Caroline Humer http://blogs.reuters.com/caroline-humer Caroline Humer's Profile Thu, 05 Nov 2015 18:00:09 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.5 Valeant tumbles 20 percent http://uk.reuters.com/article/2015/11/05/us-valeant-pharmacies-idUKKCN0SU2EP20151105?feedType=RSS&feedName=everything&virtualBrandChannel=11708 http://blogs.reuters.com/caroline-humer/2015/11/05/valeant-tumbles-20-percent/#comments Thu, 05 Nov 2015 17:20:01 +0000 http://blogs.reuters.com/caroline-humer/?p=822 NEW YORK/BOSTON (Reuters) – Valeant Pharmaceuticals International Inc (VRX.TO: Quote, Profile, Research)(VRX.N: Quote, Profile, Research) shares fell as much as 20 percent on Thursday, building on weeks of steep losses over concerns about its ties to specialty pharmacy Philidor Rx Services and its sharp drug price increases.

Valeant’s U.S.-traded shares hit their lowest since May 2013, falling as low as $73.37, before partly recovering. At midday, the stock was down 10.5 percent to $82.29.

Volume also spiked as the stock, with turnover intensifying after it slipped under $80.

One large investor in Valeant was puzzled by Thursday’s selling, saying that “nothing has materially changed” since a conference call hosted by Bill Ackman, who runs hedge fund Pershing Square Capital Management, last Friday.

On the call, Ackman, one of Valeant’s biggest investors, publicly threw his weight behind Valeant Chief Executive Officer Michael Pearson.

The investor who declined to be identified said Pearson is still the right man to be CEO. “Why would you force out the guy who knows this operation better than anyone else in the middle of this crisis?” he said.

But seeds of doubt appear to have germinated.

The Wall Street Journal published a story on Thursday detailing the thinking of Ackman, who has a more than 6 percent stake in the company.

In the report, Ackman said he had told a Valeant board member that Pearson may have to go.

Ackman was not immediately available for comment. Valeant representatives could not be reached immediately for comment.

Mutual fund managers, in particular, are feeling the pressure to tell clients and their own management they have steered clear of Valeant, something that is exacerbating the selling pressure.

Weitz Investment Management said on Nov. 2 on its website that it had exited its Valeant positions while hedge fund Blue Mountain told investors in its third-quarter letter it had also sold.

Philidor is accused of improperly boosting sales of Valeant drugs.

A U.S. Senate panel launched a bipartisan probe into pharmaceutical pricing on Wednesday, seeking documents from four drugmakers, including Valeant.

The probe and other negative developments have pushed Valeant stock below key technical levels, said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc in Boston.

Valeant “is right in the crosshairs, because it’s the poster boy for the drug-pricing issues,” he said.

The stock has been further pressured by longtime criticism of Valeant’s practices of eliminating jobs and cutting research and development after buying companies, said Peter Mann, portfolio manager at Gluskin Sheff + Associates, which sold its small Valeant position in September.

“They really possess very little in redeeming qualities in the eyes of the public,” Mann said. “The market overall has probably reached its saturation point” with Valeant.

(Reporting by Caroline Humer in New York; Additional reporting by Rod Nickel in Winnipeg, Manitoba and Rodrigo Campos and Caroline Valetkevitch in New York and Svea Herbst-Bayliss in Boston; Editing by Jeffrey Benkoe)

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Valeant shares tumble 20 percent, lowest since May 2013 http://www.reuters.com/article/2015/11/05/us-valeant-pharmacies-idUSKCN0SU2EP20151105?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/caroline-humer/2015/11/05/valeant-shares-tumble-20-percent-lowest-since-may-2013/#comments Thu, 05 Nov 2015 17:09:11 +0000 http://blogs.reuters.com/caroline-humer/?p=820 NEW YORK/BOSTON (Reuters) – Valeant Pharmaceuticals International Inc (VRX.TO: Quote, Profile, Research, Stock Buzz)(VRX.N: Quote, Profile, Research, Stock Buzz) shares fell as much as 20 percent on Thursday, building on weeks of steep losses over concerns about its ties to specialty pharmacy Philidor Rx Services and its sharp drug price increases.

Valeant’s U.S.-traded shares hit their lowest since May 2013, falling as low as $73.37, before partly recovering. At midday, the stock was down 10.5 percent to $82.29.

Volume also spiked as the stock, with turnover intensifying after it slipped under $80.

