Valeant Pharmaceuticals' shares have slumped by almost 10 per cent today following reports it’s the target of a criminal probe.
The investigation relates to whether Valeant hid its relationship with a specialty mail-order pharmacy that helped boost its drug sales.
It's alleged Valeant defrauded insurers by hiding its close relationship with the now defunct Philidor, the Wall Street Journal reported.
The embattled drugmaker – whose shares have lost almost 90 per cent of their value over the last 12 months – said it’s cooperating with the probe though didn’t confirm details on the nature of the investigation.
In October last year Valeant disclosed it was cooperating with the Manhattan US Attorney’s office over an investigation into its patient assistance programmes, drug distribution, and pricing decisions.
In a statement released after the WSJ report, Valeant said:
Valeant previously disclosed in October 2015 that the United States Attorney's Office for the Southern District of New York commenced an investigation involving Valeant.
We have been fully cooperating with the authorities throughout the investigation, and we are in frequent contact and continue to cooperate with the US Attorney's Office for the Southern District of New York.
We do not comment on rumours about investigations, and cannot comment on or speculate about the possible course of any ongoing investigation. Valeant takes these matters seriously and intends to uphold the highest standards of ethical conduct as we move forward with our mission to improve people's lives with our healthcare products.
Yesterday investors were cheered after the company dodged another profit warning as it reconfirmed its guidance for full-year profits, though it missed expectations in its most recent quarter.
The news will be another blow to remaining investors, who had hoped the company was getting back on track.
Joe Papa – who joined the struggling company in May – has said he's open to selling off more of the firm to try and clear its mounting debt pile and would assess offers for any of its assets.
Valeant was called before a US congressional hearing earlier this year – alongside the infamous Turning Pharmaceuticals' Martin Shkreli – to defend its drug pricing policy.
Since then one of Valeant Pharmaceuticals largest shareholders has offloaded its stake in the firm.