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As a postscript to the controversy over Philidor Rx Services and its relationship to Valeant Pharmaceuticals, the Arizona Board of Pharmacy is probing whether the defunct specialty pharmacy had violated the terms of its permit. And the inquiry, which is described as preliminary, could lead to further scrutiny of the troubled drug maker, which already faces several federal and state investigations.

Next week, the board hopes to question Philidor representatives about their business activities in the state. Specifically, the agency wants to know whether the pharmacy dispensed or shipped medicines, rather than simply operated a customer call center or conducted other administrative tasks, such as billing, according to Kam Gandhi, the board’s executive director.

Valeant, you may recall, had an option to buy Philidor, which the drug maker relied on to boost sales of key medicines. But a controversial report from a short seller last fall accused Valeant of using Philidor to inappropriately boost reimbursements from insurers. And media reports indicated some Valeant employees worked out of Philidor offices. The episode led Valeant to end its relationship with Philidor, prompting the pharmacy to close late last year.


Philidor execs could not be reached for comment.

To some, an inquiry at this point might appear moot, since the pharmacy, which maintained corporate headquarters in Pennsylvania, has ceased operations. But the Arizona board wants to have ammunition in the event that Philidor ever attempts to reopen, especially since the company still has an active license to do business in the state.


“We still want to know what they did here,” Gandhi explained. “Maybe they want to open another business going forward, but were doing something they were not supposed to do. If we allow them to close up shop without ever taking any disciplinary action, then there’s no history. It’s like nothing happened. So maybe we put a note in their folder.”

For the moment, the board wants to determine whether Philidor violated its non-resident permit by conducting any pharmacy business from its former Tempe, Ariz., building. Gandhi noted there was a sign on the front of the building that read “PhilidorRx,” and the Rx symbol may have constituted a violation without a proper permit.

As for Valeant, Gandhi noted the board is well aware of the controversy surrounding the ties between the drug maker and the pharmacy. Depending upon what the board learns, he said that attention could shift to Valeant. The drug maker, he said, is licensed to distribute its medicines in the state.

The inquiry into Philidor “might open up more questions,” he said. “But we’re just shooting darts right now. We don’t know what we’re going to do yet, because it depends on what we hear.”

As we noted, Valeant already faces a host of inquiries from government authorities, some of which relate to companies that were purchased in recent years, including Medicis Pharmaceuticals, Bausch + Lomb and Salix Pharmaceuticals.

Last fall Valeant received subpoenas from the US attorney’s offices in Boston and New York concerning its patient assistance programs. And more recently, the US Securities and Exchange Commission opened a probe, although details have not been disclosed.

Last week, meanwhile, there were grumblings about the way Valeant updated only certain Wall Street analysts on its progress after financial guidance was unexpectedly withdrawn. Valeant stock jumped after those conversations, raising questions about possible violations of SEC fair disclosure rules.