One large investor in Valeant was puzzled by Thursday’s selling, saying that “nothing has materially changed” since a conference call hosted by Bill Ackman, who runs hedge fund Pershing Square Capital Management, last Friday.

On the call, Ackman, one of Valeant’s biggest investors, publicly threw his weight behind Valeant Chief Executive Officer Michael Pearson.

The investor who declined to be identified said Pearson is still the right man to be CEO. “Why would you force out the guy who knows this operation better than anyone else in the middle of this crisis?” he said.

But seeds of doubt appear to have germinated.

The Wall Street Journal published a story on Thursday detailing the thinking of Ackman, who has a more than 6 percent stake in the company.

In the report, Ackman said he had told a Valeant board member that Pearson may have to go.

Ackman was not immediately available for comment. Valeant representatives could not be reached immediately for comment.

Mutual fund managers, in particular, are feeling the pressure to tell clients and their own management they have steered clear of Valeant, something that is exacerbating the selling pressure.

Weitz Investment Management said on Nov. 2 on its website that it had exited its Valeant positions while hedge fund Blue Mountain told investors in its third-quarter letter it had also sold.

Philidor is accused of improperly boosting sales of Valeant drugs.

A U.S. Senate panel launched a bipartisan probe into pharmaceutical pricing on Wednesday, seeking documents from four drugmakers, including Valeant.

The probe and other negative developments have pushed Valeant stock below key technical levels, said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc in Boston.

Valeant “is right in the crosshairs, because it’s the poster boy for the drug-pricing issues,” he said.

The stock has been further pressured by longtime criticism of Valeant’s practices of eliminating jobs and cutting research and development after buying companies, said Peter Mann, portfolio manager at Gluskin Sheff + Associates, which sold its small Valeant position in September.

“They really possess very little in redeeming qualities in the eyes of the public,” Mann said. “The market overall has probably reached its saturation point” with Valeant.

(Reporting by Caroline Humer in New York; Additional reporting by Rod Nickel in Winnipeg, Manitoba and Rodrigo Campos and Caroline Valetkevitch in New York and Svea Herbst-Bayliss in Boston; Editing by Jeffrey Benkoe)

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U.S. Senate panel probing Valeant, Turing over drug costs http://www.reuters.com/article/2015/11/04/us-usa-congress-drugprices-idUSKCN0ST1S220151104?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/caroline-humer/2015/11/04/u-s-senate-panel-probing-valeant-turing-over-drug-costs/#comments Wed, 04 Nov 2015 17:00:49 +0000 http://blogs.reuters.com/caroline-humer/?p=818 NEW YORK/WASHINGTON (Reuters) – A U.S. Senate panel on Wednesday launched a bipartisan probe into pharmaceutical pricing, seeking documents from four drugmakers including Valeant Pharmaceuticals and Turing Pharmaceuticals, companies embroiled in controversy over price hikes on lifesaving drugs.

The Senate’s Special Committee on Aging also requested information from Retrophin Inc and Rodelis Therapeutics, according to a statement from the panel’s Republican Chairwoman Susan Collins and Claire McCaskill, its top Democrat.

Also on Wednesday, Democratic members of a U.S. House of Representatives investigative committee asked Republicans to call a vote to subpoena Valeant and Turing.

Democratic leaders began calling for investigation of drug prices in September, emboldened by press reports of a more than 5000 percent overnight increase in a toxoplasmosis drug made by Turing and a more than 600 percent increase in a blood pressure treatment from Valeant.

That investigation, along with news that Democratic Presidential candidate Hillary Clinton found the increases “outrageous” and the release of her plan to restrict drugmaker profits, has hurt their stock prices. Drugmakers and their defenders say drugs are priced to help enable discovery and development of innovative new treatments.

The effort has not yet been taken up broadly by Republicans. Investors and analysts have said it would take a wider bipartisan push to possibly change how drugmakers price their medicines.

House investigative committee Republican Chairman Jason Chaffetz, who could authorize an investigation, so far has blocked it. His spokesperson did not immediately respond to request for comment.

Retrophin shares fell 14 percent to $18.67 on Nasdaq. Valeant shares fell over 2 percent to $95.50 on the New York Stock Exchange.

