Munger Says Couldn't Resist Valeant Critique That Caused Trouble

  • `Crazy excess' is bad policy, bad for nation, Munger says
  • It probably wasn't wise to inject myself in clash, he says

Billionaire Charles Munger said it may not have been smart to publicly criticize Valeant Pharmaceuticals International Inc. but that he felt obligated to speak out against what he sees as abusive practices.

“I couldn’t resist calling attention to it,” Munger said Wednesday at the annual meeting of his Daily Journal Corp. in Los Angeles. “These crazy false values and this crazy excess is bad morals and it’s bad policy. It’s bad for the nation. It’s just bad, bad, bad.”

Once a high-flying stock -- and a darling of star money managers like Bill Ackman -- Valeant has slid more than 60 percent since its peak in August. Last year, a short-seller accused the drugmaker of using a mail-order pharmacy to inflate sales; lawmakers have examined how the company set higher prices for medications.

Ackman’s Response

Munger, who is also vice chairman at Warren Buffett’s Berkshire Hathaway Inc., said in October that the drugmaker’s model of acquiring rights to treatments and jacking up prices was "similar to the worst abuses in for-profit education."

Those comments earned a rejoinder from Ackman. At a symposium on Berkshire in November, the money manager faulted Buffett and Munger for their holding in Coca-Cola Co. The soft drink maker has “probably done more to create obesity, diabetes on a global basis than any other company in the world,” he said. Coca-Cola is among the largest and most successful stock investments at Berkshire.

“I drew retaliation to Warren,” Munger, 92, said Wednesday, adding that his criticism of Valeant “caused me nothing but trouble” and that “it probably wasn’t wise for me to inject myself.”

Two of Valeant’s heart drugs, Nitropress and Isuprel, have drawn particular scrutiny. The day Valeant acquired the rights to sell them, it raised prices by 212 percent and 525 percent, respectively. At a Congressional hearing last week, interim Chief Executive Officer Howard Schiller promised to end an era of sharp hikes.

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