6 ms·

Valeant Sold Some Drugs Twice

43 points by dsri 11y ago

hanniabu 11y ago
What I'm getting from this read is that Valeant is pretty much using these acquisitions to create their own version of a ponzi scheme. Is that right or am I not quite reading this correctly?
- yborg 11y ago
  It seems more correct to say that their real goal was to have a set of "independent" pharmacies (but really not) that would pay high prices for Valeant's drugs but still appear to insurers to be doing so because the pharmacies concluded Valeant was the best supplier on its merits, not because they were secretly controlled by Valeant. Seems like someone should be spending time in Club Fed, but won't happen of course.
  - deleted 11y ago
    [deleted]
r00fus 11y ago
I love that table column names: "sell in", "sell through", "why not both?" Edit: clarity
shkkmo 11y ago
I don't get this. Valeant sold the drugs twice, but only because they: Valeant made the drug Valeant sold the drug to Philidor Valeant bought the drug when it bought Philidor Valeant sold the drug again. The best I can tell, the issue is only that Valeant knew it was going to buy Philidor when it sold Philidor those drugs. I really don't see how this matters. Even the Author seems to admit that it doesn't matter and that the real issue here is how Valeant was allegedly using Philidor to trick insurance companies into paying more for drugs. IMO, that makes the whole article title clickbait.
- shkkmo 11y ago
  > Employees were to first submit paperwork with Philidor’s national provider identifier, or NPI, and if that didn’t work were to then try with the NPIs of partner pharmacies, according to a Philidor training manual. “We have a couple of different ‘back door’ approaches to receive payment from the insurance company,” said the manual, dated October 2014. How is this not insurance fraud?
- eitally 11y ago
  You should read this: http://www.latimes.com/business/la-fi-1101-valeant-pharmacy-20151101-story.html http://www.latimes.com/business/la-fi-1101-valeant-pharmacy-...
eitally 11y ago
As the spouse of someone who was laid off as a result of a Valeant acquisition, I'm torn between hoping they go under and hoping they get a decent board/leadership and start making ethical decisions. Pearson disrupted so many careers through their process of buying patents & firing almost all of the staff of most of these companies he purchased.
- PascalsMugger 11y ago
  It annoys the hell out of me when I see articles referring to Valeant's "acquisition and cost-cutting" strategies. No, they were slashing and burning. What they did to the companies was not "cost cutting", it was corporate raiding plain and simple. I'm hoping to see them burn all the way down so that everybody who invested in them, knowing full well that their whole business plan was shady as hell, loses all the money they invested. It seems we're already 80% the way there, at least.
  - refurb 11y ago
    Don't get me wrong, I think Valeant is shady as hell, but what's the difference between cost-cutting and slashing-and-burning? The companies Valeant purchased did not have a gun to their head and I'm sure they were fairly compensated when purchased. Who cares what Valeant does after the acquisition?
    - PascalsMugger 11y ago
      It's one thing to buy a company and then do layoffs to realize efficiency gains, and another to buy a company essentially for its IP and fire everybody. Sure, it's "cost cutting" taken to its logical extreme. But it's also incredibly wasteful and disruptive. Valeant's was able to overpay for these companies because it was betting that its shady practices would allow it to realize outsize gains for the IP acquired, and that's turning out to be a bad bet. So not only have they gutted numerous companies, disrupting the lives of many researchers and others, but they are also now under a mountain of debt and have a bunch of husks of companies that aren't worth near what they were paid for. It's lose/lose/lose. The only people who made out are the ones who original owned the companies Valeant bought.
kough 11y ago
Can anyone give a background on this story?
kirk21 11y ago
Must be painful for Ackman. He told that the stock price was close to what they had in mind as 'fairly valued' a few months ago...
refurb 11y ago
Anyone familiar with the pharmaceutical industry could tell Valeant wasn't headed anywhere but down. Just take a look at their portfolio of drugs. There is nothing special there. For the most part they were selling brand names drugs in diseases where a generic drug would work just fine. The only reason they made money is because they used every trick in the book to make sure nobody noticed what they were doing. The company was bound to fail at some point in time.
- stck 11y ago
  Did you short them?
  - refurb 11y ago
    Good question! Nope! What's the saying "the markets can stay irrational longer than you can stay solvent"? I've played the biotech markets before and quickly realized I'm not cut out for them!
ndboost 11y ago
as a user of some of their medications, they can go to hell. $950 for a tube of cream for a skin condition (without insurance) and $5 for the tube with insurance. Its crazy. First prescription I got was through philidor and i never saw the cash price for the drug, after Philidor went under they partnered with Walgreens and thats where i saw the cash price for the drug.. holy crap.

