Billionaire investor William Ackman, whose hedge fund is one the of the biggest investors in drug company Valeant, has been asked to supply information to U.S. legislators probing price hikes in the pharmaceutical industry.
Continue Reading Below
Ackman told investors in his Pershing Square Capital Management on Thursday that the firm received a request on Friday from the U.S. Senate Special Committee on Aging as part of an investigation into pricing of off-patent drugs.
"As you would expect, we will fully cooperate with the committee's requests," Ackman wrote in the letter seen by Reuters.
The letter did not say the request is directly related to Valeant, but the Canadian company has sparked outrage among U.S. lawmakers and the public in the last months for having pushed through dramatic price hikes on older drugs.
Valeant did not immediately respond to a request for comment on the letter.
In February, Valeant's interim chief executive officer testified before Congress, acknowledging that the company's decision to raise the price for two heart medications, Isuprel and Nitropress, was too aggressive.
Ackman formally joined Valeant's board on Monday and appeared to be taking full control of overhauling the company by promising to file a delayed annual report by the end of next month and finding a new chief executive.
Ackman's Pershing Square owns a 9 percent stake in Valeant and has lost billions, on paper, as the company's stock price tumbled some 85 percent in the last year amid questions about its pricing strategy plus its business and accounting practices.
This week Valeant said Michael Pearson, its long-time chief executive officer and the architect of the firm's aggressive mergers and acquisitions strategy, will be leaving the firm as soon as the board finds a replacement.
Ackman told investors that he dispatched two of his staffers to Valeant's Bridgewater, New Jersey headquarters immediately after a disastrous earnings call on March 15 where the company cut its forecasts and said it could be close to default.
The letter was attached to the firm's annual report which said there are no plans to abandon the firm's strategy of making concentrated bets on a small number of companies even after last year's poor performance.
So far this year, Ackman's Pershing Square Holdings fund has lost 25 percent, largely because of the drop in Valeant which is down nearly 70 percent this year.
(Reporting by Svea Herbst-Bayliss; Editing by Cynthia Osterman and Meredith Mazzilli)