Valeant shares fall on federal probe into drug pricing

Valeant Pharmaceuticals International shares tumbled as much as 9 percent Thursday morning after it disclosed that federal prosecutors were probing it over drug pricing, distribution and patient assistance programs.

The Canadian drug giant said late Wednesday it had received subpoenas from the US Attorney’s Offices in Manhattan and Massachusetts. Valeant intends to cooperate with the investigations, the company said.

In addition to subpoenas, Valeant said it responded to a letter from Sen. Claire McCaskill (D-Mo.) about two of Valeant’s drugs. CEO J. Michael Pearson said the company’s response addressed the “analysis and reasons underlying Valeant’s pricing decisions.”

The stock was down 7.7 percent, or $13.63, to $163.66 at 9:45 a.m. in New York trading.

Last month, Valeant came under fire from Democratic lawmakers after it jacked up the prices of two older heart drugs, Isuprel by more than 500 percent and Nitropress by more than 200 percent.

All 18 Democratic members of the House Committee on Oversight and Government Reform called on their chairman to subpoena Valeant and force it to turn over documents relating to its drug prices.

The furor over allegations of price gouging was sparked by Martin Shkreli, the 32-year-old CEO of Turing Pharmaceuticals, after he jacked up the price of a drug to treat a deadly parasitic infection by 5,000 percent.

New York Attorney General Eric Schneiderman is investigating whether Turing restricted the distribution of Daraprim to thwart generic competition, allowing it to charge $750 per pill.

Turing said in a statement Tuesday that the company’s goal is “to ensure that every patient who needs Daraprim has ready and affordable access.”