6 ms·

Pharmacist at center of Valeant scandal accuses drugmaker of 'massive fraud'

45 points by 001sky 11y ago

bedhead 11y ago
Full disclosure: Valeant is my largest short position. 99% of the time, shorting stocks is unemotional. Valeant is much, much different. This company is a CANCER on our society, and I don't say that lightly. It is a microcosm for why we have the most dysfunctional, expensive, and unsustainable healthcare system on the planet. They are leading the charge when it comes to figuring out ways to legally (but unethically) and illegally bilk the public for their own interest. I have studied the company for the past two years and it is absolutely rotten to the core. I hope all of senior management wind up in prison...unfortunately it might only be a couple when the dust settles. I am going to sincerely enjoy this company going supernova, and I might get just as much pleasure watching it take down a bunch of lazy and ethically-challenged fund managers as well. Valeant is going to wreck many people's careers. The ironic thing is that this is good for us in the long-run. This is exactly the kind of wake up call we need to fix our healthcare system.
- randomname2 11y ago
  > I am going to sincerely enjoy this company going supernova, and I might get just as much pleasure watching it take down a bunch of lazy and ethically-challenged fund managers as well. Valeant is going to wreck many people's careers. Notably Ackman has a very large position. The Swiss National Bank also owns 1.3 million Valeant shares. The similarities to Enron are uncanny, as pointed out in the research report that started this all: http://www.citronresearch.com/wp-content/uploads/2015/10/Valeant-Philador-and-RandO-final-a.pdf http://www.citronresearch.com/wp-content/uploads/2015/10/Val...
  - bedhead 11y ago
    Normally I like Citron's work, but when it comes to Valeant he is a total clown. Like most of the delusional defenders such as Ackman, Citron focuses on the wrong things like accounting and channel stuffing (although I believe there is some channel stuffing going on, it's relatively unimportant). Trust me the guy is totally clueless, but he is certainly a useful idiot if there ever was one.
    - mikeyouse 11y ago
      The allegations of channel stuffing were pretty reasonable from the outside.. When Left wrote his report, it was clear that Valeant had extensive relationships with several pharmacies that weren't disclosed -- he couldn't have known that although Valeant didn't own any of them, they were rolling up their financials. His intuition was pretty spot on though, since he felt there must be something shady going on given that Valeant hadn't disclosed their relationship and it was clear they were responsible for hundreds of millions in revenue.
    - deleted 11y ago
      [deleted]
- toomuchtodo 11y ago
  Have you written any online resources regarding this? I'd love to deep dive (and perhaps even short myself, for activist reasons).
  - bedhead 11y ago
    No but there have been enough news stories in the last week or two to get up to speed. Happy to answer any specific questions.
    - deleted 11y ago
      [deleted]
    - chjohasbrouck 11y ago
      What is Valeant doing that is illegal/unethical? After reading the article and your comment I still don't really understand what they did. All I know for sure is that Valeant buys a lot of pharmacies, and one of them accused them of fraud? What are the specifics of what they're doing, and how is it harmful to consumers?
      - toomuchtodo 11y ago
        https://news.ycombinator.com/item?id=10484815 https://news.ycombinator.com/item?id=10484815
  - tortilla 11y ago
    Some good articles here: http://brontecapital.blogspot.com/2015/10/comments-on-blockbuster-valeant.html http://brontecapital.blogspot.com/2015/10/comments-on-blockb...
- seivan 11y ago
  It's funny you should say this! I actually asked a couple of days ago if one should short the fuck out if it https://news.ycombinator.com/item?id=10460488 https://news.ycombinator.com/item?id=10460488
  - toomuchtodo 11y ago
    I must know! Did you then proceed to short the fuck out of it?
    - seivan 11y ago
      Haha, can't find it in the Swedish marketplaces.
- danieltillett 11y ago
  How hard is it these days to actually get the shares to short?
  - jsprogrammer 11y ago
    Why do you need to short if you can just purchase (or sell) options?
    - PhantomGremlin 11y ago
