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 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, then sank on the CVS and Express Scripts news. CVS, late 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.
"Valeant's drugs are provided to patients through many channels, including traditional retail pharmacies, specialty pharmacies, and directly from health care providers," said Valeant spokeswoman Laurie Little in an e-mailed statement.
Philidor declined to comment on Thursday.
CVS and Express Scripts Holdings manage most of the prescriptions filled under health plans run by the nation's largest insurers. Express Scripts manages prescription benefits for 85 million people.
The move by CVS and Express Scripts will have a direct impact on Valeant, though Philidor accounts for a small portion of the Canadian company's revenue.
In Valeant's detailed presentation on Monday that spelled out its dealings with Philidor, the company said that the pharmacy accounted for about 5.9 percent of its total sales so far this year.
The stock was trading as high as $260 per share in August.