Reuters: UnitedHealth spotted 'irregularities' at Valeant-affiliated specialty pharmacy last year

Valeant CEO J. Michael Pearson

The business practices of Philidor--a specialty pharmacy Valeant ($VRX) worked with closely--have been under public scrutiny since a short seller accused the Canadian drugmaker of using the pharmacy to commit fraud. But they've been on the radar at UnitedHealth ($UNH) for a while now.

OptumRx, the group's pharmacy benefits manager, began stopping payments to Philidor more than a year ago after spotting billing irregularities, Reuters reports, citing inside sources. But Philidor kept trying to snag reimbursement, using ID numbers from other affiliated pharmacies to submit claims to OptumRx for Valeant drugs.

Since mid-October, when Citron Research accused Valeant of using Philidor and other specialty pharmacies to inflate its top line with "phantom sales," media reports have turned up several questions about Philidor's operations.

Last week, Bloomberg reported that the pharmacy gave its employees written instructions to change codes on prescriptions to indicate that physicians required or patients requested Valeant's branded drugs rather than less costly generics. Earlier in the week, The Wall Street Journal reported that Valeant employees--placed at Philidor in the pharmacy's early days--used fake names in email communications during their time there.

Valeant has denied Citron's allegations throughout, setting up a task force to investigate the claims. And last Friday, it announced that it had severed all ties with Philidor, which would be shutting down completely.

In the meantime, industry watchers are wondering how the breakup with Philidor will affect Valeant's sales. The Quebec-based drugmaker maintains that Philidor represented just 6.8% of its revenue in Q3, but for some individual products--such as growth engine Jublia--that percentage was much higher, hitting 44%.

And Valeant had planned to expand its relationship with the pharmacy, Bloomberg reported earlier this week. The company had started up a pilot program to use Philidor for some of its Bausch + Lomb eye products, sources told the news service, with the intent of widening that program in the future.

- read the Reuters story

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