Valeant CEO Pearson May Be Held in Contempt by Senate Panelby
Senate committee says Pearson didn't appear for deposition
Valeant says Pearson will testify April 27 on drug pricing
A Senate committee may start contempt proceedings against Michael Pearson, chief executive officer of Valeant Pharmaceuticals International Inc., for failing to appear to give testimony related to an investigation on drug pricing.
“Michael Pearson was under subpoena to appear for a deposition today related to the Senate Special Committee on Aging’s drug pricing investigation, and he did not comply with that subpoena,” Senators Susan Collins and Claire McCaskill said in a statement late Friday. “It is our intent to initiate contempt proceedings against Mr. Pearson.” Collins, a Republican, is the chairwoman of the panel and McCaskill is the ranking Democrat.
Pearson was subpoenaed to testify at an April 27 hearing, the latest in a series of congressional probes into how drugmakers price medications. Both the Senate and House have called on Valeant to testify.
In an April 7 letter to Collins and McCaskill, a lawyer representing Pearson said the executive will appear at the hearing but that the deposition subpoena was unfair in both timing and scope.
Pearson shouldn’t be expected to give sworn testimony if the committee hasn’t been clear about what topics and documents he’ll be questioned about, attorney Bruce E. Yannett of Debevoise & Plimpton LLP said.
Without that, “the committee’s demand would expose him to an inherently unfair process for which we cannot adequately prepare him under the circumstances,” according to the letter.
Yannett also said Valeant executives have been busy trying to file a late 10-K annual report with regulators, complete an audit of the company’s 2015 financials and finalize waivers and amendments with lenders to clear up a technical debt default.
“Mr. Pearson is not simply ‘maintaining a busy schedule’ -- he is leading a public company through a series of critical steps that are clearly in the best interests of its shareholders and thousands of employees,” Yannett wrote.
It’s a new blow for embattled Valeant, which has suffered multiple controversies and setbacks in recent months related to its business practices, accounting and drug pricing. In March, the company announced that Pearson will step down once a replacement is found.
Laurie Little, a spokeswoman for Valeant, in an e-mailed statement said Valeant has provided the committee with thousands of pages of documents. “Mr. Pearson looks forward to testifying publicly at the committee’s hearing on April 27, but has informed the company and the committee that he does not intend to also appear for private testimony in advance of the hearing,” Little said.
Since December, 15 executives and experts have participated in the Senate hearings. In the House, former pharmaceuticals executive Martin Shkreli, who has been charged with securities fraud, invoked his Fifth Amendment right and refused to testify at a hearing in February after being subpoenaed.
At the February hearing before the House Committee on Oversight and Government Reform, Howard Schiller, a former Valeant finance chief who was then interim CEO while Pearson was on medical leave, testified for the company.
(An earlier version of this story was corrected to reflect the subpoenas issued.)