Public allegations made since October about misleading sales practices by Philidor are damaging Valeant’s reputation, and the drugmaker's dermatology business will suffer while it looks for a different distribution channel, according to J Michael Pearson, Valeant CEO. The drugmaker announced on October 30 it was “severing all ties” with Philidor. Pearson said his company was “disturbed by the reports of improper behavior at Philidor,” which had led the public to question Valeant’s integrity, “and for that I take complete responsibility.”
Valeant ‘deeply involved’ in Philidor billing?
In an earnings call in late October, Valeant revealed it is Phillidor’s only customer, it includes Philidor’s revenue in its own financial reports, and in 2014 it purchased the option to acquire the pharmacy. Valeant had not mentioned Phillidor previously because specialty pharmacies are “a competitive advantage that we did not disclose to our competitors,” Pearson said.
But while Valeant tries to distance itself from Philidor, Reuters yesterday claimed to have seen documents showing some Valeant employees “were deeply involved in directing the daily operations” of Philidor.
Four former Valeant employees claim they helped found and expand Philidor, and were even involved in interviewing staff and billing for drugs.
An email was sent to two Valeant employees in 2014 “explaining how Philidor employees could bill the highest amount an insurance company was willing to pay by resubmitting rejected claims at different price points,” according to Reuters.
The whistleblowers also claim “they were sometimes told by their supervisors, also Philidor employees, to change prescriptions from doctors to allow the pharmacy to dispense a Valeant drug instead of a cheaper generic version.”
Philidor represented 6.8% of total Valeant revenue in Q3 2015, a little over $19m. The pharmacy released a statement this week, saying it was closing the business by January 31 but denying wrongdoing.
“It is unfortunate that this outcome was influenced by market forces, media misperceptions, and inflammatory, patently false reports by discredited short-sellers,” the company said.
Q4 impact
In a conference call this week, and in response to a request from in-Pharmatechnologist.com, Valeant declined to comment on specific allegations about its relationship with Philidor.
Pearson said the company is looking for a new distribution arrangement to minimise impact on patients, but that in the meantime many doctors are likely to prescribe rivals’ drugs.
“In the very short term, disruption to our dermatology business will be significant,” he said, with neurology products and Valeant’s Canadian business also affected. However, he claimed this impact will mostly fall in Q4 this year and that the business will recover in 2016. Pearson added the company still plans to file its psoriasis biologic with the FDA before Christmas.