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An ongoing criminal probe into Valeant Pharmaceuticals is focusing on the extent to which the former chief executive officer and former chief financial officer allegedly hid a relationship with a specialty pharmacy from insurers, according to Bloomberg News.

Federal prosecutors are reportedly exploring potential charges of accounting fraud in connection with Valeant’s ties to Philidor Rx Services, which the drug maker used to steer prescriptions and boost reimbursements for its medicines. Philidor submitted claims using identification numbers belonging to other pharmacies and altered code on prescriptions, and Valeant later admitted financial control of Philidor.

For now, the probe is examining actions taken by Michael Pearson, the former CEO, and Howard Schiller, the former CFO, although sources familiar with the investigation told Bloomberg that others — including Philidor executives — may be charged. Pearson was the key driver behind Valeant’s growth, which largely relied on buying older medicines and then jacking up the prices to sky-high levels.


Schiller was blamed by Valeant last year for “improper conduct” that led the drug maker to restate its earnings for 2014 and 2015, which he has repeatedly disputed. He subsequently stepped down as CFO and left the company board this year. Pearson, meanwhile, continues to work for Valeant as a consultant and maintains an office at the company’s US headquarters in New Jersey.