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Valeant severs ties and says the pharmacy is closing shop
Although Valeant’s management had defended its relationship with a specialty pharmacy, Philidor Rx Services, in an investor call on Monday, Oct. 26, it has decided to sever all ties with the company on Oct. 30. This is despite Valeant’s action to set up a board-level investigation of its relationships with the pharmacy, which handles a variety of Valeant products and in which Valeant had made a multimillion-dollar investment, with the possibility of acquiring the company outright. Tellingly, Valeant’s statement on Oct. 30 also said Philidor was shutting down—without Valeant’s more-than-$100 million in prescription revenue flowing through the pharmacy, it apparently has no other business to support it.
Between the investor call and the shutdown, the three largest pharmacy benefit managers (PBMs)—Express Scripts, CVS Health and UnitedHealth (owners of the recently acquired OptumRx PBM)—said that they were severing ties with Philidor, according to press reports. Worrisomely for Valeant, CVS Health said it was severing ties with “four additional pharmacies with which Valeant ‘has a similar relationship,’” according to the Wall St. Journal, although Valeant asserts it has contingency plans and alternative distribution channels. Valeant’s stock price continued to slide during the week; however, the thesis that Valeant was especially dependent on its relationship with specialty pharmacies as a way to prove that it is more than an acquisition engine of other pharma companies remains to be proven.
It’s likely that there will be broader repercussions in the specialty pharmacy channel, however the outcome of the Valeant investigations. The concept of a “captive pharmacy” that exists primarily to push prescriptions through PBMs and payers, overcoming prior authorization, copay and formulary positioning hurdles that those parties impose as a means of controlling drug costs to health plans will be tested in coming months. The National Assn. of Specialty Pharmacy made a point of dissociating its members from Philidor, for obvious reasons; but the fact remains that pharmacies are "special" by self-definition and by having ready access to manufacturers' drugs.