Solodyn® Profits v. Patients

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While the relationship between Valeant and Philidor is not entirely clear, it appears that Valeant employees worked closely with the pharmacy to maximize their profits at the expense of patients and their insurance companies.

Valeant and Pharmacy
More Intertwined Than Thought

By Jonathan D. Rockoff and Jeanne Whalen for

Around the Phoenix-area offices of mail-order pharmacy Philidor Rx Services LLC, employees said they often ran into a friendly colleague named Bijal Patel who tracked prescriptions. But when the employees got an email from the colleague, they say he used a different name: Peter Parker, the alter ego of Spider-Man.

He was among a few workers at Philidor offices who went by one name in person and another in emails during the past two years, according to three former employees. Mr. Patel and the other people weren't employed by Philidor, though the emails used a Philidor address, these people said. They were employees of drug company Valeant Pharmaceuticals International Inc.

As late as Sunday afternoon, the LinkedIn page for a man named Bijal Patel identified him as manager of access solutions at Valeant in Scottsdale, Ariz. Mr. Patel didn't respond to requests for comment.

The Valeant employees were placed at Philidor while the pharmacy was in its infancy, to provide help on "structures and processes," said a Philidor spokeswoman. She said in a statement that the Valeant employees set up separate Philidor email accounts, under "clearly distinguishable names," to keep "their internal Philidor communications separate from the Valeant communications, primarily to reduce the risk of incorrectly sharing either company's proprietary information."

Valeant, which is hosting an investor conference call on Monday at 8 a.m. EDT to explain its relationship with Philidor and its network of pharmacies, declined to comment.

The use of alternative names by workers at Philidor is one of a number of new details emerging about the relationship between Valeant and the network of specialty pharmacies it uses to distribute drugs. The relationship is at the center of questions that investors have raised about the strength of the drug company's operations and the disclosures of its business ties.

Last week, a short-selling hedge fund accused Valeant of using the pharmacies in an accounting scheme to inflate revenue. The drug company's shares have lost more than half their value since peaking in early August, partly due to the concerns as well as a federal investigation into how the company prices its drugs and helps patients afford them.

Valeant had generally kept mum on its relationship with Philidor before last week, because Valeant said it considered its use of such pharmacies as "one of our competitive advantages."

Last week, Valeant said that it had an option to buy Philidor. Valeant also "categorically" denied the allegations made by the short seller and said it complies fully with all accounting rules.

Interviews with former employees, doctors who prescribe Valeant drugs and patients indicate that the ties between Valeant and Philidor are more interconnected than previously disclosed. The people gave details of how the companies worked together, with Valeant employees working directly in Philidor offices, sometimes using fictional names. The people said this was to conceal the ties so it didn't appear Valeant was using the pharmacy to steer patients to the drug company's products, which Philidor strongly denied.

The people described how Philidor made it easy for patients to get Valeant drugs, even if insurers balked at the high prices, shedding light on some of the complex efforts used by companies like Valeant to sell drugs that are expensive.

Additional information from interviews and public documents raises questions about the ownership of Philidor, and its ties to another pharmacy in a state where it was denied a permit to do business.

Such pharmacies are one tool Valeant has used to fuel its business, instead of relying on the drug industry's traditional but costly investment in research and development to discover new medicines. The pharmacies can steer patients to Valeant's drugs, rather than less-expensive alternatives, and then help negotiate reimbursement with insurers, analysts say.

Use of specialty pharmacies is legal, but Valeant's efforts to secure reimbursement, and general lack of disclosure until recently, could trigger scrutiny from health insurers and regulators, according to analysts.

Philidor Rx Services was formed in Delaware and lists an office in Horsham, Pa., according to corporate registration documents in Delaware and Pennsylvania. It also has offices in Hatboro, Pa.

Andrew Davenport is Philidor's CEO, according to the Philidor spokeswoman. Documents filed with California's Board of Pharmacy in December 2014 and June 2015 list Matthew S. Davenport as Philidor's chief executive. A LinkedIn profile for Matthew Davenport in the Philadelphia area says he works for BQ6 Media Group LLC. The former Philidor employees say BQ6 consulted for Valeant, among other drug companies.

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Solodyn® (minocycline hydrochloride) is a teracycline antibiotic that is prescribed for the treatment of non-nodular moderate to severe acne.

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