Today comes more bad news for Valeant Pharmaceuticals International: a report from Bloomberg that the former CEO, J. Michael Pearson, and former CFO, Howard Schiller, may face accounting fraud charges. The charges would stem from the secret relationship between Valeant and Philidor Rx Services LLC, a mail-order pharmacy controlled by Valeant. The pharma giant, it’s believed, encouraged doctors to send prescriptions directly to Philidor, which wrangled insurance reimbursements for the overpriced meds. It may have even changed prescriptions to Valeant brands. Neither Valeant, the FBI, nor the office of U.S. attorney for Manhattan Preet Bharara would comment to Bloomberg.
Valeant became a darling of Wall Street with a string of acquisitions that gave it control over hundreds of medications, such as Wellbutrin XL, as well as medical devices such as Bausch+Lomb contact lenses. But some accuse Valeant of getting too greedy, raising prices on the drugs and devices it acquired, and possibly colluding with distributers on pricing, among other charges. For instance, it combined in one pill the generic versions of Motrin and Pepcid, worth no more than about $40 per month, according to the New York Times, and sold the combined version, christened Duexis, for about $1,500 per month.
Valeant’s stock has fallen about 70% due to the controversies.