* Deal with Walgreens more than replaces Philidor-Valeant CEO
* U.S.-listed shares jump nearly 17 percent
* Deal does not secure easier reimbursement from insurers (Recasts, adds analyst comment)
By Caroline Humer and Vidya L Nathan
Dec 15 (Reuters) - Valeant Pharmaceuticals International Inc on Tuesday said it reached a deal to distribute its drugs through leading pharmacy chain Walgreens Boots Alliance Inc, boosting credibility with wary investors and sending its shares up 17 percent.
Valeant and its Chief Executive Michael Pearson have come under pressure for steep price increases on some of Valeant's drugs and for close ties to a specialty pharmacy that used aggressive methods to overcome insurer barriers to reimbursing its medicines. Valeant's share price had dropped nearly 75 percent in recent months as its actions came under scrutiny from Congress and state and federal prosecutors.
The company said on Tuesday its arrangement with Walgreens would replace and build on sales that it would have booked from specialty pharmacy Philidor Rx Services. Philidor, which is shutting down following accusations of improper billing, accounted for about 7 percent of Valeant sales so far this year.
Wall Street analysts said the deal should help Valeant fill the gap in its revenue as Philidor closes, but acknowledged that insurers may still refuse to cover many of its drugs.
For example, Valeant said it would offer a 10 percent discount off wholesale prices on many of its skin and eye medications, including Jublia and Solodyn. The company did not explain how that would be passed on to consumers.
Consumers would also benefit through lower out-of-pocket costs via co-pay assistance and reduced prices for people whose insurance does not cover the products. Both types of discounts were previously available through Philidor and other retail pharmacies.
The deal also calls for offering 30 brand name drugs at the same price as their generic equivalents, representing a discount of 5 percent to 95 percent through Walgreens pharmacies.
The process for receiving branded products at generic prices was also not immediately clear. Commercial insurers typically direct consumers to generic products through lower co-pays and often will not pay for equivalent branded products.
Valeant "appears to be taking steps to appease some pricing scrutiny," wrote Leerink analyst David Larsen in a research note.
At the same time, the deal does not improve Valeant's reimbursement status with pharmacy benefits companies like Express Scripts Holdings Co or CVS Health Corp.
CVS and Express likely will not agree "to dispense many Valeant drugs they currently exclude from formulary unless there was an even more meaningful overhaul of the pricing structure," Larsen said.
Express Scripts, the nation's largest pharmacy benefit manager, said that its drug reimbursement and coverage policies remain in place. CVS did not have an immediate comment.
Valeant's announcement comes as Pearson prepares to address investors in person on Wednesday at a meeting in New Jersey. Major shareholders have already said they want Pearson to outline how the company will keep growing profits in the wake of recent concerns over its business practices.
In recent weeks, the drugmaker has taken other steps to address some of those concerns, hiring a powerful Washington, DC law firm to respond to inquiries from lawmakers and considering the sale of a contact lens business that has come under antitrust scrutiny, Reuters has reported.
Valeant has opened an investigation into the situation with Philidor, and said the allegations are unproven. Pearson told cable news channel CNBC on Tuesday that he "was unaware of any of the allegations."
The 20-year deal with Walgreens, the biggest U.S. drugstore operator by the number of pharmacies, gives Valeant's skin and eye products access to more than 8,000 outlets.
The products will be sold on consignment and Walgreens will be paid a distribution and dispensing fee. Valeant will take its product directly to Walgreens distribution centers instead of the typical channel of using major drug distributor AmerisourceBergen to reach its pharmacies.
Valeant said it will roll out the discounts over a six to nine-month period, once the deal takes effect in the first quarter of 2016.
Valeant said it expects the deal to provide about $600 million in savings to the American healthcare system. It calculated the figure by multiplying the average selling price of its dermatology and ophthalmology brands and multiplying it by 2015 volume. It added a 50 percent price reduction in the average selling price of its branded products multiplied by 2015 volume. (Reporting by Caroline Humer in New York and Vidya L Nathan in Bengaluru; editing by Sriraj Kalluvila, Michele Gershberg and Bernard Orr)