Pharmaguy's Insights Into Drug Industry News
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Pharmaguy's Insights Into Drug Industry News
Pharmaguy curates and provides insights into selected drug industry news and issues.
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The 5 Most Overpaid #Pharma CEOs in the World

The 5 Most Overpaid #Pharma CEOs in the World | Pharmaguy's Insights Into Drug Industry News | Scoop.it

There’s no shortage of ways to rank pharma CEOs: Drug sales. Corporate profits. Even haircuts. Here at STAT, we chose to look at it from a shareholder’s perspective.

 

We calculated shareholder returns over the past three years at the 25 biggest drug companies in the world. Then we compared that with CEO compensation. Five outliers popped out: chief executives who got raises well out of step with what they delivered to investors.

 

(To determine each company’s performance, we used a widely cited metric called total shareholder return, which tracks the value of a single share over three years, including any cash paid out in the form of dividends.)

 

The five companies that so handsomely compensated their CEOs declined to comment specifically on the pay packages, beyond noting that their boards carefully review such matters with many factors in mind. Consultants who work in the field of executive pay, however, were not so reticent.

 

“It’s completely short-sighted,” said Eleanor Bloxham, CEO of Value Alliance. “There’s no justification for the level of these compensation programs. Think of all that money that could have been plowed back into R&D, or salaries, or retirement benefits — anything to create a happier, more motivated workforce.”

 

#5 on the list is: Joseph Papa, Valeant Pharmaceuticals

 

Valeant paid its 61-year-old chief executive $62.7 million in cash and stock last year, more than 500 percent more than his predecessor made in 2014. The company, which faces crippling debt, has lost 88 percent of its value over the past three years amid congressional scrutiny, allegations of fraud, and waning revenue.

 

Find the others here (subscription required).

 

Further Reading:

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The End is Nigh for Crooked Valeant: Ackman Dumps Shares & Leaves

The End is Nigh for Crooked Valeant: Ackman Dumps Shares & Leaves | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Bill Ackman has finally conceded defeat on Valeant Pharmaceuticals International Inc.

 

After waging a costly and outspoken public defense of the controversial drugmaker, its once-biggest champion sold his entire stake in the company at a loss and said he will leave the board.

 

Precise figures are hard to come by, but public filings suggest that Ackman’s Pershing Square Capital Management may have lost $2.8 billion just on the Valeant shares it owned at the end of 2016, with overall losses likely to be much higher. The shares have plunged more than 90 percent from their peak.

 

Billionaire Ackman’s big, concentrated bets and brash personality have made him one of the most polarizing names in investing. His decision to give up on Valeant, a favorite among hedge-fund types before probes into its business practices (read “Former Crooked Valeant Executive and Philidor CEO Charged with Fraud”; http://sco.lt/73iRe5), accounting and drug pricing (read “Four Companies - Including Criminal Valeant - Raked Over the Coals for Staggering Price Hikes by Senate Report”; http://sco.lt/8avian) caused a collapse in the shares, comes after a lengthy campaign to turn around the company and salvage his investment.

 

The sale ends a near three-year saga that first saw Ackman team up with Valeant in a hostile bid for a rival, before later making a direct investment. Over the same period regulators intensified scrutiny of the drugmaker, its management and the board were overhauled, and its value was decimated.

 

  • Further Reading:
  • “More Top Executives Flee Sinking Crooked Valeant Ship”; http://sco.lt/6Gm6Ph
  • “LOL! Crooked Valeant May Change Its Name But Will Still Smell Bad to Investors!”; http://sco.lt/5dyoQD
  • “Not Only is Valeant a Criminal Organization, It is Also Incompetent at Marketing, Say Investors”; http://sco.lt/8fNYVl
  • “Crooked Valeant #Pharma Guilty of Deceptive Practices Says T. Rowe Price”; http://sco.lt/6n2YXR

 

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Four Companies - Including Criminal Valeant - Raked Over the Coals for Staggering Price Hikes by Senate Report

Four Companies - Including Criminal Valeant - Raked Over the Coals for Staggering Price Hikes by Senate Report | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Staggering hikes — in some cases higher than 5000%— in prices of prescription drugs threaten the health and economic stability of Americans who can't afford vital medicines, a congressional report warned Wednesday.

 

The findings by the Senate Special on Aging summarize the panel's 2016 investigation of records from four pharmaceutical companies and public hearings that focused on sudden price spikes in decades-old medications and the pricing decisions imposed by drug industry entrepreneur Martin Shkreli and other industry executives.

 

Turing Pharmaceuticals and Retrophin (RTRX), two firms once headed by Shkreli, embattled drugmaker Valeant Pharmaceuticals International (VRX) and Rodelis Therapeutics are among companies that dramatically raised prices on some decades-old, off-patent drugs they acquired and controlled through monopoly business models, the report said.