      The price of put options on VRX is extremely high. For example, VRX closed on Friday at $93.77. The cost of a 1 week put at 90 strike was about $5.70. The cost of a 2.5 month put at 90 strike was about $15.00. The cost of a 15 month put at 50 strike was about $10.00. I doubt that VRX will collapse immediately. These things always take a while to play out. With that in mind, look at that last data point. You would have to pay $10 for an option that won't have any value at all unless VRX goes from $94 to under $50 in the next 15 months. It might make more sense to sell a call spread instead of purchasing puts, but the option prices are very high and this stock swings wildly. This is definitely adult swim, the very deep end of the pool. I'm not brave enough to play this stock. It's much like playing Herbalife, where you've got billionaires like Ackman on one side, billionaires like Icahn on the other side. Often the best move for a small investor is to not play at all.
      - jsprogrammer 11y ago
        So take a position that makes money on large swings?
  - deleted 11y ago
    [deleted]
  - bedhead 11y ago
    It's still what's known as "general collateral" - it's not only easy but free to borrow shares. I shorted more shares yesterday.
  - deleted 11y ago
- lifeisstillgood 11y ago
  Genuine question - is not the big downside of shorting that there is a real non-zero risk that there won't be a company to have shares in shortly?
  - deleted 11y ago
    [deleted]
  - ikeboy 11y ago
    Nope; if the company goes bust, you make full profit, because you don't need to return useless shares. See http://www.investopedia.com/ask/answers/03/082803.asp http://www.investopedia.com/ask/answers/03/082803.asp
jjoonathan 11y ago
I remain impressed as ever by the health insurance & pharmaceutical markets' ability to distribute financial rewards to sources of value creation. Speaking of which, even though my libertarian days are long passed on account of forming a realistic picture of what does and does not constitute value creation in the eyes of the market, I never went to the trouble of studying "blackhat" business tactics intentionally. Perhaps I should. Any recommended reading?
- randomname2 11y ago
  I'm curious, what does fraud have to do with "libertarianism"? Don't most libertarians loathe fraud and think it should be cracked down on harder?
  - jjoonathan 11y ago
    If a libertarian took a broad enough view of fraud to object to Valeant's core business tactics then we'd get along just fine. I suspect that most do not. Tactic 1: buying other firms' medicines and then swiftly hiking their prices Tactic 2: exploiting the principal agent problem between insurer and insuree with bribes (err, I mean "coupons") There was a comparison to Enron earlier in this thread. While accounting fraud brought them down, their core business model was legal, compatible with market philosophy, and familiar: Tactic 3: buying up the power generation infrastructure and creating artificial scarcity to ramp prices. For companies that are actively engaging in this sort of nonsense, see telcos. Or Goldman Sachs -- they were in the news a while ago for doing it with Aluminum. Anyway, the fraud is almost incidental, it's the "innovative" business models that drive me nuts. Because at the same time as pharma investors, execs, and lawyers are raking in the cash, Chem PhDs and postdocs are getting paid peanuts if they can find a job at all: http://chemjobber.blogspot.com/2010/07/whats-happening-to-pharmaceutical.html http://chemjobber.blogspot.com/2010/07/whats-happening-to-ph... > To illuminate for US readers, a UK-based PhD chemist such as myself with about 10 years post-PhD experience can expect to earn 35-40k GBP, which translates to about 55-60k USD No, I'm not one, I code now, but I would have chosen differently if the market hadn't hammered so hard to shoo me away from contributing to, IMO, the more important cause. I'm convinced that the non-excludable (and therefore "valueless," per the market's reasoning) goods produced in academia account for a healthy fraction of the value in the pharma and medical industries, and it pains me that the market not only disagrees but strenuously so. It gets its priorities not just wrong but completely backwards. A "circus of values," as one popular philosopher put it.
qj4714 11y ago
