Former shareholders sue Valeant, alleging “vast fraud”
pharmafile | August 19, 2016 | News story | Medical Communications, Sales and Marketing | Valeant, fraud, lawsuit, t rowe price
Valeant Pharmaceuticals has confirmed that it is being sued by one its former largest shareholders, T Rowe Price, who claim that the company used deceptive measures to mislead shareholders and inflate sales figures.
The lawsuit alleges that Valeant used its mail-order pharmacy Philidor to artificially boost revenues and deceive shareholders on how well the business was performing. Valeant is already under criminal investigation for its dealings with Philidor. Shares tanked almost 90% since this period last year, when its dealings with Philidor and its sharp price increases on its medicines received wide public attention.
The firm suing Valeant previously owned a 6.4% stake in the company, which was worth around $4.5 billion when the stock price was at its highest.
T Rowe Price, and their co-claimants Alleghany, also point the finger at former chief executive Michael Pearson and former chief financial officer Howard Schiller for eradicating “billions of dollars in shareholder value through their misconduct, and are liable for such damages under the federal securities laws.”
The lawsuit goes on: “Defendants attributed the company’s performance to its “innovative” marketing approaches, “outstanding” sales teams, “great leadership” and superior products. However, defendants hid from investors the company’s clandestine network of controlled pharmacies and other deceptive practices that were true drivers of Valeant’s purported growth.
“Defendants’ fraud was so vast in execution and so devastating to investors, patients, physicians and insurers, that media and commentators have dubbed it the “Pharmaceutical Enron”.”
In response, Valeant issued a short statement, indicating that it “intends to defend itself and cannot comment further on ongoing litigation.”
Shares at the company fell 2% at the time of writing.
Sean Murray
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