamaeuticals’ Drug Price Hikes in Crosshairs of U.S Congress. http://www.cbc.ca/news/health/valeant-pharmaceuticals-price-hikes-1.3248265
Langley, M. (2015, November, 4th). Activist Investor Bill Ackman Plays Defense. The Wall Street Journal. http://www.wsj.com/articles/activist-investor-bill-ackman-plays-defense-1446689963
Bloomfield, D. (2015, November, 5th). Valeant Pharmaceuticals International Inc. just saw two years of gains wiped off the chart after stocks plummets in latest blow to drugmaker .Finanical Post. http://business.financialpost.com/investing/market-moves/valeant-pharmaceuticals-international-inc-shares-plunge-20-retrace-ground-to-2013-levels
Bloomfield, D. (2015, October, 22nd). Valeant Pharmaceuticals International Inc. is tanking again today after longtime bull downgrades stock. Financial Post. http://business.financialpost.com/investing/global-investor/valeant-pharmaceuticals-international-inc-is-tanking-again-today-after-longtime-bull-downgrades-stock
Linde, D. (2015, October, 26th). Valeant Pharmaceuticals International Inc. stock continues to slide, even after firing back at short seller accusations. Financial Post. http://business.financialpost.com/investing/global-investor/valeant-pharmaceuticals-international-inc-calls-for-sec-investigation-into-short-sellers-actions
Nocera, J. (2015, October, 27th). Is Valeant Pharmaceuticals the Next Enron? The New York Times. http://www.nytimes.com/2015/10/27/opinion/is-valeant-pharmaceuticals-the-next-enron.html