Short-selling firm Citron Research published a damning report on pharmaceutical company Valeant just one day before House Democrats called for the company to be subpoenaed, and for CEO Mike Pearson to be called to Washington to testify before legislators.
Legislators want to know whether or not the company gouged the prices of two drugs related to heart disease. Citron thinks those two drugs are just the beginning.
In the meantime, Valeant’s stock will continue to fall. It has lost 23% of its value in the last five days, as lawmakers discuss looking into potential price gouging across pharmaceutical companies. This after the entire country was scandalized by Martin Shkreli, the 32-year-old CEO of the startup Turing Pharmaceuticals who raised the price of his company’s drug by 5,000%.
“The real problem with drug pricing in America is forged in a single word: Valeant… Shkreli is merely a rogue trying to play the gambit that Valeant has perfected,” Citron wrote in its report.
“This article is not for you hedge fund managers who believe that this quarter’s performance is more important than human decency or longterm viability; this article is for the millions of Americans who together can be strong enough to mandate change. Wall Street will understand in time.”
According to Citron, Valeant’s model is something “any a–hole” can replicate — “jack up prices and cut spending.”
All the while, the company has claimed that it needs to raise the prices of its drugs in order to fund research and development (R&D) that isn’t happening. Citron points out that while most pharmaceutical companies spend around 17% on R&D, Valeant spends only 3% on it.
House Democrats specifically asked for information on two drugs related to heart disease. But Citron believes that once they look under the hood, they will find an array of drugs with gouged prices. They created a whole website about it.
Here’s their table:
“Valeant is a malignant tumour on the US Healthcare system that needs to be removed before it infects all the other healthy companies … or you end up with no money invested in drug innovation and forever skyrocketing drug prices,” Citron wrote..
Tell us how you really feel, guys.
Business Insider Emails & Alerts
Site highlights each day to your inbox.