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Valeant Unveils Pricing, Distribution Pacts With Walgreens--2nd Update
Name Letzter Veränderung
VALEANT PHARMACEUTICALS INTL O 148.38 19.14 (14.81 %)
WALGREEN BOOTS ALLIANCE ORD 83.31 0.75 (0.91 %)
By George Stahl
Valeant Pharmaceuticals International Inc. on Tuesday announced drug pricing and distribution agreements with Walgreens Boots Alliance Inc. as the pharmaceutical company seeks to lower prices and expand access to its drugs.
Shares of Valeant, down 64% since its August high, jumped 12% to $105.22 in morning trading in New York.
Valeant had been a highflier by acquiring other drugs and drug companies and raising drug prices, as opposed to the traditional pharmaceutical-industry growth method of discovering new drugs through research and development. Since the summer, though, the company has faced questions about its drug pricing, business practices, and accounting and disclosures.
The agreements with Walgreens are aimed at easing anxiety by joining with a recognizable name and the largest pharmacy chain in the U.S. Valeant said it expects the agreements, when fully implemented, to save the health-care system up to $600 million a year and enable consumers to access its products more easily from the more than 8,000 Walgreens U.S. locations, as well as participating independent retailers.
Under a 20-year agreement announced Tuesday, Valeant will reduce prices of its branded prescription-based dermatologic and ophthalmological products by 10%. The reduced pricing will apply to the wholesale list prices of these products and will be phased in over the next six to nine months.
The agreement also covers Valeant's over-the-counter product portfolio, and Valeant said the companies seek to expand the relationship to include other therapeutic areas over time.
The pact essentially allows Walgreens to replace Philidor Rx Services LLC, at least for Valeant's dermatologic and ophthalmological products. Philidor is the Pennsylvania-based pharmacy that came under scrutiny because of its close ties to Valeant and is planning to close shortly.
Separately, Walgreens also has agreed to distribute more than 30 of Valeant's branded products, where generics are available, at generic prices. The agreement covers such products as dermatologic treatment Aldara, hypertension drug Tiazac and diabetes drug Glumetza.
Valeant said the reduced pricing for the branded products, which will be available to all patients beginning in the second half of 2016, is expected to range from 5% to 95%, or a weighted average price decrease of more than 50%.
Valeant's pricing practices drew attention after The Wall Street Journal reported in April that the company raised the prices of two cardiac-care drugs, by 525% and 212%, respectively, after acquiring the rights to the medicines in February.
The company has since said it aims to do fewer deals designed to take advantage of underpricing, and that its revenue growth is driven as much by sales volume as price increases.
Valeant also has relied on "specialty pharmacies," such as Philidor, as a significant distribution channel for its drugs. The specialty pharmacies work to get insurers and pharmacy-benefit managers--essentially middlemen between payers for drugs and pharmacies--to pay reimbursements for Valeant's often high-price drugs, rather than using lower-cost alternatives.
Valeant has said its specialty-pharmacy strategy is "designed to improve patients' access to medications at an affordable price, and to help ensure doctors are able to prescribe the medications they believe are most appropriate for their patients."
Philidor used aggressive tactics to make sure insurers paid for Valeant's often-more-expensive drugs, according to former employees and documents, like using the identification number of a different pharmacy to secure payment if an insurer balked--a practice pharmacy industry officials called unusual.
Valeant didn't discuss its relationship to Philidor until after journalists and investors started raising questions about it, and its ties to Philidor had some features that even the company admitted were unusual--like the fact that it spent $100 million on its option to buy Philidor, and could then complete the acquisition without any further base payment.
Valeant has since cut its ties to Philidor, which will shut down by the end of January. Philidor said in November that it has adhered to all applicable laws and "to the highest standards of ethical business practice." The pharmacy added then that it was working with Valeant to help patients in transferring their prescriptions to other pharmacies.
Write to George Stahl at
george.stahl@wsj.com (END) Dow Jones Newswires
December 15, 2015 09:56 ET (14:56 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.