Valeant reportedly investigated over ties to mail-order pharmacy

Valeant Pharmaceuticals International is the subject of a criminal investigation by federal prosecutors, who are looking into whether the drugmaker defrauded insurers by hiding its ties to a mailorder pharmacy, the Wall Street Journal reported.

The U.S. Attorney’s Office in New York is pursuing an unusual legal theory, previously unreported, that Valeant and the closely linked mailorder-pharmacy, Philidor Rx Services, allegedly defrauded insurers by hiding their close relationship, the Journal said, citing unidentified people familiar with the matter.

A Valeant representative didn’t immediately respond to a request for comment.

Prosecutors are looking into whether Philidor made false statements to insurers about its ties to Valeant, the Wall Street Journal said.

Philidor, a specialty pharmacy that is now defunct, filled prescriptions for Valeant dermatology drugs such as toenail fungus treatment Jublia.

Prosecutors are investigating whether insurers thought Philidor was neutral rather than in the service of Valeant, the Journal reported.

Valeant came under scrutiny last year over issues including its business practices, particularly its relationship with Philidor, which was helping boost drug sales.

The drugmaker severed its ties with Philidor in October, following reports about tactics the mailorder pharmacy allegedly used to gain more insurance reimbursements for Valeant medicines.

They included submitting claims using other pharmacies’ identification numbers and altering codes on some doctors’ prescriptions.

Specialty pharmacies are common in the drug industry, where they fill prescriptions typically for complex drugs, such as those that require cold storage.

Valeant’s relationship with Philidor was closer than usual.

Valeant had paid $100 million for an option to buy Philidor for nothing any time in the next 10 years, and consolidated Philidor’s financials into its own.

Valeant has also disclosed in regulatory filings that it is the subject of investigations by the U.S. Securities and Exchange Commission and the U.S. Attorney’s offices in Massachusetts and New York, among other entities.