Valeant CEO Hospitalization, Medical Leave Vexes Investors
This article was originally published in Scrip
Shares of Valeant Pharmaceuticals International Inc. sank about 11% on Dec. 28 over concerns about the hospitalization due to a "severe case of pneumonia" and subsequent medical leave of the company's CEO Michael Pearson.
Shares of the Canadian drug company closed at $102.14 on Dec. 28, down $11.97, or 10.5%.
Just the fact the company's board has created an "Office of the Chief Executive Officer" consisting of three people – Robert Chai-Onn, general counsel; Ari Kellen, company group chairman; and Robert Rosiello, chief financial officer – to serve in an interim capacity, plus a committee to oversee and support those executives, speaks volumes to the magnitude of filling Pearson's shoes while he's away.
Valeant was just on its way back from digging out of a scandal involving its sketchy relationship with specialty pharmacy Philidor Rx Services Inc. – hoping a new distribution deal with Walgreens Boots Alliance Inc. would improve its image.
Philidor has been accused of using "phantom" pharmacy accounts to mask the Valeant's price increases and circumvent the traditional insurance reimbursement process.
There's also been reports Valeant employees were instrumental in launching Philidor's business in 2013, were involved in questionable billing practices and used fake emails to hide their connections with the specialty pharmacy – assertions Rep. Elijah Cummings (D-MD), ranking member on the House Oversight and Government Reform Committee, has been investigating.
Meanwhile, Valeant has been at the center of the firestorm over drug prices – sharing the disdain on Capitol Hill with Turing Pharmaceuticals AG over hiked prices of older medicines.
Valeant and Turing are among the companies being investigated by the Senate Committee on Aging and by Cummings and Sen. Bernie Sanders (I-VT).
Robert Ingram, lead independent director on Valeant's board, said the firm was keeping the status of Pearson's condition private at the request of his family.
He tried to assure investors the CEO office's support committee, of which he is a member, would be working closely with Valeant's management team to "ensure that the company continues to operate normally while Mike focuses on his health" – declaring "we will manage through this period."