 

The Committee discovered that each of the four companies followed a business model (with some variation) that enabled them to identify and acquire off-patent sole-source drugs over which they could exercise de facto monopoly pricing power, and then impose and protect astronomical price increases. The business model consists of five central elements:

 

  • Sole-Source. The company acquired a sole-source drug, for which there was only one manufacturer, and therefore faces no immediate competition, maintaining monopoly power over its pricing.
  • Gold Standard. The company ensured the drug was considered the gold standard—the best drug available for the condition it treats, ensuring that physicians would continue to prescribe the drug, even if the price increased.
  • Small Market. The company selected a drug that served a small market, which were not attractive to competitors and which had dependent patient populations that were too small to organize effective opposition, giving the companies more latitude on pricing.
  • Closed Distribution. The company controlled access to the drug through a closed distribution system or specialty pharmacy where a drug could not be obtained through normal channels, or the company used another means to make it difficult for competitors to enter the market.
  • Price Gouging. Lastly, the company engaged in price gouging, maximizing profits by jacking up prices as high as possible. All of the drugs investigated had been off-patent for decades, and none of the four companies had invested a penny in research and development to create or to significantly improve the drugs. Further, the Committee found that the companies faced no meaningful increases in production or distribution costs.

 

Find the Senate report here.

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rob halkes's curator insight, December 23, 2016 7:28 AM

Messing around with prices is the worst marketing intervention to gain trust and sustainability, I'd say! #pharma #hcsm

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Valeant Looks to Revive Xifaxan with "Bubble Guts the Sales Rep." Will It Work?

Valeant Looks to Revive Xifaxan with "Bubble Guts the Sales Rep." Will It Work? | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Now that Valeant’s $10 billion talks to sell its Salix unit to Takeda have reportedly fallen through, the company is taking matters into its own hands with a “significant” GI sales force expansion. But whether that expansion can help get its lagging meds going remains to be seen.

 

The plan? Rev up growth in the underperforming GI business by adding reps who will focus on potential primary care physician prescribers of IBS-D med Xifaxan and oral opioid-induced constipation med Relistor, Valeant said this week. The way the company sees it, it can reach “a significant majority” of likely Xifaxan and oral Relistor PCPs with the effort, which it will roll out “over the coming weeks.”

 

As with many key Valeant products, wannabe blockbuster Xifaxan has been struggling lately (read “Xifaxan Sales Down - Will $9.8 M Super Bowl Ad Redeem ‘Bubble Guts’?”; http://sco.lt/5WS4sz). In building a primary care sales force, “our goal ... is to maximize opportunities for Xifaxan and Relistor to help our products reach full potential,” CEO Joseph Papa said in a statement.

 

It’s a new tack for Valeant, which was just about ready to let those moneymakers change hands until price squabbles scuttled a potential deal with Takeda, which has tried multiple times to acquire them. Now, Valeant CEO Papa is calling the GI franchise a “core asset for future growth”—meaning it may no longer be part of the group of businesses Valeant’s willing to divest in order to pay down its debt load.

 

Meanwhile, though, Papa has blamed sales force woes for triggering Xifaxan’s poor performance to begin with. In June, the new skipper attributed the product’s slump to “sales force disruption” over the past 12 months (read “Valeant CEO Blames Salesforce, Not Shitty Ads, for Disappointing Xifaxan Sales”; http://sco.lt/78DCEL).

Pharma Guy's insight:

Related Story: “Two DTC Ad Mascots Make it to the Super Bowl. Both are Losers!”; http://sco.lt/8RgBE1

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LOL! Crooked Valeant May Change Its Name But Will Still Smell Bad to Investors!

LOL! Crooked Valeant May Change Its Name But Will Still Smell Bad to Investors! | Pharmaguy's Insights Into Drug Industry News | Scoop.it

It’s not uncommon for businesses that have hit tough times to undergo a rebrand--and embattled Valeant is thinking about undergoing one of its own.

The company could change its name to help repair its reputation, Valeant board member and activist investor Bill Ackman told CNBC Wednesday. One option? Taking on the name of its top business, eyecare giant Bausch & Lomb, the news service’s sources said. Several other names are on the table, though, and the company hasn’t made a final decision on whether it’ll go through with the moniker swap.

Valeant’s reputation could certainly use a boost after the last year-plus, over which it’s faced political pricing pushback and channel-stuffing allegations. The company has already made moves to break with its past, bringing in new CEO Joseph Papa to replace M&A-happy J. Michael Pearson--and, of course, bringing Ackman on board.

But with several investigations into the company underway--and reports saying U.S. prosecutors are building a fraud case against Valeant--the Canadian drugmaker hasn’t been able to put as much of its past behind it as it would have liked.