In a letter to Valeant Chief Executive Mike Pearson, the Senate committee chairs requested information on sodium drug Nitropress, which is used to treat high blood pressure. Its price rose by 625 percent to $1,346.62 per vial on the day Valeant acquired the drug, the letter said. It also cited an 820 percent increase to $36,811 for 25 pills of heart drug Isuprel and a 2,949 percent increase to $26,189 for 100 capsules of Cuprimine for rheumatoid arthritis.

Valeant said it planned to cooperate with the committee on the inquiry. Drug prices fluctuate due to factors “including the cost of development and acquisition and complexities in the health care cost reimbursement system,” spokeswoman Laurie Little said in an emailed statement.

Valeant is already the subject of a probe by federal prosecutors in New York and Massachusetts into drug pricing and patient assistance programs, and is also under scrutiny over separate allegations that it used specialty pharmacies to pad its revenue.

The Senate committee also sent a letter to Retrophin requesting information about Thiola, a drug that treats kidney disease, and whose price rose to $30 per tablet from $1.50 after Retrophin acquired licensing rights.

“Pharmaceutical pricing that strikes the right balance between affordability and enabling innovation is an issue of legitimate concern for patients and the industry,” Retrophin director of investor relations Chris Cline said in an emailed statement. The company said it was focused on developing its pipeline of drugs rather than acquiring and re-marketing old therapies.

The Senate committee also said it wanted to hear more about Turing’s Daraprim, an anti-infective drug used to treat toxoplasmosis among other diseases. Earlier this year Turing raised the price on the drug overnight to $750 per pill from $13.50.

Turing did not immediately comment on Wednesday’s probe. In September Turing said it would cut the price of Daraprim, but has not yet done so. The New York state attorney general’s office is also investigating Turing over whether its Daraprim price increases violated antitrust rules.

“The sudden, aggressive price hikes for a variety of drugs used widely for decades affect patients and health care providers and the overall cost of health care,” Collins said in a statement, adding that the Senate committee is probing the increases given the potential harm to patients.

(Reporting by Caroline Humer in New York and Sarah Lynch and Toni Clarke in Washington D.C.; Editing by Meredith Mazzilli)

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Valeant sends letter to doctors, seeks to reassure over pharmacy ties http://www.reuters.com/article/2015/11/03/us-valeant-pharmacies-healthcare-exclusi-idUSKCN0SR2J820151103?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/caroline-humer/2015/11/03/valeant-sends-letter-to-doctors-seeks-to-reassure-over-pharmacy-ties/#comments Tue, 03 Nov 2015 00:50:11 +0000 http://blogs.reuters.com/caroline-humer/?p=814 NEW YORK (Reuters) – Valeant Pharmaceuticals International Inc sought to reassure doctors on Monday that the company’s decision to cut ties to a controversial specialty pharmacy would not disrupt doctors’ ability to prescribe the company’s drugs to patients.

In a letter to healthcare professionals seen by Reuters, Chief Executive Officer Michael Pearson said that Valeant would pay for the cost of its products through Nov. 8 and make sure patients could fill their prescriptions with no out-of-pocket expenses, wherever possible. Patients on government-run health plans such as Medicare are not eligible.

Pearson said that Valeant’s former partner pharmacy, Hatboro, Pennsylvania-based Philidor Rx Services, will file no further insurance claims.

Philidor, which almost exclusively handled prescriptions for Valeant medications, has been accused of improperly pressing insurers for reimbursement for the drugs after they were dispensed to patients.

Valeant said on Friday it was cutting ties with Philidor, effectively shutting down the pharmacy’s operations, as Valeant investigates whether Philidor engaged in any illegal activity.

“We know many doctors and patients were concerned about the recent allegations surrounding Philidor’s business practices, and so were we,” Pearson said in the letter.

Valeant’s stock has plunged more than 40 percent since Oct. 21, when a report by a short seller raised questions about Valeant’s relationship with Philidor.

After its role in the transition plan is complete, Philidor will wind down its operations and let go of its employees over the coming weeks, according to a statement from Philidor.

“We remain steadfast that Philidor has adhered not only to all applicable laws but to the highest standards of ethical business practice,” the Philidor statement said.

As part of the transition plan outlined in Valeant’s letter to doctors, Valeant will continue to rely on Philidor to complete a number of minor tasks, including providing an option for certain patients to pay cash for drugs they would previously have claimed on insurance, and contacting patients about refills, according to the letter.

Philidor will continue to dispense Valeant prescriptions for the next week and may dispense some beyond that, according to Philidor’s statement.

