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Valeant Pharmaceuticals informed that it was cutting ties with mail-order pharmacy Philidor RX, which will shut down operations as soon as possible.
Valeant had nurtured Philidor in its infancy when it sold only two Valeant acne drugs by mail order. The two signed a deal in 2014 that effectively gave Valeant limited control over Philidor as a distribution channel for its drugs, and an option to buy the pharmacy. The partnership saw Philidor aggressively market Valeant's more expensive drugs over cheaper generics preferred by insurers. This caught the attention of US lawmakers and investigators now looking into its pricing.
The scandal has sent Valeant's share price tumbling 60% in three months. J. Michael Pearson, chairman and chief executive of the Canadian drugmaker said, "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. The newest allegations about activities at Philidor raise additional questions about the company's business practices."
The announcement came after Citron Research, an influential short-seller, accused Valeant of creating a network of mail-order pharmacies to 'stuff the channel', a deceptive business practice involving inflating sales figures by sending retailers in its distribution channel more products than they are able to sell.
Valeant intends to develop a plan to ensure patients' access to drugs is minimally disrupted. Valeant has informed Philidor that to the extent that managed care plans will no longer reimburse prescriptions in process, Valeant will fill them at the company's expense.
"We are committed to doing everything we can to provide important medicines to the patients and doctors who depend on them, and will continue to explore relationships with the full range of pharmacies to ensure patients have access to the drugs they need," Pearson said.
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