Some of the biggest customers of Philidor Rx, the consolidated specialty pharmacy tucked inside embattled drug giant
The terminations add a new headache to Valeant Pharmaceuticals as it tries to recover from an onslaught of scrutiny from lawmakers, regulators and investors into its business practices.
Read More: Defending Valeant, Top Investor Says Drugmaker's Lust For Profit Went Too Far
Valeant is under the spotlight for sharply increasing the prices of drugs it acquires, and it's now subject to a litany of regulatory investigations into its sales techniques and drug distribution channels. Media probes, meanwhile, have uncovered a tangled web of once undisclosed specialty pharmacies consolidated inside Valeant that raise questions about management's forthrightness.
Philidor Rx, one of Valeant's specialty pharmacy distributors, had gone undisclosed to investors until earlier in October when both the Southern Investigative Reporting Foundation and the New York Times published reports on the unit. Valeant then admitted it consolidated Philidor Rx and had acquired an option to buy the business, in addition to others, but it sought to downplay the unit's importance to the overall company.
Those comments may come to the forefront of the discussion on Valeant's overall value now that Philidor's biggest customers are cutting ties. PBM's, it appears, are seeing major problems with the way Philidor operates.
"CVS/caremark maintains a broad national network of 68,000 pharmacies. In accordance with CVS/caremark’s standard auditing protocols, over the last several weeks we have been monitoring and reviewing the results of recent audits of Philidor’s practices. Based on the findings from those activities, we have terminated Philidor for noncompliance with the terms of its provider agreement," CVS said in an e-mailed statement Thursday afternoon.
Said Valeant in response, "Valeant’s drugs are provided to patients through many channels, including traditional retail pharmacies, specialty pharmacies, and directly from health care providers. We look forward to continuing to work with our full range of partners to ensure patients have access to the important medicines they need."
Prominent investors including mutual fund Ruane, Cunniff and Goldfarb, and hedge funds ValueAct Capital and Pershing Square, have come to the defense of the Quebec-based Valeant. But as the news seemingly continues to worsen, its unclear how well Valeant's big investors can defend the company, or if the market will be reassured by their support.
On Thursday Ruane, Cunniff published a letter defending Valeant, however, it conceded CEO
Valeant shares tumbled over 10% in after-hours trading, within reach of new multi-year lows. The stock was trading around $100 a share, over 60% below record highs above $260 a share hit this July.
Read More: Valeant Pharmaceuticals Says Philidor RX Was Not Material, Distances Itself From Liability
