Valeant Pharmaceuticals International saw its stock take a hit on news that it is being investigated for fraud by US prosecutors
Valeant Pharmaceuticals International stock took a hit following a report that it’s under criminal investigation by US prosecutors. The stock fell 6.7% on the news that prosecutors are investigating whether the drug company defrauded insurers by concealing its connection to a mail-order pharmacy, according to a Bloomberg report.
Prosecutors allege that Valeant defrauded investors by concealing its close relationship with a now-defunct mail-order pharmacy, Philidor Rx Services, Bloomberg reported. Valeant first drew scrutiny over the relationship last year. It severed its relationship with Philidor in October after reports surfaced of shady tactics the pharmacy allegedly used to gain more insurance reimbursement on Valeant products.
The news of the investigation comes at a bad time for Valeant. Just two days before, the company’s earnings results and an annual forecast had eased investors’ concerns about the company’s debt of more than US $30 billion, according to Bloomberg. But the report of the criminal investigation reignited those worries.
Valeant shares have dropped more than 90% since their record high last year. The company announced Tuesday that it’s seeking flexibility with its creditors. News of the investigation may make that less likely, Bloomberg reported.
Valeant, for its part, says it’s cooperating with US prosecutors.
“Valeant 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,” the company said in a news release. “We do not comment on rumors about investigations, and cannot comment on or speculate about the possible course of any ongoing investigation.”
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Prosecutors allege that Valeant defrauded investors by concealing its close relationship with a now-defunct mail-order pharmacy, Philidor Rx Services, Bloomberg reported. Valeant first drew scrutiny over the relationship last year. It severed its relationship with Philidor in October after reports surfaced of shady tactics the pharmacy allegedly used to gain more insurance reimbursement on Valeant products.
The news of the investigation comes at a bad time for Valeant. Just two days before, the company’s earnings results and an annual forecast had eased investors’ concerns about the company’s debt of more than US $30 billion, according to Bloomberg. But the report of the criminal investigation reignited those worries.
Valeant shares have dropped more than 90% since their record high last year. The company announced Tuesday that it’s seeking flexibility with its creditors. News of the investigation may make that less likely, Bloomberg reported.
Valeant, for its part, says it’s cooperating with US prosecutors.
“Valeant 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,” the company said in a news release. “We do not comment on rumors about investigations, and cannot comment on or speculate about the possible course of any ongoing investigation.”
Related stories:
Troubled Valeant Pharmaceutical reveals new CEO
CEO vows drugmaker will not go bankrupt
