Ex-Drug Executive Shkreli Invokes Fifth Amendment Before Congress
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, Mr. Shkreli said, "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. 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, warned lawmakers against price controls on drug products and limits on patient cost sharing. 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.
Limiting how much patients must pay out of pocket for prescription drugs will allow pharmaceutical companies to raise prices and pass those costs along to employers and governments, according to his testimony.
Some states already have taken steps to limit cost sharing. California, for example, requires health plans sold on their state-run exchange to comply with a monthly cap. Other states have taken similar steps.
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 Pharmaceuticals AG set profit targets and then raised the price of newly acquired drugs to meet them.
The committee subpoenaed Mr. Shkreli, the former CEO of Turing Pharmaceuticals AG 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 suit, 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. Ben 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, " said Mr. Brafman. "He is not the villain, a bad boy. I think he's a hero." Nancy Retzlaff, chief commercial officer at Turing Pharmaceuticals LLC, which was the company that Mr. Shkreli ran, did appear Thursday. She said that patients didn't pay the list price for Daraprim--in fact, most patients paid just pennies a pill. 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.
(Reporting by Sarah N. Lynch in Washington and David Ingram in New York; Additional reporting by Nate Raymond and Caroline Humer in New York; Editing by Peter Cooney and Lisa Von Ahn)