Valeant Pharma compared to Enron with phantom pharmacies

Valeant Pharmaceuticals has been compared to Enron and accused of creating a network of phantom pharmacies to fool auditors. These allegations come from Citron Research which issued a report which says that that it appears that Valeant and the specialty pharmacy Philidor have created the network, and that Philidor appears to own R&O Pharmacy, a company Valeant has accused of improperly withholding payments.

Valeant Chairman and CEO Michael Pearson had told analysts on Monday that his company works with Philidor and, late last year, Valeant had purchased an option to buy that company.

Citron said that it “believes the whole thing is a fraud to create invoices to deceive the auditors and book revenue.”

The drug company denied the allegations.

Philidor, north of Philadelphia in Hatboro, Pa., supplies Valeant skin and other dermatology medicines to patients, sometimes even before an insurance company has agreed to cover the cost of a drug, to help “patients get their medicines more quickly,” according to Valeant. The company said it purchased an option to buy Philidor late last year.

Valeant products include diarrhea drug Xifaxan and toenail-fungus treatment Jublia. It was one of the best performing stocks of the past decade.

Jeffrey Newman represents whistleblowers.