California Investigates Valeant Philidor Link
The California Department of Insurance has issued a subpoena against embattled US drugmaker Valeant Pharmaceuticals over its dealings with specialty pharmacy company Philidor. Valeant revealed in its quarterly filing to the Securities & Exchange Commission (SEC) on Nov. 9 that it had received the subpoena in September. The Department of Insurance is requesting documents concerning Valeant’s relationship with Philidor and certain California-based pharmacies, as well as the marketing and distribution of Valeant products within the state, among other materials. Valeant confirmed in the SEC filing that it is cooperating with the investigation.
This probe is the latest in a long line of official inquiries into the Canada-headquartered, US-managed firm which has come under the spotlight for its strategy of inflating drug prices and using Philidor to fraudulently boost its revenues. Valeant, which cut its ties with the pharmacy chain last November, has seen its market value fall by some 90% in the last year as investigations by multiple US government agencies and Congress continue.
In late October, news agency Bloomberg reported that US prosecutors were building a fraud case against former CEO Michael Pearson and former CFO Howard Schiller. Pearson led Valeant’s aggressive strategy of acquiring drug firms and increasing their sales by hiking prices. Schiller led the firm on an interim basis as CEO when Pearson went on medical leave before being fired by the board in March this year.
Former Philidor executives could also be charged following claims that employees were told to alter doctors’ prescriptions from a generic version to the brand-name drug, as well as to resubmit previously rejected insurance claims until they were approved. Meanwhile Valeant’s financial performance has taken a hit this year with sales of many key products underperforming. The drug company has once again cut its full-year 2016 guidance and is now expecting total revenue of $9.55-9.65 billion, down from its previous forecast of $9.9-10.1 billion. The company, which has debt of around $30 billion, is reported to be in advanced talks to sell its Salix stomach drug business to Japan’s Takeda Pharmaceutical for $10 billion.
