Revisiting Valeant

This past Sunday night I was watching another incredible episode of HBO’s Industry when I heard something that made me go full Leo pointing meme.

Harper Stern — the show’s protagonist — was pitching the logic behind a massive short position taken by her firm. She rattled off a few infamous names for comparison: “Enron. Valeant. Luckin.”

I chuckled. Not because it wasn’t true — but because I immediately wondered how many people watching that scene actually know the story of Valeant Pharmaceuticals.

My guess? Not many.

And the more I thought about it, the more I realized the same might be true for many of you reading this.

Valeant’s implosion is what first sent me down the pharma rabbit hole as a young pharmacist. It was the moment I realized that medicine in America could be engineered the same way a hedge fund engineers a trade. It remains one of the clearest case studies in what happens when profit maximization outruns patient care — which, if you’ve been reading Drugstore Cowboy, you know is kind of my thing.

This week, I want to give you a crash course in one of the most important scandals in modern pharmaceutical history. I can’t capture every detail in five minutes — the story is too big and too twisted for that — but I can give you enough to understand something sobering:

It didn’t change anything.

More than a decade later, the incentives that created Valeant are still alive and well. If what you read below leaves you wanting the full picture, I highly recommend watching Season 1, Episode 3 of Dirty Money on Netflix. I revisit it at least once a year.

For today, this will have to do.

At its peak in 2015, Valeant Pharmaceuticals was worth nearly $90 billion.

Its CEO, J. Michael Pearson, was hailed as a visionary. He didn’t behave like a traditional pharmaceutical executive. He didn’t talk about pipelines or breakthrough science. He talked about discipline. Efficiency. Capital allocation. Margins.

Pearson’s model was brutally simple:

Buy companies with existing drugs on the market.
Slash research and development.
Raise prices aggressively.
Use the increased cash flow to acquire more companies.
Repeat.

No expensive labs. No long, risky clinical trials. No waiting a decade to see if a molecule pans out. Just acquisition arbitrage.

If you were willing to set morality aside entirely, it was elegant. Why spend billions trying to invent a drug when you can buy one that already works and hike the price overnight?

Wall Street loved it.

Among the loudest and proudest cheerleaders was Bill Ackman, whose hedge fund Pershing Square took a massive stake in Valeant. Ackman publicly praised Pearson, defended the strategy aggressively, and tied his own credibility to the company’s rise.

For a few years, Valeant was the smartest house in pharma. The stock soared from around $10 to over $250. Earnings calls were masterclasses in financial engineering. Analysts fawned. Investors piled in.

But if you worked in pharmacy, you watched this unfold with a pit in your stomach.

Because you knew how the cash was being generated.

Valeant didn’t invent price hikes. Drug pricing has been distorted in this country for decades.

What Valeant did was go fully all-in on not giving a sh*t about human beings.

One of the most haunting stories from that era involved two sisters with Wilson’s disease, a rare genetic disorder that requires lifelong treatment. The drugs keeping them alive — Syprine and Cuprimine — had been around for decades. They weren’t cutting-edge therapies. They weren’t the result of a billion-dollar R&D gamble. They were inexpensive drugs serving a tiny patient population.

After Valeant acquired them, the price exploded.

Treatments that had cost a few hundred dollars a month ballooned into therapies costing hundreds of thousands per year.

They ran this playbook over and over with dozens of other drugs.

Insurance denials followed. Prior authorizations multiplied. Families scrambled.

On a spreadsheet, the math was straightforward: small population, limited competition, inelastic demand. Raise the price. Capture the margin.

Pearson and his defenders insisted this was rational capital allocation. They argued that the “net price” after rebates wasn’t as extreme as the list price suggested. They pointed to patient assistance programs.

If you’ve been reading Drugstore Cowboy, you already know how that song goes.

When a drug price jumps by hundreds of thousands of dollars and a coupon magically brings the patient’s cost to zero, it doesn’t mean the system is compassionate. It means the bill is being rerouted somewhere else — to insurers, employers, taxpayers.

Coupons don’t eliminate cost. They hide it.

If Valeant had stopped at aggressive pricing, it might have limped along longer.

What accelerated the collapse was opacity.

Enter Philidor Rx Services.

Philidor was a specialty pharmacy closely tied to Valeant. The relationship allowed Valeant to influence how prescriptions were processed and reimbursed. In some cases, employees were allegedly instructed to substitute Valeant-branded drugs for whatever was prescribed by physicians. The tight coordination also enabled accounting practices that inflated sales figures and masked underlying weakness.

