UPDATE 5-CVS, Express Scripts drop Valeant's Philidor; stock dives

Thu Oct 29, 2015 6:36pm EDT
 
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(Adds after hours stock move, CVS, Express details, Valeant's Philidor revenue, Bloomberg Philidor story, Valeant comment)

By Michael Flaherty and Caroline Humer

Oct 29 (Reuters) - Valeant Pharmaceuticals Inc. sustained hits on several fronts on Thursday after CVS Health Corp and Express Scripts dropped Philidor from their networks in a sign the fallout from the drugmaker's connection with the specialty pharmacy is spreading.

The moves by the nation's two largest pharmacy benefit managers whacked Valeant shares before the market close, and pushed them 10 percent lower to $99 after hours.

After coming under pressure this summer, Valeant's stock plunged last week after short-seller Citron Research said that the company was using its drug distributor, Philidor Rx, to inflate revenue numbers.

About a dozen Valeant officials held a conference call on Monday to address the accusations, which helped ease pressure on the company's stock. Valeant said it properly accounts for sales through its pharmacy partners and only books revenue once one of its medicines reaches a patient.

Valeant's stock recovered throughout the week than sank on the CVS and Express Scripts news. CVS, late on Thursday, said its Caremark program was dropping Philidor. CVS took the step following an audit of Philidor, citing "noncompliance" with its provider agreement, the company said.

Shortly after the market close, Express Scripts said it too was ending its ties to Philidor.

CVS did not explain the "noncompliance" further when contacted by Reuters. Bloomberg on Thursday said Philidor has altered doctors' orders to wring more payment out of insurers, according to former employees and an internal document, which details how to proceed with a prescription for certain Valeant drugs after they have been rejected.   Continued...