Valeant facing fraud probe, report says
Drugmaker says it is co-operating with investigators
U.S. prosecutors have opened a criminal investigation into Valeant Pharmaceuticals International Inc over whether it hid from insurers its relationship with a specialty pharmacy that helped boost its drug sales, the Wall Street Journal reports.
Lawyers at the U.S. Attorney's Manhattan office are trying to gauge whether concealing those ties may have amounted to defrauding insurers, the Journal report said, citing people familiar with the matter.
A source familiar with the matter told Reuters on Wednesday that investigators have been looking into what disclosures Valeant and the pharmacy, Philidor Rx Services, made to insurance companies about their relationship.
The Quebec-based company has seen its market value fall by some 90 per cent in the last year as its drug pricing and other business practices prompted investigations by multiple U.S. government agencies and by Congress.
Valeant shares, which jumped on Tuesday when the company announced a reorganization and reaffirmed its full-year financial guidance, fell 10 per cent in afternoon trading Thursday.
It first came under scrutiny from New York prosecutors last October over its drug pricing and distribution. Media also reported at the time that it used Philidor to overcome insurer rejections to reimbursing its medications, with Philidor resubmitting claims to insurers until they were approved.
'The highest standards'
Valeant said in a statement on Wednesday that it was continuing to co-operate with the U.S. Attorney's Office in New York regarding the investigation that was disclosed last October.
The company did not provide further details on the subject of the probe. "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," the company said.
The investigation by U.S. prosecutors could lead to criminal charges against former Philidor executives and Valeant as a company, the Journal report said, citing one person familiar with the matter.
Officials at the U.S. Attorney's Office in Manhattan and representatives for Philidor, which closed its operations, were not immediately available for comment on the Journal report.