Pharma Guy's insight:

Related articles:

  • “Not Only is Valeant a Criminal Organization, It is Also Incompetent at Marketing, Say Investors”; http://sco.lt/8fNYVl
  • “Crooked Valeant #Pharma Guilty of Deceptive Practices Says T. Rowe Price”; http://sco.lt/6n2YXR
  • “The Addyi Report Card: Crooked Valeant Fools FDA Again”; http://sco.lt/5Ie7hR 
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Novum Pharma – Another Valeant & Mylan: Buy Cheap, Raise Prices, Blame Middlemen

Novum Pharma – Another Valeant & Mylan: Buy Cheap, Raise Prices, Blame Middlemen | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Even in an age when prescription drugs are increasingly expensive, a $9,500 tube of gel to combat scaly skin can gain notice — especially when the price spikes 128 percent overnight.

 

That’s what happened earlier this month when a little-known company called Novum Pharma suddenly hiked wholesale prices for all three of its dermatology products by whopping amounts.

 

Novum appears to be a furtive vehicle for scooping up older medicines from other companies and then boosting prices significantly. And its chief executive did the very same thing at a previous job, at Horizon Pharma.

 

Let’s start at the beginning: Novum bought three gels to treat skin conditions in March of 2015. Two months after it acquired them, it jacked up the prices tenfold. That’s right, tenfold. For instance, the wholesale price for Alcortin A, a gel used to treat dermatitis and eczema, went from $226 to $2,995.

 

There was another big price hike earlier this year. And this month, Novum boosted prices again. Alcortin A and Aloquin each now list for $9,561 per tube. And the wholesale price for its Novacort gel rose to $7,142 from $4,186 for a small tube, according to Truven Health Analytics.

 

A Novum spokesman sent us a statement insisting the prices were inaccurate and saying they include “thousands of dollars in extra charges” added by third-party middlemen and passed on to patients. “This practice reflects one of the many fundamental challenges inherent in the healthcare system today that add to the cost of access for patients,” the statement said.

 

This is the same explanation Mylan Pharmaceuticals Chief Executive Heather Bresch gave for EpiPen price hikes.

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Crooked Valeant #Pharma Guilty of Deceptive Practices Says T. Rowe Price

Crooked Valeant #Pharma Guilty of Deceptive Practices Says T. Rowe Price | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Valeant Pharmaceuticals Intl Inc. (NYSE:VRX) shares plunged in the market on Thursday, August 18, following the news of T. Rowe Price case filing. The mutual fund giant accused the multinational pharma and its executives for being involved in fraudulent schemes. These deceptive practices are said to have declined shareholder value by billions of dollars. These accusations mark the continuation of a series of nightmares for this embattled pharmaceutical.


The news came in amidst the company’s announcement of its efforts to make amendments to its interest covenants. It had been successful in making the lenders agree on these alterations so that it can pay off its $31 billion debt easily. The shares soared 5% in the market after the amendments were agreed upon, however, fell 2.8% on Thursday following the accusations. This decline is the latest in the series of declines that shares of Valeant have observed as the stock has already declined approximately 90% since August FY15.

The New Jersey filing was based on Valeant and its executives’ alleged use of secret pharmacy network, reimbursements, misleading pricing tactics, and fabricated accounting practices to shield its drugs against competition. This resulted in inflated profits and revenues for the pharma company. The firm further stated that Valeant has used expansion via acquisitions strategy to report high earnings and revenues, which it credited to its outstanding sales, higher-end products, and innovative marketing strategies. Moreover, the company had hidden this network of controlled pharmacies and other fraudulent schemes from its investors and exposed them to massive amounts of risks associated with it. Thus, the firm and other large institutional investors have filed cases in their pursuit of receiving compensation.

Pharma Guy's insight:

Also read “The Addyi Report Card: Crooked Valeant Fools FDA Again”; http://sco.lt/5Ie7hR

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Valeant CEO Blames Salesforce, Not Shitty Ads, for Disappointing Xifaxan Sales

Valeant CEO Blames Salesforce, Not Shitty Ads, for Disappointing Xifaxan Sales | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Valeant said its flagship brand, Xifaxan, is underperforming.

 

During a call with investors, Joseph Papa, Valeant's newly appointed CEO, attributed less-than-stellar sales of its best-selling brand to “significant sales turnover.”

 

Xifaxan brought in sales of $208 million in the first three months of 2016, a modest decrease compared to the $210 million in sales the drug generated in the fourth quarter of 2015.

 

Valeant spent an estimated $9.8 million to promote Xifaxan in the Super Bowl. It was one of three pharmaceutical ads featured in the 2016 Super Bowl.