“We plan to replace Philidor over the next few weeks with one or more other specialty pharmacies to ensure continuity of this cash pay program,” the letter said.

After Nov. 8, Valeant is developing a program that will be available through major drugstore chains and independent pharmacies.

“Over the next few months, we will work to develop a new, more comprehensive program to ensure your patients can continue to have access to Valeant’s products at affordable prices,” the letter said.

“This decision will certainly have a near-term impact on Valeant’s revenues and profitability,” an RBC Capital Markets analyst said of Valeant’s plan to cut off Philidor. “Having said this, we expect that the company will maintain some portion of these sales as Valeant will be able to transition a portion of this business to traditional distribution channels.”

(Reporting by Carl O’Donnell and Caroline Humer; Editing by Michele Gershberg and Bill Rigby)

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Exclusive – Valeant sends letter to doctors, seeks to reassure over pharmacy ties http://uk.reuters.com/article/2015/11/03/uk-valeant-pharmacies-healthcare-exclusi-idUKKCN0SR2J920151103?feedType=RSS&feedName=everything&virtualBrandChannel=11708 http://blogs.reuters.com/caroline-humer/2015/11/03/exclusive-valeant-sends-letter-to-doctors-seeks-to-reassure-over-pharmacy-ties/#comments Tue, 03 Nov 2015 00:49:42 +0000 http://blogs.reuters.com/caroline-humer/?p=816 NEW YORK (Reuters) – Valeant Pharmaceuticals International Inc (VRX.N: Quote, Profile, Research) sought to reassure doctors on Monday that the company’s decision to cut ties to a controversial speciality pharmacy would not disrupt doctors’ ability to prescribe the company’s drugs to patients.

In a letter to healthcare professionals seen by Reuters, Chief Executive Officer Michael Pearson said that Valeant would pay for the cost of its products through Nov. 8 and make sure patients could fill their prescriptions with no out-of-pocket expenses, wherever possible. Patients on government-run health plans such as Medicare are not eligible.

Pearson said that Valeant’s former partner pharmacy, Hatboro, Pennsylvania-based Philidor Rx Services, will file no further insurance claims.

Philidor, which almost exclusively handled prescriptions for Valeant medications, has been accused of improperly pressing insurers for reimbursement for the drugs after they were dispensed to patients.

Valeant said on Friday it was cutting ties with Philidor, effectively shutting down the pharmacy’s operations, as Valeant investigates whether Philidor engaged in any illegal activity.

“We know many doctors and patients were concerned about the recent allegations surrounding Philidor’s business practices, and so were we,” Pearson said in the letter.

Valeant’s stock has plunged more than 40 percent since Oct. 21, when a report by a short seller raised questions about Valeant’s relationship with Philidor.

After its role in the transition plan is complete, Philidor will wind down its operations and let go of its employees over the coming weeks, according to a statement from Philidor.

“We remain steadfast that Philidor has adhered not only to all applicable laws but to the highest standards of ethical business practice,” the Philidor statement said.

As part of the transition plan outlined in Valeant’s letter to doctors, Valeant will continue to rely on Philidor to complete a number of minor tasks, including providing an option for certain patients to pay cash for drugs they would previously have claimed on insurance, and contacting patients about refills, according to the letter.

Philidor will continue to dispense Valeant prescriptions for the next week and may dispense some beyond that, according to Philidor’s statement.

“We plan to replace Philidor over the next few weeks with one or more other speciality pharmacies to ensure continuity of this cash pay program,” the letter said.

After Nov. 8, Valeant is developing a programme that will be available through major drugstore chains and independent pharmacies.

“Over the next few months, we will work to develop a new, more comprehensive program to ensure your patients can continue to have access to Valeant’s products at affordable prices,” the letter said.

“This decision will certainly have a near-term impact on Valeant’s revenues and profitability,” an RBC Capital Markets analyst said of Valeant’s plan to cut off Philidor. “Having said this, we expect that the company will maintain some portion of these sales as Valeant will be able to transition a portion of this business to traditional distribution channels.”

(Reporting by Carl O’Donnell and Caroline Humer; Editing by Michele Gershberg and Bill Rigby)

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Valeant says Philidor shutting down as it cuts ties http://www.reuters.com/article/2015/10/30/us-valeant-pharmacies-idUSKCN0SO12W20151030?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/caroline-humer/2015/10/30/valeant-says-philidor-shutting-down-as-it-cuts-ties/#comments Fri, 30 Oct 2015 15:50:20 +0000 http://blogs.reuters.com/caroline-humer/?p=812 By Caroline Humer and Svea Herbst-Bayliss

(Reuters) – Valeant Pharmaceuticals International (VRX.TO: Quote, Profile, Research, Stock Buzz) said on Friday that it is cutting ties with pharmacy Philidor Rx Services and that the pharmacy was shutting down.