I don't understand one thing. All the articles I read about Valeant and Phildor say that Phildor only represents 6% or revenue. Does that mean the other 94% is legitimate and comes from pharmacies where Valeant does not have an option to buy them? That is the piece I don't understand.
- alexhu11 11y ago
  Only 6% percent of Valeant's revenue goes through Philidor. However, this raises HUGE questions about the legitimacy of the other 94% of Valeant's revenue streams. How many other arrangements like this does Valeant have. Is it conducting it's business on its other channels in an above board manner? A huge portion of Valeants growth strategy comes from specialty pharmacies like Philidor. The integrity of the strategy has now been called into question by investors.
Alex3917 11y ago
The real solution is that we need single payer healthcare that only covers generics. Then if people want to experiment with patent medicine, they can get supplemental insurance from the private markets or pay for it out of pocket. Until then the whole system is fucked.
- refurb 11y ago
  Not sure where you're going with this. That would mean that no one would have access to any drug until it had already been on the market for at least 8 or more years, unless they were willing to pay it out of pocket (if they can't afford the insurance). On Medicaid and have HER+ breast cancer? Tough, you can take some horrible chemotherapy that will give you 6 months, not the new HER2 drugs that will give you 5+ years of life. How would that even work?
  - Alex3917 11y ago
    > On Medicaid and have HER+ breast cancer? Tough, you can take some horrible chemotherapy that will give you 6 months, not the new HER2 drugs that will give you 5+ years of life. Which is exactly how it should work. The government should allow limited monopolies as an incentive for innovation, but it shouldn't be subsidizing them with taxpayer dollars. The vast majority of new drugs have few if any benefits over existing drugs, they're just government handouts to the wealthy. So I fail to see how a system that provided the best possible treatments for 99% of health problems for every American at a fraction of the current cost wouldn't be vastly better than our current system.
    - refurb 11y ago
      So I fail to see how a system that provided the best possible treatments for 99% of health problems for every American at a fraction of the current cost wouldn't be vastly better than our current system. If you're excluding patented drugs, you're excluding some of the best possible treatments out there. Also, your statement that "the vast majority of new drugs have few if any benefits over existing drugs" is not true. Some drugs are not any better, but most are better, although many only slightly. You have to realize that similar to tech, not every new drug can be a breakthrough. Most new drugs have incremental benefit, but it expands the boundaries of what's possible. If you look at the treatment of colon cancer, each new drug only added a few months of life, but after 10 years, the benefit had extended to over 5 years.
lifeisstillgood 11y ago
I am coming late to the game but cannot find useful, clear explanations (I read the rather over wrought citron doc ... Is this a genuine stock researcher?) So as I understand it : - valeant sells over priced medical drugs, which are named on a prescription by a doctor (?) but if you Are with insurer X, the insurer requires the druggist To replace expensive named brand with generic alternative. - Valeant "owns"/has crushingly close relationship with Philidor a network of local pharmacies / druggists. - philidor then buys a small druggist in Canada named R&O who then gets orders from all over the country and stops sending the cash to HQ because they were bought for 350k and now have revenue of 69m a few months later - And ... Exactly how does Philidor do this fraud thing? If you are supposed to swap NameBrand out for GenericBrand, how does sending in 69M of invoices for NameBrand help? Philidor / valeant were not supposed to be selling it anyway? How does this coupon thing help? This is one of the annoying things about fraud - it is all simple when you eventually understand it. Ps if anyone cares to explain how one can make and obtain money from having "stolen identity" please post that too ...
- refurb 11y ago