Pharma Guy's insight:

Read: Xifaxan Sales Down - Will $9.8 M Super Bowl Ad Redeem "Bubble Guy"? http://sco.lt/5WS4sz 

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Board Overhaul at Crooked Valeant #Pharma - Some Old J&J Cronies Gone

Board Overhaul at Crooked Valeant #Pharma - Some Old J&J Cronies Gone | Pharmaguy's Insights Into Drug Industry News | Scoop.it

After weeks of delay, Valeant Pharmaceuticals on Friday filed its 2015 annual report with regulators, a significant move that will help the beleaguered drug maker avoid default on more than $30 billion in debt. At the same time, the company overhauled its board, shrinking it to 11 members from 14.

 

[And among the independent directors stepping down is Colleen Goggins, a former worldwide chair at Johnson & Johnson, where she first worked with Pearson, who was a consultant to the health care giant at the time.]


The steps come following withering scrutiny during a Senate hearing earlier this week in which both Michael Pearson, the outgoing Valeant chief executive, and Bill Ackman, the hedge fund investor and Valeant board member, admitted that jacking up the prices of drugs to sky-high amounts was a mistake. And during that session, Ackman promised that leadership, as well as pricing changes, are planned.

As expected, Pearson is stepping down from the board. His replacement, former Perrigo Chief Executive Joe Papa, begins work next week and was nominated to join the board, along with seven existing board members. This group includes Ackman, who heads Pershing Square Capital Management. The company also plans to bulk up its governance committee by adding three independent board members.

The filing, which contains some revisions to financial results for different portions of 2014 and 2015, will be picked through in coming days. But what was already a voluminous section devoted to “government and regulatory inquiries,” a euphemism for investigations, is rapidly expanding.

Pharma Guy's insight:

This is reminiscent of the time that Colleen A. Goggins, at the time Worldwide Chairman, Consumer Group, Johnson & Johnson, was sent to testify in place of Bill Weldon, JNJ's CEO at the time, who declined to attend due to medical problems (see "JNJ's CEO Weldon May Send Underling to Congress. The Aching Back Excuse"). Afterward, Goggins left J&J, probably with a nice severance package. Now we know where she and her pal Pearson ended up!

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Citing "Headwinds," Valeant Fires All 140 Addyi Sales Reps

Citing "Headwinds," Valeant Fires All 140 Addyi Sales Reps | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Valeant Pharmaceuticals is firing the 140-person contract sales force that markets the Addyi female libido pill and another 143 sales reps who peddle dermatology medicines and a treatment for irritable bowel syndrome that is marketed to hospitals.

“We must adapt to headwinds that… are impacting anticipated growth rates in certain franchises and geographies,” Michael Pearson, the Valeant chief executive, wrote in a memo to employees today.

The firings come shortly after some investors reportedly criticized Valeant for failing to successfully promote the drug and setting its price too high. Last fall, Valeant bought Sprout Pharmaceuticals, which had just won regulatory approval for the Addyi pill amid controversy over its safety and effectiveness. Valeant is charging $800, or roughly double what Sprout market research had reportedly anticipated.

Although Valeant paid $1 billion for Sprout, the investment was expected to pay off quickly with sales forecasts showing $1 billion in sales over the past few months following a launch last September. Instead, Addyi has been a disappointment. 

Pharma Guy's insight:

You didn't need a crystal ball to see this one coming!

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Addyi - an "Expensive Mistake." Duh!

Addyi - an "Expensive Mistake." Duh! | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Selling Addyi -- the first drug of its kind for women -- is just one of the numerous challenges ahead for Valeant, whose stock and bonds plunged the most ever on Tuesday as investors lost faith in the embattled drugmaker. Valeant agreed to buy Addyi’s maker, Sprout Pharmaceuticals, for $1 billion in August, at a time when Pearson’s strategy to grow through acquisitions and price hikes was embraced by Wall Street. Mirroring Valeant’s dramatic fallout over the past six months, Addyi went from a bold bet to a problematic business.


“We don’t know how big Addyi is going to get, but we don’t think it’s going to be a blockbuster,” said Ram Selvaraju, an analyst at Rodman & Renshaw who recommends buying Valeant stock. “It is an expensive mistake.”

Pharma Guy's insight:

You don't need a Wall Street analyst to know that sales of Addyi will not save Valeant. See "Study Shows Addyi is Not 'Female Viagra' by Any Stretch of the Imagination"; http://sco.lt/7ZfQhN 

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One Billion Dollars! O Valeant! Sung to tune of O Canada!

One Billion Dollars! O Valeant! Sung to tune of O Canada! | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Shortly after the FDA approved Addyi (the "pink pill"), Canadian pharma company Valeant announced it would buy Sprout for $1 billion. Was it a good buy?


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Pharma Guy's insight:

Will Addyi survive in the market long enough for Valeant to recoup its costs?

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Crooked Valeant Wants to Change Its Name. LOL!

