The U.S. Attorney's Office is investigating if the relationship with Valeant Pharmaceuticals International Inc. and mail-order pharmacy Philidor Rx services LLC was not fully disclosed and potentially fraudulent. Photo by stefanphotozemun/Shutterstock
NEW YORK, Aug. 11 (UPI) -- U.S. prosecutors are investigating Valeant Pharmaceuticals International Inc. on accusations it defrauded insurers by hiding its relationship with a mail-order pharmacy.
The U.S. Attorney's Office of the Southern District of New York is investigating if Quebec-based Valeant and now-out-of-business Philidor Rx Services LLC defrauded insurance companies by hiding their close relationship, The Wall Street Journal reported Thursday. An unidentified source said the attorney's office is looking into accusations Philidor helped patients get insurance coverage for higher-priced Valeant products.
The issue is whether insurers believed Philidor, a Philadelphia-based company, was neutral instead of working on Valeant's behalf, the source said, adding investigators are also examining Philidor's rebates to customers who used Valeant products.
Valeant's business model involves selling medication and other products it acquires from other firms, typically at increased prices. It worked with Philidor to deliver medication to customers, but never disclosed its relationship with Philidor until accounting and other questions arose in October 2015. Vealeant and Philidor began working together in 2013, and by 2015 Philidor was selling a portfolio of more than 50 Valeant pharmaceuticals and receiving more than $80 million in fees from Valeant, documents from the U.S. Senate Committee on Aging indicated.
The Attorney's Office is investigating possible U.S. mail and wire fraud violations, the Wall Street Journal said.
A statement Wednesday from Valeant said the company "previously disclosed in October 2015 that the United States Attorney's Office for the Southern District of New York commenced an investigation involving Valeant. We have been fully cooperating with the authorities throughout the investigation, and we are in frequent contact and continue to cooperate."
Valeant stock declined 2.98 percent on the New York Stock Exchange at the close of business Wednesday, and down 3.06 percent on the Toronto Stock Exchange.