Valeant Plunges On Report U.S. Attorney Pursuing Criminal Charges Ag...
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`https://www.forbes.com/sites/antoinegara/2016/08/11/valeant-plunges-on...
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`AUG 11, 2016 @ 09:15 AM
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`3,661 
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`The Little Black Book of Billionaire Secrets
`
`Antoine Gara, FORBES STAFF 
`FULL BIO
`
` is falling anew after the Wall Street Journal reported
`Valeant Pharmaceuticals
`VRX +0.61%
`that the U.S. Attorney's Office in the Southern District of New York is considering
`pursuing criminal charges against the embattled drug company on grounds of insurance
`and wire fraud. The SDNY's potential case centers around Philidor Rx Services, Valeant's
`now defunct specialty pharmacy channel, which appears to have inflated the company's
`sales by misleading insurers and other payors when filling prescriptions.
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`According to the WSJ, the criminal case may probe whether Philidor made false
`statements to insurers about its relationship with Valeant in order to distribute the
`company's high priced drugs. Philidor, virtually unknown to Valeant investors a year ago,
`was a Pennsylvania-based operation that Valeant consolidated into its earnings beginning
`in late 2014. When Philidor was uncovered by the Southern Investigative Reporting
`Foundation last fall, Valeant said the outfit was a distinct business and that it had
`acquired an option to buy the company for $100 million, but never exercised it.
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`However, it seems Valeant and Philidor had an extremely close relationship, and
`potentially one that mislead payors. The distribution channel almost exclusively sold
`Valeant products. Media reports and communications dug up in a Senate inquiry show
`that employees of Valeant had close contact with Philidor. Weeks after Philidor was
`uncovered, large insurers around the country suspended the pharmacy and alleged abuse.
`Valeant quickly shuttered Philidor, but in doing so claimed it had not condoned the
`company's practices. Philidor, for its part, has said it believed its employees behaved
`ethically.
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`ACRUX DDS PTY LTD. et al.
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`EXHIBIT 1534
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`IPR Petition for
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`U.S. Patent No. 7,214,506
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`Valeant Plunges On Report U.S. Attorney Pursuing Criminal Charges Ag...
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`https://www.forbes.com/sites/antoinegara/2016/08/11/valeant-plunges-on...
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`Michael "Mike" Pearson, former chief executive officer of Valeant Pharmaceuticals International Inc., left, speaks as Howard
`Schiller, former interim chief executive officer and former chief financial officer of Valeant Pharmaceuticals, center, and
`William "Bill" Ackman, founder and chief executive officer of Pershing Square Capital Management LP. Photographer: Andrew
`Harrer/Bloomberg [-]
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`In 2015, Philidor accounted for roughly 8% of Valeant's sales, the company has said.
`However, since Philidor was closed in October, Valeant's sales in dermatology have
`plunged. Last quarter, dermatology sales fell 55% as high priced drugs like Jublia that
`were distributed through Philidor saw dramatic volume declines.
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`The SDNY's case may take a novel angle, focusing on whether Philidor made false
`statements to insurers about its ties to Valeant and deceived insurers into thinking the
`operation was a neutral distributor. In doing so the SDNY may claim Valeant and its
`executives committed wire fraud and used inter-state communications to commit that
`fraud, according to the WSJ. The investigation also is looking at Philidor's business
`practices, rebates and reimbursements.
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`In recent quarterly filings, Valeant has disclosed a litany of regulatory investigations
`including from the SDNY and the U.S. Attorney's Office for the District of Massachusetts.
`Other regulators looking into Valeant include a California insurance department, the New
`Jersey State Bureau of Securities, and staff at the Los Angeles Regional Office of the
`Securities and Exchange Commission and the North Carolina Department of Justice.
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`Gallery
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`Launch Gallery
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`Valeant Plunges On Report U.S. Attorney Pursuing Criminal Charges Ag...
`
`https://www.forbes.com/sites/antoinegara/2016/08/11/valeant-plunges-on...
`
`About the WSJ's report, Valeant said it "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
`with the U.S. Attorney's Office For the Southern District of New York. We do not comment
`on rumors about investigations and cannot comment or speculate about the possible
`course of any ongoing investigation."
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`The company added, "Valeant takes these matters seriously and intends to uphold the
`highest standards of ethical conduct as we move forward with our mission to improve
`people's lives with our healthcare products."
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`Valeant shares were falling 6.66% in pre-market trading on the WSJ report, after plunging
`as much as 15%. On Tuesday, shares gained over 20% as the company reaffirmed its 2016
`guidance and said it was in discussions with lenders on covenant relief to its $30 billion
`debt load.
`
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