Valeant Says It Will Cut Ties To Specialty Pharmacy Amid Fraud Allegations
Valeant Pharmaceuticals International is ending its relationship with Philidor Rx Services, because of questions raised about whether it was using the specialty pharmacy to boost sales of Valeant drugs over cheaper versions.
As a result, Philidor will shut down as soon as possible, The Wall Street Journal reported.
"The newest allegations about activities at Philidor raise additional questions about the company's business practices," Valeant CEO J. Michael Pearson, said in a statement. "We have lost confidence in Philidor's ability to continue to operate in a manner that is acceptable to Valeant and the patients and doctors we serve."
Pearson said patients, doctors and business partners have been disturbed by reports of "improper behavior at Philidor, just as we have been."
"We know the allegations have also led them to question Valeant and our integrity, and for that I take complete responsibility," he added. "Operating honestly and ethically is our first priority, and you have my absolute commitment that we will make it right."
Quebec-based Valeant makes a wide range of drugs, including the antidepressant Wellbutrin and antifungal Jublia. Once a favorite on Wall Street, the company has seen its stock price plummet after weeks of questions about its business model, which involves purchasing other drug companies and raising the prices of the drugs they sell.
More recently, short-selling firm Citron Research raised questions about Valeant, saying it used specialty pharmacies such as Philidor to steer consumers to buy its drugs, rather than cheaper, generic versions of them. Citron compared Valeant in a report to Enron.
After the report, Valeant acknowledged that it held a major stake in Philidor and had an option to buy the company. Valeant said Thursday that Philidor represented 6.8 percent of its revenue during the third quarter.
The Journal reported this week about questionable business practices at Philidor, such as that some Valeant employees actually worked at Philidor's Pennsylvania offices, using fake names in e-mails such as "Peter Parker."
The allegations have generated sharp criticism from doctors, patients and politicians and led to a federal investigation of the company. On Monday, Pearson defended Valeant in a conference call with investors but also said it would form a board committee to investigate the charges.
This week, three big pharmacy benefit management companies — CVS Health Corp., Express Scripts Holding Co. and UnitedHealth Group's OptumRx — said they would stop all interactions with Philidor.
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