When journalists and short sellers started digging, the narrative shifted from “disciplined capital allocation” to “what exactly is going on here?”

The market, which had applauded the discipline, rediscovered the word risk.

The stock collapsed. Congressional hearings followed. Pearson was out. Ackman’s once-boisterous defense grew noticeably quieter. Tens of billions of dollars evaporated.

Valeant eventually rebranded as Bausch Health.

The name changed.

The incentives did not.

When people think of pharma villainy, they think of Martin Shkreli.

Shkreli became infamous for raising the price of just one drug — Daraprim — and then smirking about it online. He leaned into the role. He livestreamed. He antagonized. He treated public outrage like performance art.

He was reckless and proud of it.

Valeant was different.

Valeant was doing essentially the same thing — raising prices on old drugs with limited competition — but on a vastly larger scale. And it wasn’t led by a smirking provocateur. It was led by polished executives in suits and backed by some of the most sophisticated investors on earth.

Shkreli played the villain.

Valeant hosted earnings calls.

That distinction matters.

Outrage is easy when the villain is cartoonish. It’s harder when the behavior is wrapped in PowerPoint decks and endorsed by pension funds.

Shkreli became a meme.

Valeant became a market darling.

Bill Ackman deserves special scrutiny here.

He wasn’t a passive investor who stumbled into a bad trade. He was an evangelist. He defended the strategy publicly. He framed critics as naïve. He dismissed concerns about sustainability and pricing as overblown.

And yes — I think he’s a dick.

Because when you hitch your reputation to a model built on extracting margin from patients with rare diseases, you don’t get to pretend you were just analyzing spreadsheets. He knew exactly what was going on.

For a while, he was rewarded handsomely.

This part of the story rarely gets emphasized: Valeant’s rise wasn’t a rogue act by one CEO. It was endorsed by capital. Celebrated by analysts. Integrated into institutional portfolios across the financial system.

The same investors who preach ESG principles had no problem riding a company generating growth by squeezing the sickest, least visible patients in the country.

Ackman eventually lost billions — roughly $4 billion. His reputation took a hit.

But the lesson Wall Street absorbed wasn’t “don’t do this.”

It was “don’t do this so visibly.”

The model wasn’t rejected because it was immoral.

It was rejected because it imploded.

That is a very different form of accountability.

After the collapse, there was talk of reckoning. Lawmakers held hearings. Commentators spoke solemnly about excess. Pharma executives emphasized renewed commitments to innovation and patient access.

For a moment, it felt like a turning point.

Now look around.

Drug prices remain detached from manufacturing cost. Rebates still distort list prices. PBMs still extract spreads. Vertical integration has deepened. Direct-to-consumer models now bypass pharmacies entirely. Financial engineering in healthcare has become more sophisticated, not less.

The mechanics that allowed Valeant to thrive didn’t disappear.

They were refined.

Would Valeant succeed if it tried the exact same blunt strategy tomorrow? Probably not in the same form. The optics are worse. Social media would amplify outrage faster. Politicians would scramble to hold hearings sooner.

But the core logic — maximize cash flow from existing assets, use leverage to amplify returns, let patients and insurers absorb the friction — is still embedded in the system.

Valeant collapsed because it was too aggressive, too leveraged, too exposed.

Not because the system rejected its logic.

Here’s where we stand.

Valeant was a stress test for American healthcare. It pushed the pricing model to its outer limits. It revealed how much financial engineering the system would tolerate before capital fled.

The answer was: quite a lot.

Patients bore the cost. Investors reaped the gains — until they didn’t. Executives moved on. The company changed its name. The incentives remained intact.

Strip away the personalities and the hearings, and you’re left with a simple truth:

When healthcare is treated primarily as a financial asset class, the patient becomes a line item.

Valeant made that explicit.

On Industry, Valeant is a punchline — invoked in the same breath as Enron. In pharmacy, it’s a reminder that even a scandal of that magnitude can amount to nothing.

Until the incentives change — not the names, not the CEOs, not the branding — there will always be another version of Valeant.

As I sat on my couch Sunday night, Leo-pointing at the screen, I felt the same thing I felt as a young pharmacist watching this unfold in real time:

If Valeant wasn’t big enough to force a reckoning, what will be?

All I know is this:

Wherever that battle is, I’ll be there.

Giddy up.

Alec Wade Ginsberg, PharmD, RPh
4th-Gen Pharmacist | Owner & COO, C.O. Bigelow
Founder, Drugstore Cowboy