The move was part of a defense to allay concerns about the downside of its dealings with that pharmacy the morning after big pharmacy chains said they would cut it from their networks.

Valeant also said it would bolster its internal investigation into the matter by adding to the team an outside lawyer who once worked in the U.S. Department of Justice.

The drugmaker’s move comes amid growing pressure from investors after Valeant disclosed two weeks ago that it was under investigation by the U.S. government over its patience assistance program and drug pricing and distribution.

Influential short-seller Citron Research was one of the first critics to call the company out on Philidor in an Oct 20 report, saying Valeant was using the pharmacy set-up to inflate revenue. Valeant has denied any wrongdoing.

Valeant disclosed this week that it had paid $100 million for an option to buy the business. Bloomberg on Thursday detailed wrongdoing in its processing of medical claims, building on earlier reports about business practices.

Later Thursday, three top U.S. drug benefit managers, who administer prescription medicine benefits for health plans, said they would no longer work with the pharmacy. Express Scripts (ESRX.O: Quote, Profile, Research, Stock Buzz), CVS Health (CVS.N: Quote, Profile, Research, Stock Buzz) and OptumRx, part of UnitedHealth Group Inc (UNH.N: Quote, Profile, Research, Stock Buzz), said they made the decision after conducting audits of the pharmacy.

Philidor will be shutting down operations as soon as possible, Valeant said.

Bill Ackman, whose Pershing Square Capital Management has a 6.3 percent stake in Valeant, told investors on Friday that “life will go on” for the company as it continues to sell high-demand products like Bausch & Lomb contact lenses.

“We think the Valeant business is quite robust,” Ackman said on a widely attended conference call. He said shares are undervalued.

“One criticism of (Valeant Chief Executive Mike Pearson) has been that he is so disciplined on costs that he could be seen as being a little cheap on hiring on the PR side,” Ackman said.

The hedge fund swept up 2.1 million additional Valeant shares last week as the stock plummeted, making Pershing Square the company’s second-largest shareholder, leapfrogging asset manager T. Rowe Price.

Valeant shares fell 9.1 percent Friday and remained off during Ackman’s conference call, trading at $101.31. They have given up more than a third of their value since the company disclosed that Philidor pharmacy distributed drugs making up 6-percent of Valeant revenue this year, and are well off from their peak on Aug. 5 of $263.70.

Bloomberg reported on Thursday that 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.

‘LOST CONFIDENCE IN PHILIDOR’

Philidor first disclosed less than two weeks ago that it was using a pharmacy called Philidor, which works with a network of pharmacies including one called R&O Pharmacy that is also involved in lawsuits with Valeant over nonpayment and other issues.

“We have lost confidence in Philidor’s ability to continue to operate in a manner that is acceptable to Valeant,” Chief Executive Michael Pearson said in a statement. “Operating honestly and ethically is our first priority, and you have my absolute commitment that we will make it right.”

Valeant said that former U.S. Deputy Attorney General Mark Filip had been appointed to advise a committee that it formed earlier this week to look into the allegations related to the company’s association with Philidor. Filip works for Kirkland & Ellis.

Philidor accounted for 6.8 percent of Valeant’s total revenue in the third quarter and 5.9 percent so far this year. The drugmaker said it intended to develop a plan to ensure minimal disruption to patients’ access to drugs.

Valeant shares have lost more than half their value since September as the company has come under attack on several fronts. U.S. prosecutors are also investigating the company over drug pricing, a hot issue in the U.S. presidential campaign.

Valeant was until recently one of the most popular healthcare stocks among investors, with its model of rapid acquisition-driven growth. Its abrupt slide from market darling to a company under fire has weighed heavily on ValueAct Partners and Pershing Square, two well known U.S. activist funds.

Short-seller Citron Research tweeted Friday that the shares of Valeant have a better chance of going to zero than Herbalife Ltd (HLF.N: Quote, Profile, Research, Stock Buzz).

Citron said: “$VRX has a better chance of going to 0 than $HLF EVER will. Citron to update full story on Monday. Dirtier than anyone has reported!!”

