Shares of Valeant Pharmaceuticals (VRX) closed down 16.53% today after Congressional Democrats announced they would seek a subpoena for drug information about the company's high priced drugs. The reason for this subpoena is because about a month ago Valeant refused the request of documents to be sent to Democratic representatives. 

The two Democratic representatives who requested these documents are Elijah Cummings, and Bernie Sanders. Both Democrats requested that Valeant release information about significantly raising the price of two heart drugs after acquiring rights for them. In essence both representatives want to know why such a huge price increase is warranted if the drugs themselves don't cost much to make. 

More specifically these two Democrats want to see whether the company's decision to raise one heart drug's price by 525% and the other by 212% is justified in the free market. It seems that the government needs to look out for any pharmaceutical companies that are starting to price gouge whether it's because they have full control of the market disease sector or treat a rare disease. In either of those scenarios raising the price  by 1000% or more is not considered fair practice legally or morally for these patients who need these treatments to stay alive. 

House Democrats even want to bring in the CEO of Valeant Pharmaceuticals, Micheal Pearson, to testify to the committee about these high drug prices. Valeant's stance is that they do not need to release any documents as they are private and confidential. In addition, the company states that the only reason they brought up the drug prices was because they were significantly under priced in the market and they have patient assistance programs to hep the patients get these drugs if they really need it.

Now it is up to the Republican Chairman of the committee, Jason Chaffetz, to decide whether or not to hold a hearing about this matter. Whether Chaffetz decides to hold a hearing on this matter remains to be seen, but high drug pricing is definitely a matter that needs to be looked at. 

All this initially stemmed from another biotech founder, Martin Shkreli, who founded Turing Pharmaceuticals AG. He bought an anti-parasitic drug, known as Daraprim, and then increased its price from $13.50 per pill to about $750 per pill. This caused a huge controversy about raising the price of a decade old drug so much after it was acquired. After receiving so much backlash Turing has stated that it will lower the cost from the $750 price target but for the moment we don't know by how much. 

If anything, biotech stocks were hit hard on today's news about the the subpoena for Valeant and Hillary Clinton's comments from last week about Turing Pharmaceuticals' price hike didn't help the sector out either. The biotechnology sector has been hit but if things get resolved in terms of pricing then quite possibly biotech stocks will have a nice bounce back one of these days.