43 points by dsri 11y ago

What I'm getting from this read is that Valeant is pretty much using these acquisitions to create their own version of a ponzi scheme. Is that right or am I not quite reading this correctly?

yborg 11y ago
It seems more correct to say that their real goal was to have a set of "independent" pharmacies (but really not) that would pay high prices for Valeant's drugs but still appear to insurers to be doing so because the pharmacies concluded Valeant was the best supplier on its merits, not because they were secretly controlled by Valeant. Seems like someone should be spending time in Club Fed, but won't happen of course.
- deleted 11y ago
  [deleted]

r00fus 11y ago

I love that table column names: "sell in", "sell through", "why not both?" Edit: clarity

shkkmo 11y ago

I don't get this. Valeant sold the drugs twice, but only because they: Valeant made the drug Valeant sold the drug to Philidor Valeant bought the drug when it bought Philidor Valeant sold the drug again. The best I can tell, the issue is only that Valeant knew it was going to buy Philidor when it sold Philidor those drugs. I really don't see how this matters. Even the Author seems to admit that it doesn't matter and that the real issue here is how Valeant was allegedly using Philidor to trick insurance companies into paying more for drugs. IMO, that makes the whole article title clickbait.

shkkmo 11y ago
> Employees were to first submit paperwork with Philidor’s national provider identifier, or NPI, and if that didn’t work were to then try with the NPIs of partner pharmacies, according to a Philidor training manual. “We have a couple of different ‘back door’ approaches to receive payment from the insurance company,” said the manual, dated October 2014. How is this not insurance fraud?
eitally 11y ago
You should read this: http://www.latimes.com/business/la-fi-1101-valeant-pharmacy-20151101-story.html http://www.latimes.com/business/la-fi-1101-valeant-pharmacy-...

eitally 11y ago

As the spouse of someone who was laid off as a result of a Valeant acquisition, I'm torn between hoping they go under and hoping they get a decent board/leadership and start making ethical decisions. Pearson disrupted so many careers through their process of buying patents & firing almost all of the staff of most of these companies he purchased.

PascalsMugger 11y ago
It annoys the hell out of me when I see articles referring to Valeant's "acquisition and cost-cutting" strategies. No, they were slashing and burning. What they did to the companies was not "cost cutting", it was corporate raiding plain and simple. I'm hoping to see them burn all the way down so that everybody who invested in them, knowing full well that their whole business plan was shady as hell, loses all the money they invested. It seems we're already 80% the way there, at least.
- refurb 11y ago
  Don't get me wrong, I think Valeant is shady as hell, but what's the difference between cost-cutting and slashing-and-burning? The companies Valeant purchased did not have a gun to their head and I'm sure they were fairly compensated when purchased. Who cares what Valeant does after the acquisition?
  - PascalsMugger 11y ago
    It's one thing to buy a company and then do layoffs to realize efficiency gains, and another to buy a company essentially for its IP and fire everybody. Sure, it's "cost cutting" taken to its logical extreme. But it's also incredibly wasteful and disruptive. Valeant's was able to overpay for these companies because it was betting that its shady practices would allow it to realize outsize gains for the IP acquired, and that's turning out to be a bad bet. So not only have they gutted numerous companies, disrupting the lives of many researchers and others, but they are also now under a mountain of debt and have a bunch of husks of companies that aren't worth near what they were paid for. It's lose/lose/lose. The only people who made out are the ones who original owned the companies Valeant bought.

kough 11y ago

Can anyone give a background on this story?

kirk21 11y ago

Must be painful for Ackman. He told that the stock price was close to what they had in mind as 'fairly valued' a few months ago...

refurb 11y ago

Anyone familiar with the pharmaceutical industry could tell Valeant wasn't headed anywhere but down. Just take a look at their portfolio of drugs. There is nothing special there. For the most part they were selling brand names drugs in diseases where a generic drug would work just fine. The only reason they made money is because they used every trick in the book to make sure nobody noticed what they were doing. The company was bound to fail at some point in time.

stck 11y ago
Did you short them?
- refurb 11y ago
  Good question! Nope! What's the saying "the markets can stay irrational longer than you can stay solvent"? I've played the biotech markets before and quickly realized I'm not cut out for them!

ndboost 11y ago

as a user of some of their medications, they can go to hell. $950 for a tube of cream for a skin condition (without insurance) and $5 for the tube with insurance. Its crazy. First prescription I got was through philidor and i never saw the cash price for the drug, after Philidor went under they partnered with Walgreens and thats where i saw the cash price for the drug.. holy crap.