Crooked Valeant Wants to Change Its Name. LOL! | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Valeant Pharmaceuticals is considering (yet another) makeover.

 

Having weathered continued accusations of financial malfeasance for the past two years, the scandal-plagued pharma giant has changed its C-suite and made a commitment to tackle its debt load.

 

Now, Valeant says it is “very serious” about changing its name.

 

“We have thoughts about our name. We are looking at the alternatives,” CEO Joe Papa said Tuesday at the company’s annual meeting in Quebec, Canada.

 

Since he replaced disgraced former CEO Michael Pearson last May, Papa has been trying to shake the brand’s bad image and tackle its roughly $30 billion junk-rated debt load.

 

Meanwhile, on the other side of the Atlantic, Ackman was still smarting from the massive loss his fund Pershing Square faced from its disastrous investment. Ackman built up his stake at an average cost of $190 a share and sold in March at $11 a share (read “The End is Nigh for Crooked Valeant: Ackman Dumps Shares & Leaves”; http://sco.lt/8yP24P).

 

The silver-haired investor said he would “probably stay away from pharmaceutical companies” in the future.

 

Further Reading:

  • “Not Only is Valeant a Criminal Organization, It is Also Incompetent at Marketing, Say Investors”; http://sco.lt/8fNYVl 
  • “Crooked Valeant #Pharma Guilty of Deceptive Practices Says T. Rowe Price”; http://sco.lt/6n2YXR 
  • “The Addyi Report Card: Crooked Valeant Fools FDA Again”; http://sco.lt/5Ie7hR
Pharma Guy's insight:

I predicted this: “LOL! Crooked Valeant May Change Its Name But Will Still Smell Bad to Investors!”: http://sco.lt/5dyoQD

 

Meanwhile, what name would you suggest? 

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Valeant Beefs Up Salesforce to Relaunch Addy & "Find Its Spark Again!"

Valeant Beefs Up Salesforce to Relaunch Addy & "Find Its Spark Again!" | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Valeant Pharmaceuticals International added 250 primary-care sales reps to its Salix sales force, which markets therapies like irritable-bowel-syndrome drug Xifaxan and opioid-induced constipation drug Relistor.

 

The drugmaker also announced it would re-launch its sexual dysfunction pill Addyi. Separately, Valeant announced a new campaign, Find My Spark, that was developed in tandem with the American Sexual Health Association.

 

[Remember this: “Citing ‘Headwinds,’ Valeant Fires All 140 Addyi Sales Reps”; http://sco.lt/7Kwptp back in April, 2016?]

 

Valeant acquired Addyi in its buyout of Sprout Pharmaceuticals in 2015 for $1 billion. Addyi received FDA approval the same month as a treatment for hypoactive sexual disorder in premenopausal women.

 

The campaign's website, findmyspark.com, offers a sex health quiz and talking tips for patients to discuss hypoactive sexual disorder with their doctor but does not specifically mention the drug. Valeant plans to kick off the re-launch of Addyi in March, according to its earnings presentation.

 

[Meanwhile, we all know how useless “quizzes” are: “The #Pharma-Developed Self-Assessment Questionnaire that Got Addyi Approved”; http://sco.lt/7limUz In fact, the Find My Spark quiz looks suspiciously similar.]

Pharma Guy's insight:

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More Top Executives Flee Sinking Crooked Valeant Ship with $ Millions in Bonuses In Tow

More Top Executives Flee Sinking Crooked Valeant Ship with $ Millions in Bonuses In Tow | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Valeant’s investors aren’t the only ones heading for the exit in droves. The company announced Monday that a trio of its top execs would be doing the same—just as they serve out the terms of their cash retention bonuses.

 

EVPs Anne Whitaker and Ari Kellen, along with former CFO Robert Rosiello, will make their way to the door in the coming weeks, with Kellen and Rosiello departing Dec. 31 and Whitaker following on Jan. 13. Kellen and Rosiello will continue to serve as consultants to the Canadian drugmaker, the company said, giving no reason for the changes.

 

Valeant has spent a pretty penny trying to keep the trio on. In May, the company shelled out equity grants to each of the three execs to vest over an 18-month period, with $3.8 million going to Kellen, $2.8 million to Rosiello and $1.25 million to Whitaker. Those grants—comprising restricted stock units—began vesting last month.

 

The timing of their exits doesn’t seem random in light of other retention bonuses bestowed in May, however. For staying in their posts till year's end, the three will collect the remaining one-third of $1 million cash bonuses that began vesting in June.

 

And with Valeant's shares an iffy proposition for outside investors, it's logical that insiders might not want to wait around for their own equity to vest. Since the company handed out the equity awards May 12, Valeant shares have dropped significantly, to $14.68 at yesterday's close from $24.93 that day.