(Additional reporting by Ben Hirschler in London and Shivam Srivastava in Bengaluru; Editing by David Goodman and Nick Zieminski)

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CVS, Express Scripts drop Valeant’s Philidor; stock dives http://www.reuters.com/article/2015/10/29/valeant-pharmacies-shareholders-idUSL3N12T5VA20151029?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/caroline-humer/2015/10/29/cvs-express-scripts-drop-valeants-philidor-stock-dives/#comments Thu, 29 Oct 2015 21:22:09 +0000 http://blogs.reuters.com/caroline-humer/?p=810 Oct 29 (Reuters) – Shares of Valeant Pharmaceuticals Inc.
fell further on Thursday after CVS Health Corp and Express
Scripts dropped Philidor Rx from their networks in a sign the
fall-out from the drugmaker’s connection with the specialty
pharmacy is spreading.

Philidor Rx, the speciality pharmacy used by Valeant, is at
the center of accusations lodged by a short-seller last week
that Valeant inflated revenues – allegations that sent Valeant
shares into a tailspin.

The stock recovered some of its losses, and was trading
higher through most of Thursday until CVS, late in the trading
session, 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.

Valeant’s New York traded shares fell 4.7 percent to $111.50
at the close. The stock was trading as high as $260 per share in
August.

Express Scripts, later on Thursday, said it too was ending
its ties to Philidor.

The CVS announcement came after mutual fund manager Ruane,
Cunniff & Goldfarb Inc., sent a letter to its own investors
about the Valeant saga. The Sequioa Fund, which the mutual fund
manages, owns 9.93 percent of Valeant and is the company’s
largest shareholder.

While the letter is largely a defense of Valeant’s
practices, it says that the company needs to move faster with
paying down its debt. It also points out that Valeant’s
aggressive business practices have “pushed boundaries,” and that
the company needs to better manage its reputation.

“We would stress the importance of taking a more systemic
approach to managing business practices with an eye on the
company’s long-term corporate reputation,” said the letter dated
Oct. 28 and signed by Ruane, Cunniff & Goldfarb President Robert
Goldfarb and Executive Vice President David Poppe.

Separately, two of the five independent directors of the
Sequioa Fund resigned over the weekend, the Wall Street Journal
reported on Thursday, citing the board’s chairman. Reuters could
not immediately reach the chairman, Roger Lowenstein.

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

(Additional reporting by Vidya Nathan; Editing by Cynthia
Osterman, Nick Zieminski and Andrew Hay)

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Anthem shares falls as Obamacare business hampers profit http://www.reuters.com/article/2015/10/28/us-anthem-results-idUSKCN0SM13320151028?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/caroline-humer/2015/10/28/anthem-shares-falls-as-obamacare-business-hampers-profit/#comments Wed, 28 Oct 2015 15:05:03 +0000 http://blogs.reuters.com/caroline-humer/?p=808 By Caroline Humer

(Reuters) – Health insurer Anthem Inc (ANTM.N: Quote, Profile, Research, Stock Buzz) said on Wednesday that its Obamacare insurance business is being hampered by lower-than-anticipated enrollment due to fewer applicants than expected and cheaper premium rates at competitors.

Anthem has been one of the biggest and most profitable insurers in the new individual market, which was overhauled in 2014 with new government subsidized plans sold on exchanges created under Obamacare. Now Anthem says that business will drag on profit growth in 2016 and could even affect its long-term 2018 financial target.

The comments from the second-largest U.S. health insurer came in its third-quarter financial report, which showed that other government-based businesses had outperformed expectations.

Shares of Anthem were down 5.1 percent at $137.35 in morning trading. Cigna Corp (CI.N: Quote, Profile, Research, Stock Buzz), which Anthem has announced plans to buy, was down 3.2 percent while shares of Aetna Inc (AET.N: Quote, Profile, Research, Stock Buzz), which reports on Thursday, were down 2.8 percent.

“We’re trending the wrong direction on enrollment,” Anthem Chief Financial Officer Wayne DeVeydt told investors on a conference call. The company lost 69,000 exchange customers during the quarter, ending with 824,000 customers. It has 1.75 million total individual customers.

Anthem, which operates Blue Cross Blue Shield plans in more than a dozen states, said it expects continued enrollment declines in the fourth quarter and that 2016 will be weak as competitors undercut prices. After that, it is counting on improvements in 2017 and 2018 when it expects to be able to compete better on prices.

