- Thomson Reuters
At a Wells Fargo healthcare conference, analysts asked Valeant CEO Joe Papa about Direct Success Pharmacy.
It’s a specialty pharmacy that the company had a special arrangement with to distribute the antidepressant Wellbutrin XL.
You may recall that it was the discovery of one of these special arrangements, with a now defunct secret specialty pharmacy called Philidor, that contributed to Valeant’s near demise last October. Valeant and Philidor are both under investigation for potentially defrauding health insurers.
So naturally Wells Fargo was curious about Direct Success.
“We have not heard anything from Valeant about Direct Success Pharmacy since. As we are interested in Valeant’s current use of Direct Success Pharmacy and other service providers, we asked CEO Joe Papa about Direct Success Pharmacy during our conversation. Papa explained that in the time he has worked at Valeant so far, he was not aware of Direct Success Pharmacy,” analyst David Maris wrote in a note to clients (emphasis added).
That’s got to be comforting.
‘I don’t know her’
This wasn’t the only troubling thing to come out of the conference.
In April, Valeant executives sat in the hot seat in Congress, and they promised to make some changes at the company.
For one thing, they promised drug price reductions across the board – especially for two heart drugs, Nitropress and Isuprel. The company had raised the prices of the drugs 525% and 212%, respectively, and that caught the ire of Congress.
That anger is also part of what dragged Valeant’s stock price down over 90% from this time last year.
The company did make somewhat good on its promise to lower the prices of Nitropress and Isuprel. But that’s really it, according to Papa.
That’s what he told analysts at Wells Fargo’s healthcare conference in Boston last week.
“Papa explained that since becoming Valeant’s CEO, the company has taken price cuts on only two drugs: Isuprel and Nitropress; and that Valeant has provided an average discount in the mid-teens to customers of these two products,” Maris wrote in a note to clients.
This is not exactly the spirit of what Valeant executives discussed before Congress.
At the hearing, Bill Ackman, a major Valeant shareholder, said that he would “recommend” a 30% price reduction for Isuprel and Nitropress.
And former Valeant CEO Michael Pearson also offered a 10% reduction for many drugs while denying a report that the company had raised the prices of 16 drugs over the previous 12 months.
So it looks as though Congress may have reason to continue breathing down Valeant’s neck – that is, of course, if it wants the company to stick to its promises.