Shares of Valeant Pharmaceuticals International Inc. (NYSE:VRX) suffered late Thursday on news that health chain CVS had severed ties with a specialty pharmacy whose convoluted relationship with Valeant has stirred shareholder unrest in the past week. The news, reported by Dow Jones, comes as executives try to right the ship after a spate of damaging reports.
As Dow Jones reported Thursday, CVS cut Philidor RX from its Caremark program after an audit found the specialty pharmacy "noncompliant" in their agreement. The second-largest pharmacy chain in the country, CVS commands 22 percent of retail pharmacy market share in the U.S. Valeant stock ended the day down 5 percent at $111.51.
Last week Valeant disclosed its business ties with Philidor, a previously obscure specialty pharmacy that distributes a number of Valeant's pharaceuticals and accounts for 7 percent of its revenue. Valeant had purchased a $100 million option to buy Philidor for free in late 2014, a puzzling arrangement that the Canadian drugmaker had yet to act on.
Shareholders reacted negatively on the news last week, and an explosive short seller's report Oct. 21 only aggravated the pain. Despite executives' attempts to clarify Valeant's relationship with Philidor and its network of related pharmacies, shares have sunk more than 50 percent from August highs.
Late Wednesday, the Wall Street Journal reported details of how Philidor employees were encouraged to seek out back-door means for getting prescriptions approved by reluctant insurance companies, including using other pharmacies' identification numbers to mask Philidor's involvement.