  This is my take (based on other articles I've read): - Most of Valeant's drugs have cheap generic options, so most insurance company's say "no" when a pharmacy tries to fill it, hence it's hard as hell for Valeant to sell their drugs - Valeant forms a cushy relationship with Philidor. Unlike most pharmacies, Philidor puts a LOT of effort into getting the insurance companies to say yes (they just give the drug to the patient before getting paid; if the drug gets denied, they try many others ways to get paid) - Philidor was starting to get shutdown by payers, basically, any request from Philidor was red flagged by the payers to double check to see if something fishy was going on - Philidor also tried to get a pharmacy license in California, but the authorities said no because they lied on who actually owned what (apparently getting a "no" to a license is really bad) - Philidor then decides to buy R&O to get their licenses and their payer contracts. Basically it's a run around, the insurance company will see the script coming from R&O and basically think "ahh.. at least it's not Philidor" - However, Philidor starts playing loose and fast with R&O license even before they closed the deal. Philidor would bill an insurance company using R&O's pharmacy ID, which is a HUGE no-no - R&O sees what's up and says "screw this crap, I'm not going to give Valeant any of the insurance money I have until I get some goddamn answers as to what they are doing" - Valeant (in all it's wisdom) sues R&O for non-payment and R&O says "I never got a invoice from you" and all hell breaks loose as the story unwinds
rjurney 11y ago
I'm always fascinated by scams. As entrepreneurs we look for holes in the system to fix, whereas scammers look for holes to exploit.
kenesom1 11y ago
SIRF's report on October 19 [1] discusses operating structure and entities, many of which are named after chess references. From several articles: "Philidor" ["Francois-Andre Philidor was an 18th century French Chess master"] "BQ6 Media" ["named after the chess shorthand for Bobby Fisher's legendary move against Russian chess master Boris Spassky in 1972"] "End Game LP" ["stage of a chess game when there are few pieces left"] "KGA Fulfillment Services Inc." ["popular chess move is the King's Gambit Accepted, or as it's often referred to in chess notation, KGA."] "Isolani LLC" ["Isolani refers to an isolated queen’s pawn."] "Lucena Holding LLC" ["Lucena position - one of the most famous and important positions in chess endgame theory"] "Back Rank" ["a checkmate move in which a rook or queen takes the king on the back row of the board."] [1] http://sirf-online.org/2015/10/19/hidden-in-plain-sight-valeants-big-crazy-sort-of-secret-story/ http://sirf-online.org/2015/10/19/hidden-in-plain-sight-vale... [2] http://www.theglobeandmail.com/report-on-business/valeants-sales-network-the-firms-and-chess-terms-tied-to-it/article27009058/ http://www.theglobeandmail.com/report-on-business/valeants-s... [3] http://www.propublica.org/article/pharmacies-valeant-affiliates-not-disclosed-california-license-denial http://www.propublica.org/article/pharmacies-valeant-affilia... [4] http://sirf-online.org/2015/10/25/the-kings-gambit-accepted-the-annals-of-fraud/ http://sirf-online.org/2015/10/25/the-kings-gambit-accepted-... [5] https://en.wikipedia.org/wiki/Chess_endgame https://en.wikipedia.org/wiki/Chess_endgame [6] https://en.wikipedia.org/wiki/Lucena_position https://en.wikipedia.org/wiki/Lucena_position
suprgeek 11y ago
I remember when I had first read the gushing profile of "Mike Pearson" http://www.theglobeandmail.com/report-on-business/rob-magazine/how-valeant-became-canadas-hottest-stock/article8889241/?page=all http://www.theglobeandmail.com/report-on-business/rob-magazi... It contained the all important paragraph: "Pearson’s next suggestion was even more daring: Cut research and development spending, the heart of most drug firms, to the bone. “We had a premise that most R&D didn’t give good return to shareholders,” says Pearson. Instead, the company should favour M&A over R&D, buying established treatments that made enough money to matter, but not enough to attract the interest of Big Pharma or generic drug makers" TLDR: Cut R&D, buy successful but smaller drugs and then because of no competition make a killing by jacking up prices. This firm and its nasty business model of profiteering off the backs of sick desperate people, deserve to die. They are no better than vultures that feed on the dying.
TYPE_FASTER 11y ago
How is Valiant different from Uber? They both ignore regulations to serve a market. They both increase prices when there is a demand.

