Valeant to Sever Ties With Philidor

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Valeant Pharmaceuticals International Inc. on Friday said it was severing all ties with mail-order pharmacy Philidor Rx Services, LLC, which will shut down operations as soon as possible.

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Valeant's relationship with Philidor has come under close scrutiny, partly because of the aggressive tactics Philidor has used to ensure that pharmacy-benefit managers�essentially middlemen in the drug-distribution process�pay for Valeant drugs, rather than lower-cost alternatives that are preferred by insurers.

"The newest allegations about activities at Philidor raise additional questions about the company's business practices," said J. Michael Pearson, Valeant's chairman and chief executive. "We have lost confidence in Philidor's ability to continue to operate in a manner that is acceptable to Valeant and the patients and doctors we serve."

Valeant said it intends to develop a plan to ensure patients' access to drugs is minimally disrupted. It added that it has informed Philidor that to the extent that managed care plans will no longer reimburse prescriptions in process, Valeant will fill them at the company's expense.

In the third quarter, Philidor represented 6.8% of Valeant's total revenue.

Valeant, the Canadian drug maker and until recently a stock market darling, has been under fire for weeks. Politicians, doctors and insurers have sharply criticized Valeant's approach to drug pricing, which sometimes involves buying old medications and jacking up the prices. More recently investors, including vocal short sellers, have questioned Valeant over its accounting and business practices.

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