Hedge fund holding its tongue on Valeant scandal, for now

Hedge fund holding its tongue on Valeant scandal, for now

Citron Research says Valeant Pharmaceuticals has questionable deals with pharmacies.

Drug maker Valeant Pharmaceuticals has been under fire as of late for its questionable relationships with some of its partner pharmacies, with some experts saying that the deal puts the companies’ profits ahead of patients’ rights. Now pressure on Valeant is growing from Wall Street analysts, who say they may have more information that will shine a light on more of Valeant’s improper activities.

The hedge fund firm Citron Research has been taking a hard look at Valeant for months, according to a Reuters report. In October, the firm’s report on Valeant uncovered what Citron says are the drug maker’s questionable accounting practices involving its pharmacy network that had not previously been disclosed to investors. The Citron report was credited for a massive 40 percent drop in the company’s stock price.

Last Friday, while a billionaire backer of Valeant was holding a conference call with other investors to defend his positive take on the company, a tweet from Citron warned that further revelations about Valeant would be forthcoming, noting that the company’s stock price could drop to zero and that the company is “dirtier than anyone has reported!!” Citron also tweeted that it would be releasing a new report on the company on Monday.

But on Monday, Citron stated that no new information on Valeant would be released, for now.

Last week, the country’s largest manager of drug insurance benefits, Express Scripts Holding Company, raised questions about the arrangement between Valeant and its partner pharmacy Philidor RX Services. In response, Valeant ended its deal with Philidor, leading Philicor to suspend its operations.

Express Scripts and other insurance management firms seek to keep drug prescription costs down by negotiating with suppliers and suggesting patients get generics when they are available. But drug makers looking to maintain profits attempt to steer patients to their products through often undisclosed deals with allied pharmacies.

Using such “captive” pharmacies can allow drug companies to evade restrictions of insurance plans, and push patients towards their brand name drugs, even after their patents have expired and cheaper versions are available.

On Monday, Citron reiterated that its research showed that Valeant’s problems go beyond the relationship with Philidor. In a statement to Reuters, Valeant responded to Citron, claiming that their report was “filled with demonstrably false statements” about Valeant’s business.

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