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NEW YORK — After CVS Caremark and two other pharmacy benefit managers announced that they are terminating mail-order pharmacy Philidor Rx Services LLC from their networks, Valeant Pharmaceuticals Inc. said it would also sever ties with Philidor.
Philidor has been accused of bolstering sales of products made by the Canadian-based drug manufacturer Valeant.
Joining CVS Health in the decision to cut off Philidor from their networks were Express Scripts Holding Co. and UnitedHealth Group Inc.’s OptumRx.
Valeant’s relationship with Philidor has come under close scrutiny, in part because of the reportedly aggressive tactics that Philidor has used to ensure PBMs pay for Valeant drugs, rather than the lower-cost alternatives preferred by insurers.
Philidor had almost exclusively dispensed Valeant’s high-priced dermatology drugs. One of those drugs, Solodyn, is an acne medication that costs more than $1,000 a month. Solodyn is a formulation of minocycline, an older and much less expensive drug.
Another product, Jublia, an ointment for toenail fungus and one of Valeant’s fastest-growing treatments, costs more than $500 for a small bottle.
Valeant has confirmed that Philidor handled 44% of its Jubia business in the third quarter.
The Wall Street Journal reported that Philidor advised its staff to use “backdoor” tactics to ensure payment, including using the identification number of a different pharmacy if an insurer wouldn’t work with Philidor. The Journal also reported that some Valeant employees worked in Philidor’s offices and went by the names of fictional characters.
Valeant purchased an option to buy Philidor in late 2014 and has been consolidating its results with its own since then. The drug maker had been accused of encouraging doctors to submit prescriptions for its products to Philidor, inhibiting patients from going to a community pharmacy.
Together, Express Scripts, CVS Caremark and OptumRx, including a PBM since acquired by OptumRx, handled about three-quarters of the total estimated 5 billion U.S. prescriptions last year, according to Adam Fein, president of Pembroke Consulting, a firm that focuses on the pharmaceutical industry.
The terminations “completely undermine Philidor’s usefulness to Valeant,” Fein said.
CVS Caremark said its move came after several weeks of “monitoring and reviewing the results of recent audits of Philidor’s practices” and that it was terminating the pharmacy “for noncompliance with the terms of its provider agreement.”
