The Next Valeant?
Concordia Healthcare bought a drug to treat irritable bowel syndrome when a prescription for the medication cost about $87. Now it sells at $782.
The Other Canadian Drug Company That Has Pushed Up Drug Prices
In 2014, Concordia Healthcare bought Donnatal, a decades-old drug used to treat irritable bowel syndrome. The $265 million deal was a windfall for a company backed by Paul Manning and his PBM Capital Group, a healthcare investment firm in Charlottesville, Va. Manning’s company received a $200 million cash payment financed with a loan from GE and $65.5 million of Concordia stock that represented a 15% stake in the company at the time. A prescription for Donnatal in the U.S. sold for about $87 in 2010, but by the time Manning sold the drug to Concordia it sold for about $353, according to IMS Health data. After securing Donnatal, Concordia in June 2014 immediately doubled the price to $602, according to IMS Health data. Donnatal now sells for about $782 and it’s Concordia’s best-selling product, representing about 10% of sales. In total, the price of Donnatal has increased by 800% since 2010. (Vardi, 5/20)
Compatriot Drugmaker Shares Valeant's Appetite For Price Hikes
Valeant and fellow Canadian pharma Concordia Healthcare share a similar appetite for M&A. Another thing the two companies have in common? A zest for dramatic drug price increases on older meds. A couple years ago, Concordia said it would shell out $265 million for Donnatal, a decades-old drug that treats irritable bowel syndrome. In June 2014, Concordia jacked up Donnatal’s price to $602 from $353 per prescription, according to IMS Health data cited by Forbes. The drug, which is the company’s best-selling product, now sells for about $782 per-- an 800% increase from 2010. (Wasserman, 5/23)
Meanwhile, a series of letters between the Securities and Exchange Commission and Valeant reveal that the company was told it needed to clarify how it reported financial results to investors —
SEC Asked Valeant To Change How It Reported Deal Costs, Tax
U.S. securities regulators last year told Valeant Pharmaceuticals International Inc. that it needed to clarify how it reported financial results to investors, and that expenses from the drugmaker’s many acquisitions shouldn’t be excluded from adjusted earnings as one-time costs. In a series of letters between the Securities and Exchange Commission and Valeant from December to April, the drugmaker was told that it could no longer describe in earnings releases a “core” business that excluded the cost of deals, because Valeant made so many acquisitions that such activity was a regular part of its operations. (Armstrong and Koons, 5/24)