Valeant to sever ties with Philidor

He said during a teleconference that Valeant had made a “meaningful mistake” of underinvesting in its public relations and offered an insufficient response when short-seller Citron accused it this month of using phantom sales to boost its bottom line.

“Valeant Pharmaceuticals worldwide Inc.is under fire for buying smaller drug developers and then increasing prices on the medicines developed by those companies”.

The battle between Left, a short seller who runs the stock commentary site Citron Research, and Ackman, a prominent activist investor, has captivated Wall Street for over a week as Valeant has struggled to restore investor confidence.

Valeant Pharmaceuticals global (VRX.N, VRX.TO) is to sever all ties with pharmacy business Philidor Rx Services, it said on Friday, in the wake of criticism over the relationship between the two closely associated companies.

J. Michael Pearson, CEO of Valeant, said he takes responsibility to get back the integrity and position of the Company, which has been lost by the allegations imposed on them. Philidor will in turn, shut down operations “as soon as possible”, the statement said. US prosecutors are also investigating the company over drug pricing, a hot issue in the USA presidential campaign. Express Scripts, CVS Health, and UnitedHealth Group’s OptumRx said they would all stop doing business with the pharmacy on concerns over its business practices.

Valeant disclosed this week that it had paid $100 million for an option to buy Philidor.

In the Third Quarter 2015, Philidor represented 6.8% of total Valeant revenue.

The manual instructed employees to submit claims under different pharmacy identification numbers if an insurer rejected Philidor’s request for reimbursement – to essentially shop around for one that would be accepted.

Philidor earlier said that its relationship with Valeant has benefitted several patients as it ensures that patients receive the medication on time. Morningstar Premium Members gain exclusive access to our full Valeant report, including fair value estimates, consider buying/selling prices, bull and bear breakdowns, and risk analyses.

Specialty pharmacies like Valeant and Horizon used to make their money handling complex, expensive drugs that treated serious conditions, like multiple sclerosis.

Valeant Pharmaceuticals worldwide Inc is a specialty pharmaceutical and medical device company that develops, manufactures, and markets a range of generic and branded generic pharmaceuticals, over-the-counter products and medical devices. He also cited the example of a young Warren Buffett’s 1963 investment of about $20 million in American Express (AXP) after its stock tanked more than 40 percent amid the company’s connection to a scam involving vegetable oil.

Valeant came under scrutiny for a similar tactics after it bought the life-saving heart drugs Nitropress and Isuprel in February and nearly immediately increased their prices, tripling one and raising the other sixfold.