It seems Valeant’s insistence earlier this week that its relationship with specialty pharmacy Philidor was above board failed to convince pharmacy benefit managers.
The three largest PBMs in the US – CVS, Express Scripts and UnitedHealth – have all announced they will no longer do any business with Philidor, which was at the centre of allegations that Valeant was using Philidor and other pharmacies to artificially inflate revenues.
Express Scripts and CVS have also said they would also stop dealing with four other pharmacies with which Valeant has “a similar relationship,” with all the PBMS citing non-compliance with the terms of supplier agreements as the reason for the decisions.
Now, Valeant has announced that it too is terminating its relationship with Philidor, saying the pharmacy “has informed Valeant that it will shut down operations as soon as possible, consistent with applicable laws.”
The Canadian pharma company’s chief executive Michael Pearson said it had taken the decision in the wake of the “newest allegations about activities at Philidor [which] raise additional questions about the company’s business practices.”
The allegations of impropriety – which emerged last week – included claims Valeant was using Philidor and other ‘captive’ pharmacies “for the purpose of phantom sales or stuff the channel, and avoid scrutiny from the auditors.”
It has also been revealed that Valeant had an option to buy Philidor and was incorporating the company’s revenues into its own financial statements, saying it accounted for 6.8% of total group revenue in the third quarter.
The latest revelations further impacted Valeant’s shares which are already in the doldrums after months of downward pressure resulting from scrutiny of hefty price increases for products acquired by the company and questions about the sustainability of its business model.
Valeant held an investor conference earlier this week put forward its position that it was operating within the law, but also said it was forming a committee to look into the allegations.
Meanwhile, other specialty pharma companies – including Allergan, Endo and Horizon Pharma – have issued statements explaining their relationships with specialty pharmacies in a bid to avoid any fallout damage. All three said around 3% of sales went through these channels, but they insisted the pharmacies were all independent organisations.