Valeant Turns to Drug Discounts to Keep Doctors Prescribingby and
Nitropress, Isuprel prices lowered in customer negotiations
Dermatological drugs offered for free to some patients
After drawing criticism for its price hikes, Valeant Pharmaceuticals International Inc. is turning to a new strategy: discounts.
In deals with hospital customers, the company is cutting prices for Nitropress and Isuprel, two heart drugs that have been at the center of congressional investigations because Valeant raised their prices 212 percent and 525 percent after acquiring the rights to sell them. The goal is to "protect volume" -- to make sure the drugs continue to be used as the company navigates through a tumultuous time, Chief Executive Officer Mike Pearson said Tuesday on a conference call.
At the same time, the company has also been giving dermatological drugs away for free for patients who seek to fill them through Valeant’s mail-order pharmacy partner, Philidor RX Services.
While that brings down the average price of the drugs, it’s also designed to keep physicians prescribing them, Pearson said.
“Our strategy is actually to keep the volume, even if we get much lower prices in the short term,” Pearson said. “You would rather take a short-term hit to protect our business for next year and beyond.”
It’s not clear how much Valeant is discounting across its portfolio of drugs, or how many medications will get price cuts, according to Elizabeth Krutoholow, an analyst at Bloomberg Intelligence.
“It’s an interesting strategy for them," she said. "It kind of goes against their typical model of price increases."
The call, held to answer analysts’ questions and regain investor confidence, didn’t help Valeant’s shares. The stock declined 2 percent to $83.68 at the close in New York.
Some doctors, seeking to reduce insurance paperwork and ensure their orders were fulfilled as desired, had encouraged patients to contact Philidor to fill prescriptions for Valeant dermatology medicines like Jublia and Solodyn. Valeant announced plans to end its relationship with Philidor after the pharmacy’s business practices came under scrutiny.
Former Philidor employees have alleged that the pharmacy altered some doctors’ orders to specify that they wanted brand-name drugs instead of generics, a way to get larger reimbursements for Valeant from health insurers. Philidor said that it only filled prescriptions with medications that doctors and patients requested. Weeks before Valeant said it would cut ties with Philidor, the drugmaker was planning to expand the relationship, Bloomberg has reported.
Severing ties with Philidor will put pressure on Valeant’s dermatology business. Analysts at BMO Capital Markets estimate the company could lose about a third of the unit’s sales this quarter. Dermatological sales were $465.5 million in the third quarter, out of total revenue of $2.79 billion.
On Tuesday’s call, Pearson said the company is working to build relationships with other specialty pharmacies.
"I’m not going to talk about the details, but the reception so far has been good," he said.