J. Michael Pearson, CEO of Valeant.
Photograph by Kevin Van Paassen — Bloomberg via Getty Images
By Laura Lorenzetti
October 15, 2015

Valeant Pharmaceuticals received subpoenas from federal prosecutors demanding more information concerning how it prices and distributes its drugs, according to public documents filed late Wednesday.

Federal prosecutors are also looking into information Valeant (VRX) provided to the Centers for Medicare and Medicaid Services, as well as how the company helps patients afford the rising costs of its medications. Valeant responded that it is reviewing the subpoenas and will cooperate with investigators.

“All of us at Valeant firmly believe in maintaining strong regulatory and financial controls and believe we have operated our business in a fully compliant manner,” Valeant CEO J. Michael Pearson said in a statement.

High drug prices have become a hot-button issue, especially after Democratic presidential candidate Hillary Clinton addressed the issue with her drug price plan in the wake of Turing Pharmaceutical’s 5,000% increase in the price of its Daraprim treatment. Congress members have also been demanding more information from pharmaceutical companies like Valeant, which has a string of older treatments that have gotten significantly more expensive in recent years.

For instance, its heart drug Isuprel went from a list price of $4,489 in December 2013 and is now $36,811. Another drug, diabetes treatment Glumetza went from $896 at the start of 2013 to $10,020 as of this July. Cuprimine, a treatment for Wilson disease, skyrocketed to $26,189 from $888 in February 2013.

In response to concerns of rising drug prices, pharmaceutical companies often reference their patient assistance programs, which help patients cover out-of-pocket costs. Valeant spent $544 million on such programs last year and anticipates spending $630 million this year, it said in a letter to Sen. Claire McCaskill on Wednesday.

The concern is that pharmaceutical companies are not required to provide information on these programs and data is spotty across the industry. The best studies suggest that most major pharmaceutical companies have assistance programs for between two and four of their products amongst the dozens of drugs they sell, said Peter B. Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center. Another survey in Health Affairs said that only 4% of companies even report back how many patients their program had helped.

“These are sort of opaque programs of unknown scope,” Bach told Fortune. “And I can tell you from real-life experience, it’s not like going on Amazon.”

Such programs require significant paperwork to prove a need and need to be approved by companies. In addition, drug makers can’t provide the same kind of benefits to patients on Medicare or other government-assisted programs since it’s considered an illegal kickback, limiting the impact of such programs.


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