45 points by 001sky 11y ago

Full disclosure: Valeant is my largest short position. 99% of the time, shorting stocks is unemotional. Valeant is much, much different. This company is a CANCER on our society, and I don't say that lightly. It is a microcosm for why we have the most dysfunctional, expensive, and unsustainable healthcare system on the planet. They are leading the charge when it comes to figuring out ways to legally (but unethically) and illegally bilk the public for their own interest. I have studied the company for the past two years and it is absolutely rotten to the core. I hope all of senior management wind up in prison...unfortunately it might only be a couple when the dust settles. I am going to sincerely enjoy this company going supernova, and I might get just as much pleasure watching it take down a bunch of lazy and ethically-challenged fund managers as well. Valeant is going to wreck many people's careers. The ironic thing is that this is good for us in the long-run. This is exactly the kind of wake up call we need to fix our healthcare system.

randomname2 11y ago
> I am going to sincerely enjoy this company going supernova, and I might get just as much pleasure watching it take down a bunch of lazy and ethically-challenged fund managers as well. Valeant is going to wreck many people's careers. Notably Ackman has a very large position. The Swiss National Bank also owns 1.3 million Valeant shares. The similarities to Enron are uncanny, as pointed out in the research report that started this all: http://www.citronresearch.com/wp-content/uploads/2015/10/Valeant-Philador-and-RandO-final-a.pdf http://www.citronresearch.com/wp-content/uploads/2015/10/Val...
- bedhead 11y ago
  Normally I like Citron's work, but when it comes to Valeant he is a total clown. Like most of the delusional defenders such as Ackman, Citron focuses on the wrong things like accounting and channel stuffing (although I believe there is some channel stuffing going on, it's relatively unimportant). Trust me the guy is totally clueless, but he is certainly a useful idiot if there ever was one.
  - mikeyouse 11y ago
    The allegations of channel stuffing were pretty reasonable from the outside.. When Left wrote his report, it was clear that Valeant had extensive relationships with several pharmacies that weren't disclosed -- he couldn't have known that although Valeant didn't own any of them, they were rolling up their financials. His intuition was pretty spot on though, since he felt there must be something shady going on given that Valeant hadn't disclosed their relationship and it was clear they were responsible for hundreds of millions in revenue.
  - deleted 11y ago
    [deleted]
toomuchtodo 11y ago
Have you written any online resources regarding this? I'd love to deep dive (and perhaps even short myself, for activist reasons).
- bedhead 11y ago
  No but there have been enough news stories in the last week or two to get up to speed. Happy to answer any specific questions.
  - deleted 11y ago
    [deleted]
  - chjohasbrouck 11y ago
    What is Valeant doing that is illegal/unethical? After reading the article and your comment I still don't really understand what they did. All I know for sure is that Valeant buys a lot of pharmacies, and one of them accused them of fraud? What are the specifics of what they're doing, and how is it harmful to consumers?
    - toomuchtodo 11y ago
      https://news.ycombinator.com/item?id=10484815 https://news.ycombinator.com/item?id=10484815
- tortilla 11y ago
  Some good articles here: http://brontecapital.blogspot.com/2015/10/comments-on-blockbuster-valeant.html http://brontecapital.blogspot.com/2015/10/comments-on-blockb...
seivan 11y ago
It's funny you should say this! I actually asked a couple of days ago if one should short the fuck out if it https://news.ycombinator.com/item?id=10460488 https://news.ycombinator.com/item?id=10460488
- toomuchtodo 11y ago
  I must know! Did you then proceed to short the fuck out of it?
  - seivan 11y ago
    Haha, can't find it in the Swedish marketplaces.
danieltillett 11y ago
How hard is it these days to actually get the shares to short?
- jsprogrammer 11y ago
  Why do you need to short if you can just purchase (or sell) options?
  - PhantomGremlin 11y ago
    The price of put options on VRX is extremely high. For example, VRX closed on Friday at $93.77. The cost of a 1 week put at 90 strike was about $5.70. The cost of a 2.5 month put at 90 strike was about $15.00. The cost of a 15 month put at 50 strike was about $10.00. I doubt that VRX will collapse immediately. These things always take a while to play out. With that in mind, look at that last data point. You would have to pay $10 for an option that won't have any value at all unless VRX goes from $94 to under $50 in the next 15 months. It might make more sense to sell a call spread instead of purchasing puts, but the option prices are very high and this stock swings wildly. This is definitely adult swim, the very deep end of the pool. I'm not brave enough to play this stock. It's much like playing Herbalife, where you've got billionaires like Ackman on one side, billionaires like Icahn on the other side. Often the best move for a small investor is to not play at all.
    - jsprogrammer 11y ago
      So take a position that makes money on large swings?
- deleted 11y ago
  [deleted]
- bedhead 11y ago
  It's still what's known as "general collateral" - it's not only easy but free to borrow shares. I shorted more shares yesterday.
- deleted 11y ago
lifeisstillgood 11y ago
Genuine question - is not the big downside of shorting that there is a real non-zero risk that there won't be a company to have shares in shortly?
- deleted 11y ago
  [deleted]
- ikeboy 11y ago
  Nope; if the company goes bust, you make full profit, because you don't need to return useless shares. See http://www.investopedia.com/ask/answers/03/082803.asp http://www.investopedia.com/ask/answers/03/082803.asp

