Now we’ll find out how these tycoons justify hiking the cost of life-saving drugs

The ongoing pharmaceutical price gouging debate took a new turn this week, one that at least ought to provide blackly comic entertainment: the US Senate has launched an investigation into drug pricing by four companies and has subpoenaed their chief executives to testify before a bipartisan committee on 13 December. It should be one of those very rare moments when DVRs will be set to record C-Span, the cable channel that broadcasts Congress.

Two of those executives, J Michael Pearson of Valeant International and Martin Shkreli of Turing Pharmaceuticals, remain high on the internet’s “most hated” list. It has all of the makings of the best Senate hearing since Bill Clinton said: “I did not have sexual relations with that woman.”

To recap, Valeant and its cohorts have pioneered a business model that stands accused of ditching a lot of expensive research and development in favour of buying up old generic drugs that operate as virtual monopolies, then jacking the price up. Valeant and Turing (which, despite its profile, is a very minor although equally unethical player) will be joined in the dock by Retrophin and Rodelis Therapeutics.

Mr Shkreli might be the public face of this kind of dubious enterprise, but Mr Pearson is the undisputed heavyweight champion. Valeant, until recently the largest Canadian company by market capitalisation, has hit the skids over the last few months. This column highlighted its unethical approach to drug pricing three weeks ago, and since then the company has lost more than half its value. Valeant’s stock was trading at $263 a share in May, and closed below $80 on Friday.

Valeant’s problems have not been restricted to negative comment and publicity regarding its approach to pricing drugs. Two weeks ago, a California-based short seller called Citron Research published research claiming that its business model was the pharmaceutical equivalent of Enron. Which, for people with half-decent memories, is not a compliment.

Citron’s main thrust was that a big chunk of Valeant’s sales were coming via a “speciality pharmaceutical” outlet called Philidor. Citron accused Philidor of stockpiling Valeant inventory then claiming the stock as sales. It should be added that Citron is run by Andrew Left, a well-known short seller, but even so, Valeant was Phildor’s only customer and the former immediately announced that it would end the relationship. That is the sort of behaviour that leaves more questions than answers.

The whole sordid tale is made even juicier by the presence of several very large hedge funds and high-profile investors, most notably Pershing Square’s Bill Ackman. Many readers will remember Mr Ackman as the hedge fund manager that took a billion dollar short position in Herbalife then went on to claim, via a 342-page PowerPoint presentation, that the company is a fraudulent pyramid scheme. Pershing Square has paper loss approaching $2bn on its Valeant long position, so presumably Mr Ackman dislikes the taste of his own medicine. Such is his dislike that Mr Ackman spent four hours defending his position in Valeant and the company last week, again supported by a huge PowerPoint presentation. That approach worked so badly with Herbalife, which ended up costing Pershing an arm and a leg, you would think Mr Ackman might have learned his lesson, but apparently not.

The Senate inquiry will lack any power to make immediate changes to pharmaceutical pricing law. What it could do, depending on the performance of the four executives called to testify, is make their pricing policy even harder to maintain and further ruin their credibility. The inquiry will be co-chaired by Republican Susan Collins of Maine and Democrat Claire McCaskill of Missouri, two of the most formidable women in American politics. Neither is any pushover and both will make these executives squirm.

Legendary investor Charlie Munger, Warren Buffet’s right-hand man for 40 years, joined in the pile-on late in the week, telling an interviewer: “It [Valeant] is just a company that was too aggressive in ignoring moral considerations in the way it did business.” Thankfully, those moral considerations are no longer being ignored and the writing appears to be on the wall for Valeant and its fellow miscreants.

The theory was that Facebook’s growth was supposed to slow down because it’s not hip with the kids. Which, as it turns out, is nonsense. Last week’s third-quarter results blew expectations out of the water, just as they did at Amazon and Google. Since when were people in their teens good customers anyway? More than a billion people use Facebook daily, while the company’s other high profile acquisitions, Whatsapp and Instagram, still show the kind of growth Twitter would kill for.

Questions over Facebook’s security and its mass harvesting of information appears to be having little impact on its growth, despite leaving many users uneasy.

Indeed, Facebook’s user base has doubled in size over the last three years. The number of video views has doubled to 8 billion per day since April and Facebook now gets more than 1.5 billion visitors per month.

The company’s bet on mobile, which it placed a couple of years ago, has paid off handsomely. Mobile advertising revenue grew to $3.4bn (£2.3bn) for the quarter, growth of 73 per cent year on year.

The numbers are mind-boggling for a company that many observers thought was overvalued when it first came to the market. Anyone brave enough to have taken a punt soon after the company was listed in 2012 is now sitting pretty on about five times their original investment.

Despite how uncomfortable Facebook often makes many people feel – particularly when finding themselves wondering “how did Facebook know I was interested in that?” – the company has confounded critics and naysayers time and time again.

With a huge slice of the social media market, an ambitious investment program, a stand-alone news service in the pipeline and a valuation that, while obviously still expensive, looks justified, it’s not difficult to see why CEO Mark Zuckerberg and COO Sheryl Sandberg remain so bullish.

The truth is that most users are now so deeply invested in Facebook that they can’t go anywhere else even if they wanted to. So they won’t, and Facebook will continue to grow.