By Stephanie Armour and Jonathan D. Rockoff
WASHINGTON--Former pharmaceutical executive Martin Shkreli, who
prompted a public outcry last year for raising the price of a
lifesaving medication, asserted his Fifth Amendment right not to
testify Thursday before a House committee probing escalating drug
costs.
His appearance marked the end of weeks of negotiation over
whether he would attend the hearing between the committee and Mr.
Shkreli's lawyers, as well as a barrage of tweets from Mr. Shkreli
that criticized lawmakers. He claimed he was being asked to come to
the hearing merely to help Congress score political points or
provide entertaining theater.
Pressed by one committee member to answer some questions that
wouldn't incriminate himself, said Mr. Shkreli, who previously
headed Turing Pharmaceuticals AG. "I intend to follow the advice of
my counsel, not yours."
Mr. Shkreli was escorted out of the hearing, about 50 minutes
after it started, when he made it clear he wouldn't answer any
questions. Rep. John Mica (R., Fla.) threatened to hold Mr. Shkreli
in contempt for refusing to testify, but Rep. Jason Chaffetz (R.,
Utah), who is the committee's chairman, indicated he wouldn't seek
a contempt finding.
In an unconfirmed tweet on Mr. Shkreli's verified Twitter
account, he said, "Hard to accept that these imbeciles represent
the people in our government."
The hearing is part of the probe by the House Committee on
Oversight and Government Reform, which is investigating causes and
solutions to sharp cost increases in drug prices.
Canadian-based Valeant Pharmaceuticals International Inc.
purchased two long-standing drugs that treat heart
problems--Isuprel and Nitropress--from privately held Marathon
Pharmaceuticals LLC and then raised their prices by 525% and
212%.
Howard Schiller, interim chief executive of Valeant, said
Thursday at the hearing that the company would raise drug prices in
the future "within industry norms, and much less than" it had for
Isuprel and Nitropress.
Mark Merritt, president and chief executive of the
Pharmaceutical Care Management Association, called for an
acceleration of FDA drug approvals, a government watch list of
off-patent bands that don't face competition, and changes that
would consider copay coupons illegal kickbacks. His group
represents pharmacy-benefit managers, which are third-party
administrators such as Express Scripts Holding Co. and CVS Health
Corp. The managers oversee prescription drug program, negotiate
drug costs on behalf of employers and health plans, and attempt to
get discounts from drugmakers.
Congressional probes into rising drug prices have picked up as
more pharmaceutical companies have raised the prices of drugs after
acquiring the rights to sell them in the U.S. Memos released by
Democrats on the committee indicated that Valeant and Turing AG set
profit targets and then raised the price of newly acquired drugs to
meet them.
The committee subpoenaed Mr. Shkreli, who was the CEO of Turing
when it bought the U.S. rights to an anti-parasite drug called
Daraprim and increased its price more than 50-fold. Mr. Shkreli
resigned as Turing CEO after his arrest on securities fraud
charges, which he denies.
The hedge-fund manager bought Turing and then increased the
price of Daraprim, a drug that treats a parasitic infection, from
$13.50 to $750 a pill. After a public and political outrage, he had
pledged to lower the price but instead opted to grant a discount to
hospitals that still resulted in a sharp increase in the cost of
the drug.
Mr. Shkreli has been active on social media, tweeting on Jan. 22
"you want me to go to DC to just say 'I plead the 5th?" for your
entertainment?"
At the hearing, Mr. Shkreli--in a pinstriped suitcoat, no tie
and facial stubble--was chastised for smiling occasionally and
turning away for pictures as lawmakers asked him questions. Rep.
Trey Gowdy (R., S.C.) pressed him to speak to statements he has
done on national TV.
"We can even talk about the purchase of Wu-Tang. Is that the
name of the album?" said Rep. Gowdy, referring to the $2 million
Mr. Shkreli reportedly spent for a Wu-Tang Clan hip-hop album. "I
am stunned that a conversation about an album purchased could
possibly subject him to incrimination."
Rep. Chaffetz assured Mr. Shkreli that questions wouldn't touch
on pending criminal investigations. Rep. Elijiah Cummings (D., Md.)
encouraged him to change the system rather than going down in
history as a poster boy for greed.
Benjamin Brafman, Mr. Shkreli's lawyer, answered questions
outside the hearing while his client stood by quietly. He said Mr.
Shkreli didn't want to answer questions in this hostile environment
and any behaviors his client displayed during the hearing was due
to nervous energy rather than disrespect.
"Many of the things that were said in the hearing were just not
accurate, " Mr. Brafman said. "He is not the villain, a bad boy. I
think he's a hero."
Nancy Retzlaff, chief commercial officer at Turing LLC, also
appeared Thursday. She said patients didn't pay the list price for
Daraprim--in fact, most patients paid just pennies a pill.
She also said the company hadn't made a lot of money on the
price increase for Daraprim and is losing money, which Mr. Chaffetz
questioned.
"You're making money hand over fist," he said, noting that
employees were getting pay increases and in some cases earnings up
to $800,000 and spending more than $20,000 on a yacht party and
hundreds on a cigar roller. "Don't tell me that you're losing
money."
Committee members angrily criticized two officials from the U.S.
Food and Drug Administration for what they said was a glacial pace
of drug approvals, said Mr. Shkreli is putting a bad face on the
pharmaceutical industry, and derided drugmakers for raising prices
that they said produced profits but hurt hospitals and patients.
They pledged to continue their investigation.
"It's disgusting we're here today to talk about drug price
increases," said Rep. Buddy Carter (R., Ga.) "None of these
witnesses here today have had to look into the eyes of someone
trying to decide between buying groceries or medication."
Prescription drug spending rose more than 12% in 2014 in the
U.S., the biggest annual increase in more than a decade, according
to a report by Express Scripts.
Write to Stephanie Armour at stephanie.armour@wsj.com and
Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
February 04, 2016 12:42 ET (17:42 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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