jjoonathan 11y ago

I remain impressed as ever by the health insurance & pharmaceutical markets' ability to distribute financial rewards to sources of value creation. Speaking of which, even though my libertarian days are long passed on account of forming a realistic picture of what does and does not constitute value creation in the eyes of the market, I never went to the trouble of studying "blackhat" business tactics intentionally. Perhaps I should. Any recommended reading?

randomname2 11y ago
I'm curious, what does fraud have to do with "libertarianism"? Don't most libertarians loathe fraud and think it should be cracked down on harder?
- jjoonathan 11y ago
  If a libertarian took a broad enough view of fraud to object to Valeant's core business tactics then we'd get along just fine. I suspect that most do not. Tactic 1: buying other firms' medicines and then swiftly hiking their prices Tactic 2: exploiting the principal agent problem between insurer and insuree with bribes (err, I mean "coupons") There was a comparison to Enron earlier in this thread. While accounting fraud brought them down, their core business model was legal, compatible with market philosophy, and familiar: Tactic 3: buying up the power generation infrastructure and creating artificial scarcity to ramp prices. For companies that are actively engaging in this sort of nonsense, see telcos. Or Goldman Sachs -- they were in the news a while ago for doing it with Aluminum. Anyway, the fraud is almost incidental, it's the "innovative" business models that drive me nuts. Because at the same time as pharma investors, execs, and lawyers are raking in the cash, Chem PhDs and postdocs are getting paid peanuts if they can find a job at all: http://chemjobber.blogspot.com/2010/07/whats-happening-to-pharmaceutical.html http://chemjobber.blogspot.com/2010/07/whats-happening-to-ph... > To illuminate for US readers, a UK-based PhD chemist such as myself with about 10 years post-PhD experience can expect to earn 35-40k GBP, which translates to about 55-60k USD No, I'm not one, I code now, but I would have chosen differently if the market hadn't hammered so hard to shoo me away from contributing to, IMO, the more important cause. I'm convinced that the non-excludable (and therefore "valueless," per the market's reasoning) goods produced in academia account for a healthy fraction of the value in the pharma and medical industries, and it pains me that the market not only disagrees but strenuously so. It gets its priorities not just wrong but completely backwards. A "circus of values," as one popular philosopher put it.

qj4714 11y ago

I don't understand one thing. All the articles I read about Valeant and Phildor say that Phildor only represents 6% or revenue. Does that mean the other 94% is legitimate and comes from pharmacies where Valeant does not have an option to buy them? That is the piece I don't understand.

alexhu11 11y ago
Only 6% percent of Valeant's revenue goes through Philidor. However, this raises HUGE questions about the legitimacy of the other 94% of Valeant's revenue streams. How many other arrangements like this does Valeant have. Is it conducting it's business on its other channels in an above board manner? A huge portion of Valeants growth strategy comes from specialty pharmacies like Philidor. The integrity of the strategy has now been called into question by investors.

