Michael Pearson reaches out to physicians for continued support of the multi-national
On November 2, 2015, Reuters reported that Valeant Pharmaceuticals International launched a campaign meant to reassure doctors about the company’s decision to cut ties to a controversial specialty pharmacy.
In a letter to healthcare professionals seen by Reuters, Chief Executive Officer J. Michael Pearson extended an offer in which Valeant would pay for the cost of its products through Nov. 8 and make sure patients could get their medications without paying out-of-pocket expenses, wherever possible.
Pearson said that Valeant’s former partner-pharmacy, Pennsylvania-based Philidor Rx Services, would file no further insurance claims. On October 30, the company said it was cutting ties with Philidor, effectively shutting down the pharmacy’s operations, as Valeant investigates whether Philidor engaged in any illegal activity.
Philidor, which put all its proverbial eggs in the Valeant basket, almost exclusively handling prescriptions for the pharma giant’s drugs, has been accused of improperly pressing insurers for reimbursement for the drugs after they were dispensed to patients.
“We know many doctors and patients were concerned about the recent allegations surrounding Philidor’s business practices, and so were we,” Pearson said in the letter. You better believe he was concerned! Valeant’s cozy relationship with fill-first Philidor had drawn unwanted attention from Valeant shareholders, who also were concerned. It was the last thing the embattled pharmaceutical multi-national needed.
Valeant’s stock has plunged more than 40 percent since Oct. 21, when a report by a short-seller raised questions about the company’s relationship with Philidor.
Reuters also noted Philidor’s statement that it will wind down its operations and fire its employees over the coming weeks. “We remain steadfast that Philidor has adhered not only to all applicable laws but to the highest standards of ethical business practice,” Philidor added.
“We plan to replace Philidor over the next few weeks with one or more other specialty pharmacies to ensure continuity of this cash pay program,” Pearson said in his letter.
“Over the next few months, we will work to develop a new, more comprehensive program to ensure your patients can continue to have access to Valeant’s products at affordable prices,” the letter said.
The Reuters piece quotes an RBC Capital Markets analyst who said of Valeant’s plan to cut off Philidor: “This decision will certainly have a near-term impact on Valeant’s revenues and profitability. Having said this, we expect that the company will maintain some portion of these sales as Valeant will be able to transition a portion of this business to traditional distribution channels.”
However, distribution plans after the sloughing off of Philidor are hardly Valeant’s only major problem. In October 2015, a New York Times columnist claimed that Valeant CEO Pearson’s “plan was to acquire pharmaceutical companies, fire most of their scientists and jack up the price of their drugs.”
After acquiring Salix Pharmaceuticals in 2015, Valeant raised the price of the diabetes pill Glumetza about 800 percent. Valeant’s stocks then withered in October 2015, following a New York Times article about their business model which enriches executives and shareholders by overpricing life-saving drugs. Valeant’s controversial model is under investigation by regulators as of November 2015.