Controversial pharmaceutical company Valeant has received at least two subpoenas regarding its drug pricing strategy and now the stock is getting slammed.
On Thursday, the Canadian drugmaker disclosed that it received subpoenas from the US Attorney’s Office for the District of Massachusetts and the Southern District of New York related to a number of concerns.
The company also disclosed that its CEO Mike Pearson addressed the company’s pricing decision related to two of its drugs following a letter from Senator Claire McCaskill (D-MO).
Following the disclosure, shares of Valeant were down as much as 9% in pre-market trading on Thursday.
Pricing practices in the pharmaceutical industry, from Valeant and others, have been under pressure over the last several weeks after Martin Shkreli, the 32-year-old CEO of the startup Turing Pharmaceuticals, made headlines by raising the price of a drug his firm purchased by more than 5,000%.
Shkreli and the whole pharmaceutical industry have now found themselves in the crosshairs of politicians, most prominently Democratic Presidential front-runner Hillary Clinton, who sent biotech stocks crashing after announcing plans to take on what she called price gouging in the sector.
Since then, Valeant in particular has found itself under the microscope of short-sellers at Citron Research, who detailed the price increases for dozens of Valeant drugs since they were purchased by the company’s.
But even before the pricing controversy, Valeant had been viewed as a controversial company in its own right given its core strategy of buying companies for their drug assets while shedding things like salespeople and research & development activities.
The company is also a substantial holding of hedge fund titan Bill Ackman, who said earlier this month that perhaps the company could use some help on the PR front.
In the third quarter shares of Valeant fell about 20%.