Pharma Guy's insight:

Related article: “Pearson, Former Crooked Valeant #Pharma CEO, Unloads $97M Worth of Stock!”; http://sco.lt/6iD0oj

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Former Crooked Valeant Executive and Philidor CEO Charged with Fraud. Current CEO & CFO Next?

Former Crooked Valeant Executive and Philidor CEO Charged with Fraud. Current CEO & CFO Next? | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Gary Tanner, former executive, and Andrew Davenport, ex-CEO of Philidor, have been arrested and charged with fraud. Preet Bharara, US attorney for the Southern District of New York, has accused Tanner and Davenport of conducting “multi-million dollar fraud and kickback scheme” against Valeant.

The full complaint suggests that Tanner and Davenport created Philidor through Tanner’s relationship to Valeant, as the dominant sales channel for Valeant. Tanner allegedly hid his interests to Philidor from his superiors. Eventually the scheme allowed Tanner and Davenport to accrue an individual fortune of $10 million and $40 million, respectively.

“Today, we charge corporate fraud at Valeant Pharmaceuticals. Gary Tanner, a former Valeant executive, and Andrew Davenport, the CEO of Philidor, allegedly concocted a fraudulent scheme to illegally use Philidor as a vehicle for personal profit and self-dealing,” U.S. Attorney Bharara said in a statement. “Their alleged kickback scheme illegally converted Valeant shareholder money into their own personal nest eggs. As alleged, while purporting to be arms-length business counterparts, the two men were, in fact, partners in crime”.

The news, though adding further damage after a difficult month, could be worse for Valeant. There has been, as yet, no implication in their former CEO and CFO in the investigation for fraud.

Pharma Guy's insight:

Related articles:

  • “LOL! Crooked Valeant May Change Its Name But Will Still Smell Bad to Investors!”; http://sco.lt/5dyoQD 
  • “Not Only is Valeant a Criminal Organization, It is Also Incompetent at Marketing, Say Investors”; http://sco.lt/8fNYVl 
  • “Crooked Valeant #Pharma Guilty of Deceptive Practices Says T. Rowe Price”; http://sco.lt/6n2YXR 
  • “The Addyi Report Card: Crooked Valeant Fools FDA Again”; http://sco.lt/5Ie7hR 
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Not Only is Valeant a Criminal Organization, It is Also Incompetent at Marketing, Say Investors

Not Only is Valeant a Criminal Organization, It is Also Incompetent at Marketing, Say Investors | Pharmaguy's Insights Into Drug Industry News | Scoop.it

When Valeant bought Sprout Pharmaceuticals and its controversial female libido drug Addyi, it agreed to a marketing blitz that would bring royalties to Sprout's former shareholders. Valeant bungled the job, those former investors say. And they’re taking their gripes to court.

 

The investors slapped the embattled pharma with a lawsuit claiming Valeant failed to market Addyi successfully, both by neglecting its contractual marketing obligations and by pricing the med at $800 per month--twice as high as the market could bear.

 

"Simply put, Addyi is languishing because of Valeant's operational ineptitude and breach of its obligations under the merger agreement," they said in the complaint, as quoted by Reuters.

 

The way the suit-bringers see it, Addyi’s high price tag hurt the pill’s chances to snag coverage from insurers and pharmacy benefits managers, leading to poor sales. And when former Valeant CEO moved to cut 140 of Addyi's sales reps, he cited those poor revenues in an internal memo to employees (read “Citing ‘Headwinds,’ Valeant Fires All 140 Addyi Sales Reps”; http://sco.lt/7Kwptp).

 

Naturally, Addyi's sales didn’t turn around without those reps on the job, and Addyi may wind up generating less than $10 million this year--well below the $1 billion mark Valeant has said it's aiming for by next July. If that happens, those angry former investors will wind up millions of dollars short in royalties, they say.

 

To make sure they're not shortchanged, they’re seeking unspecified damages, and they're asking the court to require Valeant to live up to its Sprout merger agreement by hiring a 150-member sales force and socking at least $200 million into marketing, research, and development, Reuters reports.

 

Addyi, whose FDA approval sparked controversy from the get-go, came with a set of marketing challenges. It posted questionable efficacy in trials (read “Study Shows Addyi is Not ‘Female Viagra’ by Any Stretch of the Imagination”; http://sco.lt/7ZfQhN), and its label was burdened with serious safety warnings, including a risk of loss of consciousness--a risk made worse by the drug's interaction with alcohol (read “FDA Defends Its Approval of Addyi for Women Despite Peculiar Circumstances”; http://sco.lt/4zmeQr).

Pharma Guy's insight:

Ha, Ha! Talk about adding insult to injury!