Alex3917 11y ago

The real solution is that we need single payer healthcare that only covers generics. Then if people want to experiment with patent medicine, they can get supplemental insurance from the private markets or pay for it out of pocket. Until then the whole system is fucked.

refurb 11y ago
Not sure where you're going with this. That would mean that no one would have access to any drug until it had already been on the market for at least 8 or more years, unless they were willing to pay it out of pocket (if they can't afford the insurance). On Medicaid and have HER+ breast cancer? Tough, you can take some horrible chemotherapy that will give you 6 months, not the new HER2 drugs that will give you 5+ years of life. How would that even work?
- Alex3917 11y ago
  > On Medicaid and have HER+ breast cancer? Tough, you can take some horrible chemotherapy that will give you 6 months, not the new HER2 drugs that will give you 5+ years of life. Which is exactly how it should work. The government should allow limited monopolies as an incentive for innovation, but it shouldn't be subsidizing them with taxpayer dollars. The vast majority of new drugs have few if any benefits over existing drugs, they're just government handouts to the wealthy. So I fail to see how a system that provided the best possible treatments for 99% of health problems for every American at a fraction of the current cost wouldn't be vastly better than our current system.
  - refurb 11y ago
    So I fail to see how a system that provided the best possible treatments for 99% of health problems for every American at a fraction of the current cost wouldn't be vastly better than our current system. If you're excluding patented drugs, you're excluding some of the best possible treatments out there. Also, your statement that "the vast majority of new drugs have few if any benefits over existing drugs" is not true. Some drugs are not any better, but most are better, although many only slightly. You have to realize that similar to tech, not every new drug can be a breakthrough. Most new drugs have incremental benefit, but it expands the boundaries of what's possible. If you look at the treatment of colon cancer, each new drug only added a few months of life, but after 10 years, the benefit had extended to over 5 years.

lifeisstillgood 11y ago

I am coming late to the game but cannot find useful, clear explanations (I read the rather over wrought citron doc ... Is this a genuine stock researcher?) So as I understand it : - valeant sells over priced medical drugs, which are named on a prescription by a doctor (?) but if you Are with insurer X, the insurer requires the druggist To replace expensive named brand with generic alternative. - Valeant "owns"/has crushingly close relationship with Philidor a network of local pharmacies / druggists. - philidor then buys a small druggist in Canada named R&O who then gets orders from all over the country and stops sending the cash to HQ because they were bought for 350k and now have revenue of 69m a few months later - And ... Exactly how does Philidor do this fraud thing? If you are supposed to swap NameBrand out for GenericBrand, how does sending in 69M of invoices for NameBrand help? Philidor / valeant were not supposed to be selling it anyway? How does this coupon thing help? This is one of the annoying things about fraud - it is all simple when you eventually understand it. Ps if anyone cares to explain how one can make and obtain money from having "stolen identity" please post that too ...