Many of its individual customers buy their insurance on the exchanges created under President Barack Obama’s national healthcare reform law and receive subsidies from the government aimed at making it more affordable. The government expects about 9.1 million people to have this insurance at the end of 2015, a lower target than the 15 million it once aimed for, and for next year expects 10 million people to enroll.

Earlier this week, the U.S. government said that in the 37 states where it runs exchanges, the monthly premium rate of the benchmark health insurance plan will increase 7.5 percent on average.

DeVeydt said the company was not seeing what hospitals attested to this week: patients dropping coverage because of premium prices.

Two weeks ago, UnitedHealth Group Inc (UNH.N: Quote, Profile, Research, Stock Buzz) disappointed investors when it told them the individual business was cutting into profit this year. Unlike Anthem, it said it expected 2016 to improve.

Leerink Partners analyst Ana Gupte described Anthem’s commentary on the call as being “very cautious” and noted the pressure from market share losses to other plans that had priced below them in 2016.

Anthem said its other businesses did well as more people enrolled for its government plans in Medicare for the elderly and disabled and Medicaid for lower-income families. Medicaid enrollment rose by 786,000 members in the third quarter.

Anthem said earnings rose to $654.8 million, or $2.43 per share, from $630.9 million, or $2.22 per share, a year earlier.

The company said spending on medical claims as a percentage of premiums rose to 83.6 percent from 82.5 percent a year ago, due to expenses in its individual business. The metric is keenly watched for signs of rising costs.

On an adjusted basis, Anthem earned $2.73 per share, well above analysts’ average estimate of $2.33 according to Thomson Reuters I/B/E/S.

Revenue rose to $19.77 billion from $18.37 billion. Analysts were expecting revenue of $19.64 billion.

The company also forecast full-year profit of $10.10-$10.20 per share, below analysts’ expectations of $10.22.

(Reporting by Caroline Humer in New York and Amrutha Penumudi in Bengaluru; Editing by Savio D’Souza and Matthew Lewis)

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From pilot to profit-maker, Valeant’s pharmacy rose quickly http://www.reuters.com/article/2015/10/26/us-valeant-pharmacies-philidor-idUSKCN0SK2SB20151026?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/caroline-humer/2015/10/26/from-pilot-to-profit-maker-valeants-pharmacy-rose-quickly/#comments Mon, 26 Oct 2015 22:56:14 +0000 http://blogs.reuters.com/caroline-humer/?p=806 NEW YORK (Reuters) – The pharmacy at the center of suspicions over Valeant Pharmaceuticals International Inc’s (VRX.TO: Quote, Profile, Research, Stock Buzz) (VRX.N: Quote, Profile, Research, Stock Buzz) business practices began as a small pilot project two years ago and quickly grew to account for 7 percent of the drugmaker’s revenue.

Valeant disclosed on Monday details of its relationship with Pennsylvania-based Philidor Rx Services, defending the pharmacy against allegations of illegal activity while pledging to review the business carefully.

Few Valeant investors had heard of Philidor until last week, when influential short-seller Citron Research said it was being used to create “phantom accounts” and inflate the drugmaker’s revenue. Valeant immediately denied the allegations, but shares in the company tumbled as investors questioned its pharmacy ties.

“When you … construct an unusually complex and not transparent way of doing things, the first question is: ‘Why didn’t you do it the standard easy way?’,” said Erik Gordon, a professor at the University of Michigan’s law and business schools.

Valeant explained on Monday that the pharmacy began as a pilot under Medicis Pharmaceutical Corp, a maker of anti-wrinkle medicines and facial fillers that Valeant acquired in 2012. By January 2013, Valeant began studying how to build up the program, known at the time as the Medicis Alternate Fulfillment Program.

The pharmacy passed on discounts paid for by Valeant to patients with commercial insurance, often reducing their out-of-pocket costs to zero and helping them to pay for medicines that they could not otherwise afford. When the patient was covered, Valeant would bill insurance companies for reimbursement.

This process effectively denied patients access to cheaper or alternative drugs and circumvented the way health insurers typically pay pharmacies for drugs.

The program grew from distributing two drugs to at least 10 Valeant medications, including steroid cream Locoid and acne treatment Solodyn, Valeant said on Monday. Its biggest success may be distribution of the toenail fungus treatment Jublia, as Philidor now handles 44 percent of the drug’s sales.