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The Miracle of "Compound" Drug Price Increases a la Valeant & Pfizer

The Miracle of "Compound" Drug Price Increases a la Valeant & Pfizer | Pharmaguy's Insights Into Drug Industry News | Scoop.it

In response to intensifying criticism over drug prices, Allergan chief executive Brent Saunders promised not to raise prices by more than single-digit percentage points. So far, no other head of a large drug maker has spoken publicly about this notion or agreed to do the same thing.

 

Yet some companies may adopt this approach quietly — and push the envelope in the process.

 

How so? One way is to raise prices on drugs by 9.9 percent. And this is what Valeant Pharmaceuticals did last week.

 

The drug maker, which has been widely vilified for buying older medicines and then jacking up the prices to sky-high levels, increased list prices for three eye medicines by exactly 9.9 percent, according to Wells Fargo analyst David Maris.

 

Of course, such a price hike pales in comparison to the 525 percent and 212 percent increases Valeant took on a pair of lifesaving heart drugs on the same day the company acquired the medicines in early 2015. But given the public anger over rising costs for prescription drugs, this kind of maneuver is a convenient way to avoid unpleasant scrutiny and still goose revenue.

 

The “9.9 percent increase versus an even 10 percent seems very odd and may be an attempt to stay under the radar of managed care plans and states looking out for double-digit price increases,” Maris wrote in an investor note.

 

He noted the three eye drugs represented just $1.2 million in combined sales in the second quarter, which is a small piece of $2.4 billion in company-wide sales. But the company is under pressure to jump-start revenue, suggesting more 9.9 price hikes can be expected. “While insignificant,” Maris opined, “we believe this may be a sign of things to come.”

 

We asked the company why it chose to raise prices by 9.9 percent and not 10 percent, but did not receive a reply.

 

The 10 percent threshold has taken on more than symbolic weight, though.

 

A bipartisan group of congressional lawmakers last week introduced a bill that would require drug makers to justify their pricing and provide a breakdown of their costs before raising prices on certain products by more than 10 percent. The legislation largely mimics bills that have been introduced in more than a dozen states, although only Vermont has passed such a law.

Pharma Guy's insight:

Conside this: If Valeant were to raise prices by 9.9% twice per year as has been the general practice of other pharma companies (e.g., read “Big #Pharma Pfizer et al Sneak In Multiple Drug Price Hikes Per Year”; http://sco.lt/7Lk8Jd) the results would be an average 23% increase per year. The cumulative effect adds up – for Valeant’s treasury and the consumer pocketbook.

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Pearson, Former Crooked Valeant #Pharma CEO, Unloads $97M Worth of Stock!

Pearson, Former Crooked Valeant #Pharma CEO, Unloads $97M Worth of Stock! | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Former Valeant CEO J. Michael Pearson unloaded more of his personal holdings than was originally thought, CNBC has learned.

 

According to documents not made public yet but obtained by CNBC, Pearson sold nearly 5 million shares and options for a total of $96.8 million. The news comes the same day that the Sequoia Fund revealed it is completely out of the stock. Sequoia was at one time the largest Valeant shareholder.

 

Wednesday also saw short seller Andrew Left say the company's stock could be headed to zero. That news took more than 7 percent out of its shares.

 

"I think it's obvious it's a zero now," Left told The Street. Left's firm, Citron Research, did not immediately respond to CNBC's request for comment.

 

Pearson sold about 288,000 shares on June 30 for proceeds of $5.7 million, according to the documents. A day later, he sold more than 4 million shares with proceeds of nearly $83 million, and then on July 5, he sold some 411,000 shares, according to the documents. Total proceeds: $96.8 million.

 

Valeant, which has been embattled amid U.S. investigations of its business and accounting practices, announced in March that Pearson would leave the company (but "Crooked Valeant to Pay Former CEO Pearson $83,000 a Month for Consulting! What?!"; http://sco.lt/664KbR). The company's shares are trading about 90 percent lower than the same time last year, and the price has moved little over the last month.

 

Also in March, the company slashed its 2016 revenue forecast (see “Valeant CEO Blames Salesforce, Not Shitty Ads, for Disappointing Xifaxan Sales”; http://sco.lt/78DCEL

and said that a delay in filing its annual report could pose a debt default risk. When it finally issued its delayed report, the Canadian drugmaker identified misstatements that would reduce some of its previously reported revenue.

 

The company came under fire when The New York Times reported that Valeant and other pharmaceutical companies were using a network of specialty pharmacies to sustain sales of their high-priced drugs and prevent patients and insurers from switching to cheaper generic drugs. Citron Research subsequently published a note calling Valeant the "pharmaceutical Enron."

Pharma Guy's insight:

Valeant is a crooked company! Not only did Pearson gain by selling his stock, he also gets paid as a consultant to the company: "Crooked Valeant to Pay Former CEO Pearson $83,000 a Month for Consulting! What?!"; http://sco.lt/664KbR 

 

Now, sources told Bloomberg that U.S. prosecutors may be building a fraud case against the embattled pharmaceutical company and that charges could be brought forward in a matter of weeks; http://cnb.cx/2f8lNmk 

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Crooked Valeant to Pay Former CEO Pearson $83,000 a Month for Consulting! Whaa?!

