Industry analysts have been warning that the drug pricing issue won't be going away anytime soon. And they continue to be proven right.
The specific aspects of Valeant's business that are drawing federal scrutiny are related to its patient assistance program. Pharma companies use these programs in order to reduce patients' co-pays for pharmaceutical products - but those products must be financed by private insurers or government programs like Medicare and Medicaid. As the New York Times notes, just because Valeant has been issued subpoenas does not mean that any charges are forthcoming.
Valeant, for its part, says that it will full cooperate with the investigation. " All of us at Valeant firmly believe in maintaining strong regulatory and financial controls and believe we have operated our business in a fully compliant manner," said CEO J. Michael Pearson in a statement.
The bigger point here is that federal and state regulatory authorities are turning a discerning eye towards biopharma's pricing practices. It's unclear at this point is any major charges will be levied against pharmaceutical giants.
But the ongoing scrutiny is certainly giving many presitigious firms a black eye - so it's not surprising that companies like Valeant and Allergan have already begun to reconsider their "acquire-and-hike" strategies for drugs.