Philidor now is licensed in 46 states and the District of Columbia, and also distributes drugs through affiliates in California, Florida, New Jersey, South Carolina and Texas. The company said it was ready to cooperate with Valeant’s committee reviewing its business.

“Philidor’s relationship with Valeant has benefited countless patients by ensuring they receive their medication quickly and efficiently,” Philidor said in a statement. Philidor’s rapid rise led Valeant to spend $100 million in late 2014 on a 10-year option to buy the company for $0. The deal terms include other target-based payments of up to $133 million, $33 million of which have already been paid, it said.

Valeant said that Philidor was considering looking to other drugmakers to expand its business model, and the purchase option was meant to stabilize its ties to the distributor. As part of their agreement, Valeant members sit on a joint steering committee with Philidor management, and the drugmaker has the right to influence hiring of key personnel, though it cannot replace the chief executive or management.

“We do not own or control Philidor,” Valeant board member and former Chief Financial Officer Howard Schiller said during the conference call.

The size of the purchase option was below the company’s standard for disclosure, Valeant said. Together with the fact that Valeant accounted for Philidor revenue as intercompany sales, the pharmacy dealings were undetectable in its quarterly financial reports.

In order to comply with accounting standards, Valeant said that it consolidates Philidor revenue as its own, and also that of other specialty pharmacies in the network. That includes R&O Pharmacy, a California specialty pharmacy that is part of Philidor’s network. In recent months, Valeant sent a collection letter to R&O for not paying it for medicines distributed through its network. R&O has since filed suit against Valeant. Philidor also has an option to acquire Isolani, another specialty pharmacy. That pharmacy in turn owns a 10 percent stake in and the option to acquire the rest of R&O. Isolani provides management and administrative services to R&O while Philidor provides back end services, Valeant said.

The intertwined companies had employees who worked for both Valeant and Philidor, the Wall Street Journal reported on Monday. Valeant did not address that point, but said that the board committee would look into that issue.

Charles Elson, a corporate governance expert at the University of Delaware, said that the committee will likely take weeks or months to report on its findings.

“They believe there’s a problem. That’s really all we can say for sure,” Elson said.

(Reporting by Caroline Humer; Editing by Michele Gershberg and Bill Rigby)

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Valeant calls for SEC investigation into short-seller’s actions http://www.reuters.com/article/2015/10/26/us-valeant-pharmacies-idUSKCN0SK1FZ20151026?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/caroline-humer/2015/10/26/valeant-calls-for-sec-investigation-into-short-sellers-actions/#comments Mon, 26 Oct 2015 12:56:43 +0000 http://blogs.reuters.com/caroline-humer/?p=804 By Caroline Humer and Euan Rocha

(Reuters) – Drugmaker Valeant Pharmaceuticals International Inc said on Monday it has asked U.S. securities regulators to investigate a short-seller’s “completely untrue” allegation that the company used its ties with a specialty pharmacy to inflate revenue, and said it would conduct a review of its pharmacy network.

Laval, Quebec-based Valeant fired back in a conference call with investors and analysts after the report by Citron Research, run by Andrew Left, hammered Valeant’s stock last week.

“His motivation is the same as one who runs into a crowded theater and falsely yells fire. He wanted people to run,” Valeant Chief Executive Mike Pearson said. “He intentionally designed the report to frighten our shareholders to drive down the price of our stock so he could make money for his short-selling.”

Valeant, whose U.S.-listed shares were down as much as 14 percent in premarket trading before paring losses to 6 percent, also said a board review had found that the company was in compliance with the law on revenue recognition from drugs sold through the specialty pharmacy, Philidor.

It said it would set up an ad-hoc committee to look into allegations related to the company’s association with specialty pharmacy distributor Philidor.

Valeant’s lead director Robert Ingram said the company’s board has “complete and total faith” in Pearson.

Valeant’s link to Philidor and its option to buy the company came under scrutiny after a New York Times report said that Valeant and other drugmakers were using specialty drug distributors to circumvent barriers to raising prices.

Valeant has said it properly accounts for sales through its pharmacy partners and only books revenue once one of its medicines reaches a patient.

Citron’s Andrew Left did not immediately respond to a request for comment.

(Reporting by Caroline Humer in New York, Euan Rocha in Toronto and Rod Nickel in Winnipeg, Manitoba; additional reporting by Michael Flaherty in New York; Editing by Nick Zieminski)

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