House Oversight committee upbraids Turing, Valeant execs

Photo credit: House Committee on Oversight and Reform

House lawmakers took drugmakers to task at a hearing Thursday, lambasting executives at Turing Pharmaceuticals and Valeant Pharmaceuticals, saying both companies' business models represent “unprecedented arrogance” and a “terrible example of American business.”

Nancy Retzlaff, Turing's chief commercial officer, Turing's embroiled ex-CEO and founder Martin Shkreli, and Valeant interim CEO Howard Schiller provided testimony at the House Committee on Oversight and Government Reform's hearing. Shkreli invoked the Fifth Amendment.

Rep. Buddy Carter (R-GA) castigated both Retzlaff and Schiller, charging, “You abused the system. I find it repulsive what you've done.” While Rep. Peter Welch (D-VT) acknowledged that the healthcare system as a whole has created perverse incentives. “The bottom line is we've got a broken market,” Welch said. ”There's market power with no competition.”

Drug pricing has captured the national spotlight within the past year, spurred in part from presidential campaigns along with a number of notable and dramatic price hikes. Both Democratic presidential candidates Bernie Sanders and Hillary Clinton have proposed new regulations that would allow the government to negotiate drug prices, and a recent Kaiser Family Foundation poll found that the majority of Americans believe the government should be allowed to negotiate drug prices on behalf of Medicare enrollees. In February 2015, Valeant increased the price of heart drugs Nitropress and Isuprel by 525% and 212%, respectively. Meanwhile, Turing raised the price Daraprim from $13.50 to $750 a tablet after it acquired the drug in August.

See also: Valeant's controversial model undergoing changes, says CEO

Another committee member, Rep. Stephen Lynch (D-MA) proposed a poison-pill amendment that would allow Congress to suspend the patent exclusivity period for a drug “when anyone acts like Turing is acting,” and “contract[s] with DARPA, our government research labs, to produce your drugs at no cost to the consumer.”

“The problem is that it will impact the good companies that are actually doing research,” he cautioned. “You're trashing the pharma industry that's developing a lot of great drugs and researchers that are doing great work.”

Shkreli, who currently faces a federal indictment over securities fraud unrelated to his work with Turing, pled the fifth, disclosing that he would “not be giving an opening statement” and repeatedly saying that he would not testify per advice from his counsel. Shkreli resigned as CEO of Turing following his arrest in December. That didn't keep him from tweeting, however, shortly after he was excused from the hearing.

Rep. Elijah Cummings (D-MD) asked Shkreli to “use any remaining influence you have over your former company to lower the price of these drugs. People's lives are at stake because of the price increase you imposed and the access problems you created.”

Turing's Retzlaff, too, was questioned about the company's pricing and communications strategy. Rep. Eleanor Holmes Norton (D-DC) examined Turing's public relations strategy. Information about the strategy was disclosed in documents obtained by the committee.

“Turing employed a public relations strategy to focus on patient assistance programs and R&D efforts—in other words, instead of keeping the price [at a rate that it could be] purchased by patients and hospitals, you went to patient assistance programs to try and obscure the price,” Norton argued.

See also: New Turing CCO steps down amid drug price controversy

Retzlaff responded that the PR strategy was meant to “correct any miscommunication.” Turing, facing months of criticism about the price hike of Daraprim, announced in November it would discount the toxoplasmosis treatment by 50% to hospitals.

Later in the hearing, Valeant's Schiller acknowledged that drug pricing is not an exact science. “In some cases, we've been too aggressive, trying to manage our bottom line, to develop R&D and expand manufacturing,” he explained. Rep. John Duncan (R-TN) responded that the company “needs to do more” to rein in prices.

Schiller acknowledged in opening remarks that Valeant “has made mistakes. We're changing. We're listening.”