(Adds share fall, details on probe and company)
Aug 10 (Reuters) - U.S. federal prosecutors are investigating whether drugmaker Valeant Pharmaceuticals International Inc defrauded insurers by hiding a relationship with pharmacy Philidor that boosted sales of its drugs, the Wall Street Journal reported, citing people familiar with the matter.
Valeant’s U.S. listed shares were down 12.2 percent at $24 in extended trading on Wednesday.
Neither Valeant nor the U.S. attorney’s office in Manhattan were immediately available for comment.
Lawyers in the U.S. attorney’s office in Manhattan are pursuing a theory that Valeant and Philidor Rx Services LLC allegedly defrauded insurers by concealing their ties, the WSJ said.
It is expected to be the most serious investigation that Valeant currently faces, and could lead to criminal charges against former Philidor executives and Valeant as a company, the Journal added, citing one person. (on.wsj.com/2aMvQwS)
Valeant cut ties with Philidor Rx Services last October after it was revealed that the specialty pharmacy used aggressive tactics to try to increase insurer reimbursement, mostly for dermatology drugs to help the Canadian drugmaker inflate revenue.
The probe revolves around whether the now-defunct Philidor made false statements to insurers about its ties to Valeant, and whether insurers thought Philidor was neutral rather than in the service of Valeant, the Journal reported.
The government lawyers are also looking at certain Philidor business practices, such as rebates and other compensation provided by the pharmacy to customers who used Valeant products, as well as Philidor’s efforts to seek reimbursement from insurers, the WSJ said.
Political concerns about Valeant’s drug price increases and investor scrutiny of its dealings with Philidor dragged down Valeant’s shares last fall.
Reporting by Anya George Tharakan in Bengaluru; Editing by Jonathan Oatis and Matthew Lewis