Crooked Valeant to Pay Former CEO Pearson $83,000 a Month for Consulting! Whaa?! | Pharmaguy's Insights Into Drug Industry News | Scoop.it

How much is one month’s worth of advice from Michael Pearson’s worth? Valeant Pharmaceuticals is willing to pay more $83,000.

Valeant stock may have tanked and its growth strategy imploded during his final months running the beleaguered drug maker, but Pearson was just awarded a consulting contract that will pay him more than $583,000 through the end of this year and as much as $180,000 next year, or $15,000 a month, according to a filing with the US Securities and Exchange Commission. The fees will be pro-rated for partial months.

The consulting services were listed in a letter that outlines his separation agreement, which was dated May 26, more than three weeks after his tenure as Valeant chief executive ended. He has since been replaced by former Perrigo Chief Executive Joe Papa.

Pharma Guy's insight:

This company is run by a gaggle of gangsters!

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Valeant's Pearson & Ackman Testify Before Congress: "Time to Slaughter Some Hogs"

Valeant's Pearson & Ackman Testify Before Congress: "Time to Slaughter Some Hogs" | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Fresh off one of the biggest Wall Street drubbings in recent memory, Valeant Pharmaceuticals went to Washington on Wednesday to defend itself against accusations the company is little more than a price-gouging, drug industry hedge fund.

 

Michael Pearson, the architect of Valeant’s rise into a stock market darling, and his biggest booster, billionaire hedge fund manager Bill Ackman, testified in front of a Senate committee investigating its drug pricing practices. Former CFO Howard Schiller, who was Valeant’s finance head until he was fired in March, also testified.

 

In a rousing opening statement McCaskill said, “you can try to dress up this business model with do good sounding phrases… Its using patients as hostages. It’s immoral. It hurts real people. It makes Americans very very angry.”

 

“Pigs get fed. Hogs get slaughtered,” she added. “It’s time to slaughter some hogs.”

 

 

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Xifaxan Sales Down - Will $9.8 M Super Bowl Ad Redeem "Bubble Guts"?

Xifaxan Sales Down - Will $9.8 M Super Bowl Ad Redeem "Bubble Guts"? | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Valeant missed the sales mark for its irritable bowel syndrome drug, Xifaxan, which it called one of the company's “leading growth platforms,” when it reported its long-awaited fourth-quarter earnings on Tuesday.

Xifaxan saw sales of $210 million for the last three months of 2015, down from $220 million in the previous quarter. In December of last 2015, the company forecast sales of $390 million for Xifaxan in the fourth quarter of 2015, according to Business Insider.

Valeant's business model and pricing practices have been under scrutiny in recent months. 

The drugmaker ran a Xifaxan ad in the most recent Super Bowl broadcast, one of three pharma spots featuring during the February event.  The drugmaker spent $9.8 million for the 60-second spot, according to estimates from iSpot.tv. The ad features an animated intestine who scrambles to the bathroom during a bout of abdominal pain.

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Valeant Accused of Enron-like Fraud Via Phony Specialty Pharmacies

Valeant Accused of Enron-like Fraud Via Phony Specialty Pharmacies | Pharmaguy's Insights Into Drug Industry News | Scoop.it
Shares of Valeant Pharmaceuticals tumbled on Wednesday after a research firm accused the drug company of massive fraud similar to what doomed Enron.


It's the latest controversy swirling around Valeant, a $50 billion pharmaceutical giant that's backed by hedge fund billionaire Bill Ackman. Federal prosecutors are already investigating the way Valeant prices and distributes its drugs.


Now Citron, a short-selling firm that publishes free research used to bet against companies, is making allegations that Valeant could be the "pharmaceutical Enron."


Citron pointed to what it sees as a "web of deception" that amounts to "fraud" aimed at creating "invoices to deceive auditors and book revenue."


Citron alleges that Valeant created a network of phony pharmacies "for the purpose of phantom sales" and to avoid scrutiny from auditors.


Citron is an activist short seller that has a team of investigators led by Andrew Left. 


This isn't the first time Citron has accused a health care company of shady behavior. The short seller noted in its Valeant report that in 2008 it exposed a relationship between medical device maker Arthrocare and Discocare. 


Top Athrocare executives were later found guilty of inflating sales figures and the company's former CEO was recently sentenced to 20 years in prison for securities fraud, according to media reports.


Pharma Guy's insight:

Call the Valeant bought Sprout (and the "female Viagra" pill Addyi) for $1 billion: http://sco.lt/71tACv 

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