Valeant Pharmaceuticals International Inc (NYSE: VRX) is currently under investigation over allegations that the Canadian drug manufacturer defrauded insurers by hiding its relationship with a mail-order pharmacy known as Philidor Rx Services. Those familiar with the matte claim that the pharmacy boosted sales of Valeant drugs, which would, basically, be considered collusion and fraud.
According to a spokeswoman from Valeant, the company said, in an official public statement: “Valeant has been cooperating and continues to cooperate with the ongoing Southern District of New York investigation.”
Does this mean they are on the up and up?
Let’s hope so, for there sake, as this albeit unusual investigation is the most serious case Valeant has ever faced. Of course, if the allegations are true the company could face massive legal charges against former Philidor executives and Valeant as a whole. For now, the investigation is expected to close by the end of this year; but, of course, things could change and it could continue for much longer.
The prosecutors report that the investigations involve determining the legitimacy of claims from the now-defunct Philidor who supposedly made false statements to insurers about how it is tied to the Valeant name. Philidor, of course, helped patients to get insurance coverage for higher-priced Valeant drugs (instead of their cheaper alternatives).
In contrast, though, Philidor lawyers said—in an April 2016 letter to a Senate committee on the matter—the company was “agnostic” in its connection with Valeant and that they dispensed their drugs in a way which “mirrored the independent judgment” of prescribing doctors.
Still, the government lawyers have also taken to examining Philidor’s general business practices, which includes rebates and other forms of compensation given to customers by pharmacies, in connection with the sale of Valeant products. They are also examining Philidor’s efforts to receive reimbursement form those insurers.
Are Valeant’s claims of innocence enough to save the company? After all, wasn’t this the reason Valeant cut ties with Philidor in October (because of accusations that it was just a phantom pharmacy specifically put in place to boost sales)?
Valeant Pharmaceuticals (NYSE: VRX) Stock Price
Well, after the report was released, shares of Valeant Pharmaceuticals Inc (NYSE: VRX) continue to plummet today after already suffering a massive 70 percent drop on the year. Indeed, Valeant shares were down by 9 percent, as of the opening bell on Thursday morning and closed down 10.36% to $24.49