Shares of Valeant Pharmaceuticals International (VRX) sank Thursday after drugstore giant CVS Health (CVS) dropped one of the drugmaker’s partners from the network used by CVS’ Caremark pharmacy benefit unit.
CVS said it terminated Philidor Rx Services, a specialty pharmacy under scrutiny over its business relationship with Valeant, after an internal audit found evidence of “noncompliance with the terms of its provider agreement.”
Philidor could not immediately be reached for comment on the action.
Valeant shares, which have lost more than 50% of their value in recent months, closed down 4.7% at $111.50.
The CVS decision marks the latest in a series of blows that have hit Canada-based Valeant’s finances and reputation. Federal prosecutors recently subpoenaed the company for information on its drug-pricing and distribution policies. Washington lawmakers are examining steep price hikes in two heart medications that joined the drugmaker’s portfolio as the result of corporate acquisitions.
Separately, short seller Andrew Left’s Citron Research issued a report last week that accused Valeant of creating “phantom accounts” as part of a purported “fraud to create invoices to deceive the auditors and book revenue.” The allegations targeted Valeant’s ties to a network of specialty pharmacies that distribute its medications.
The company has denied any wrongdoing.
Trying to quell investor concern, Valeant on Monday disclosed accounting details and other information about its ties to Philidor, the Pennsylvania-based specialty pharmacy the company has an option to buy.