For all its woes, Valeant Pharmaceuticals was not responsible for every act of bad behavior. Some problems were inherited, and the drug maker will pay $54 million to make one of those disappear.
The company reached a settlement stemming from a probe by the US Attorney in New York into marketing practices for several drugs that were sold by Salix Pharmaceuticals, a company that Valeant bought last year for $11 billion. The agreement, which must still be finalized, was reached this month, according to a filing Valeant made on Tuesday with the US Securities and Exchange Commission (see page 39).
The drugs that were the focus of the investigation, which began in February 2013, are Xifaxan, Relistor, and Apriso, which are used to treat various stomach disorders. It is not clear whether the investigation involved off-label marketing, which is promoting medicines for unapproved uses, or kickbacks that are made to induce doctors to write prescriptions.
We asked Valeant and the US Attorney in New York for comment and will update you accordingly.
The settlement is only one of several government probes that new Valeant Chief Executive Joe Papa must resolve. The US Federal Trade Commission, the US Department of Justice, and several US Attorneys are investigating acquisitions, patient assistance programs, a relationship with a mail-order pharmacy, accounting practices, and payments to physicians.
Among them is an SEC investigation into Salix inventory disclosures. Before Valeant acquired it, Salix imploded when senior management had to walk back statements about inventory levels that were much lower than previously indicated. The disclosure prompted a huge plunge in Salix stock and some executives later departed. The events set the stage for a sale.
For its part, Valeant pursued Salix in order to gain the Xifaxan medication, which is used to treat traveler’s diarrhea and irritable bowel syndrome, a usage that was approved by regulators after Valeant bought the company. That ailment was expected to become a lucrative market. So far, though, the drug is failing to live up to its sales potential, according to analysts.
Although Valeant has forecast Xifaxan sales to hit $1 billion this year, Wells Fargo analyst David Maris wrote in an investor note earlier this week that he believes this is unlikely. The number of prescriptions written for the drug “remain underwhelming,” he noted and pointed out that prescriptions appear “stagnant over the past seven months.”