Valeant faces scrutiny Wednesday by U.S. Congress over drug pricing

The U.S. Special Senate Committee on Aging begins a hearing on rising drug costs on Wednesday that will focus on the practices of companies such as Quebec-based Valeant Pharmaceuticals Inc. and U.S.-based Turing Pharmaceuticals.

The hearing is focusing on the trend of pharmaceutical companies buying up smaller drugs companies with specialized niche drugs and jacking up prices.

Valeant has said it is cooperating with the Senate committee's review and has provided requested documents.

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Formerly the biggest company on the TSX, its shares have plunged in response to U.S. probes and a report from a short-seller that it was using a mail-order pharmacy to help patients get its skin drugs.

It is under scrutiny for the pricing of cardiac-care drugs, Nitropress and Isuprel, as the prices of these drugs rose by 525 per cent and 212 per cent shortly after Valeant bought rights to them.

U.S. Senators are to hear testimony on the causes of drug price hikes from experts from Johns Hopkins University, University of Utah Health Care and the University of Alabama at Birmingham.

Seeking way to regulate

"There's a line at which these huge price increases for prescription drugs go from rewarding innovation to price gouging and this hearing will set the stage for an examination of whether that line is being crossed," said committee member Sen. Claire McCaskill.

"We'll hear from experts about why these huge price spikes are occurring and what this looks like for patients and providers on the front lines."

Congress is seeking ways to regulate the pharmaceutical industry to prevent price spikes that make drugs prohibitively expensive.

Turing has become a public whipping boy over the pricing, after it bought the rights to a half-century-old antiparasitic drug called Daraprim in August and raising the price to $750 a tablet.

Valeant is also under scrutiny from the Federal Trade Commission for potentially cornering a portion of the contact lense market.

Earlier this year it bought Paragon Vision Sciences, which with Valeant's Bausch & Lomb unit would give it a majority in the market for gas-permeable lenses.

Undisclosed sources told Reuters that Valeant may be seeking a buyer for Paragon.

Valeant in an October filing said it had received a letter from the FTC regarding a "non-public investigation."