refurb 11y ago
This is my take (based on other articles I've read): - Most of Valeant's drugs have cheap generic options, so most insurance company's say "no" when a pharmacy tries to fill it, hence it's hard as hell for Valeant to sell their drugs - Valeant forms a cushy relationship with Philidor. Unlike most pharmacies, Philidor puts a LOT of effort into getting the insurance companies to say yes (they just give the drug to the patient before getting paid; if the drug gets denied, they try many others ways to get paid) - Philidor was starting to get shutdown by payers, basically, any request from Philidor was red flagged by the payers to double check to see if something fishy was going on - Philidor also tried to get a pharmacy license in California, but the authorities said no because they lied on who actually owned what (apparently getting a "no" to a license is really bad) - Philidor then decides to buy R&O to get their licenses and their payer contracts. Basically it's a run around, the insurance company will see the script coming from R&O and basically think "ahh.. at least it's not Philidor" - However, Philidor starts playing loose and fast with R&O license even before they closed the deal. Philidor would bill an insurance company using R&O's pharmacy ID, which is a HUGE no-no - R&O sees what's up and says "screw this crap, I'm not going to give Valeant any of the insurance money I have until I get some goddamn answers as to what they are doing" - Valeant (in all it's wisdom) sues R&O for non-payment and R&O says "I never got a invoice from you" and all hell breaks loose as the story unwinds

rjurney 11y ago

I'm always fascinated by scams. As entrepreneurs we look for holes in the system to fix, whereas scammers look for holes to exploit.

kenesom1 11y ago

SIRF's report on October 19 [1] discusses operating structure and entities, many of which are named after chess references. From several articles: "Philidor" ["Francois-Andre Philidor was an 18th century French Chess master"] "BQ6 Media" ["named after the chess shorthand for Bobby Fisher's legendary move against Russian chess master Boris Spassky in 1972"] "End Game LP" ["stage of a chess game when there are few pieces left"] "KGA Fulfillment Services Inc." ["popular chess move is the King's Gambit Accepted, or as it's often referred to in chess notation, KGA."] "Isolani LLC" ["Isolani refers to an isolated queen’s pawn."] "Lucena Holding LLC" ["Lucena position - one of the most famous and important positions in chess endgame theory"] "Back Rank" ["a checkmate move in which a rook or queen takes the king on the back row of the board."] [1] http://sirf-online.org/2015/10/19/hidden-in-plain-sight-valeants-big-crazy-sort-of-secret-story/ http://sirf-online.org/2015/10/19/hidden-in-plain-sight-vale... [2] http://www.theglobeandmail.com/report-on-business/valeants-sales-network-the-firms-and-chess-terms-tied-to-it/article27009058/ http://www.theglobeandmail.com/report-on-business/valeants-s... [3] http://www.propublica.org/article/pharmacies-valeant-affiliates-not-disclosed-california-license-denial http://www.propublica.org/article/pharmacies-valeant-affilia... [4] http://sirf-online.org/2015/10/25/the-kings-gambit-accepted-the-annals-of-fraud/ http://sirf-online.org/2015/10/25/the-kings-gambit-accepted-... [5] https://en.wikipedia.org/wiki/Chess_endgame https://en.wikipedia.org/wiki/Chess_endgame [6] https://en.wikipedia.org/wiki/Lucena_position https://en.wikipedia.org/wiki/Lucena_position

suprgeek 11y ago

I remember when I had first read the gushing profile of "Mike Pearson" http://www.theglobeandmail.com/report-on-business/rob-magazine/how-valeant-became-canadas-hottest-stock/article8889241/?page=all http://www.theglobeandmail.com/report-on-business/rob-magazi... It contained the all important paragraph: "Pearson’s next suggestion was even more daring: Cut research and development spending, the heart of most drug firms, to the bone. “We had a premise that most R&D didn’t give good return to shareholders,” says Pearson. Instead, the company should favour M&A over R&D, buying established treatments that made enough money to matter, but not enough to attract the interest of Big Pharma or generic drug makers" TLDR: Cut R&D, buy successful but smaller drugs and then because of no competition make a killing by jacking up prices. This firm and its nasty business model of profiteering off the backs of sick desperate people, deserve to die. They are no better than vultures that feed on the dying.

TYPE_FASTER 11y ago

How is Valiant different from Uber? They both ignore regulations to serve a market. They both increase prices when there is a demand.