Thursday, August 11, 2016
Valeant's stock is sliding after reports it is under criminal investigation
Valeant Pharmaceuticals, the troubled Canadian drugmaker, isunder criminal investigation, according to The Wall Street Journal.
Federal investigators are considering bringing charges of defrauding investors with its relationship to specialty pharmacy Philidor, reported The Journal, citing unnamed sources familiar with the matter.
According to the report, US district attorneys in New York are considering whether Philidor unfairly directed patients toward higher-priced drugs made by Valeant instead of lower-cost options without revealing the relationship between the two firms.
Investigators are looking into whether Philidor told insurers that it had no relationship with Valeant in order to secure coverage of the higher-priced drugs.
Philidor, which no longer exists, stated in a letter to a US Senate committee investigating Valeant that it did not push patients toward Valeant's products. Valeant paid $80 million in fees to Philidor in 2015, and the specialty pharmacy was dispensing more than 5o drugs made by Valeant, according to documents sent to the committee.
Valeant disclosed in October 2015 that it had a relationship with Philidor, including an option to buy the company. Eventually, Valeant severed ties with Philidor because of misstatements in its accounting.
According to the report, the US attorney's office is considering pressing charges related to mail and wire fraud. The Journal's sources said that the office is considering charges against two former Philidor executives individually.
Valeant had previously said in filings that it was facing investigations in four different states, including New York. The filing directly stated that New York investigators were looking into the Philidor relationship.
UPDATE: In response to the story, Valeant released a statement late Wednesday saying that the investigation was already public knowledge and that the firm is cooperating with the US attorney's office. Here is the statement in full:
"Valeant previously disclosed in October 2015 that the United States Attorney's Office for the Southern District of New York commenced an investigation involving Valeant. We have been fully cooperating with the authorities throughout the investigation, and we are in frequent contact and continue to cooperate with the U.S. Attorney's Office for the Southern District of New York. We do not comment on rumors about investigations, and cannot comment on or speculate about the possible course of any ongoing investigation."
"Valeant takes these matters seriously and intends to uphold the highest standards of ethical conduct as we move forward with our mission to improve people's lives with our healthcare products."
In trading on Thursday, Valeant's stock fell by roughly 8.0% to $25.12 as of 10:22 a.m. ET.