Shares for Valeant Pharmaceuticals skyrocketed after the company reached a deal to sell skin and eye medications through the Walgreens network at lower prices. The company will discount its dermatology and ophthalmology prescriptions by 10% at more than 8,000 Walgreens pharmacies. Additionally, Valeant will offer this same distribution model to other independent pharmacies as well. With the announcement, Valeant shares increased by 12%.
Recently, the company was under scrutiny for its controversial drug-pricing practices. Valeant was largely criticized for its relationships with mail-order pharmacies, most notably Philidor Rx Services. These mail-order pharmacies helped doctors and patients to access Valeant medications, even when insurers refused to cover them. Valeant stock started plummeting in early August because of these practices.
Valeant ended its relationship with Philidor in late October. The termination came amid reports that Philidor used unethical tactics to obtain more insurance reimbursements for Valeant medications. The tactics included submitting claims using the identification numbers of other pharmacies and changing the codes on prescriptions.
For now, Valeant is eager to move forward with Walgreens. CEO of Valeant Mike Pearson said that the deal with Walgreens “more than replaces Philidor”. Meanwhile, market analysts are encouraging investors to pick up Valeant stock while the price is still low. They say that the deal with Walgreens will bring long term success to the pharmaceutical company.
The deal between Walgreens and Valeant is set to last 20 years. Walgreens will never take ownership of the medications, but it will hold them on consignment until their delivery. In exchange, Walgreens will be able to remove the wholesalers that it usually purchases the medications from, thereby offering patients lower out-of-pocket costs. Walgreens does not currently have such a relationship with any other drug manufacturer, but the company has said that it would consider such partnerships in the future.
Many popular Valeant drugs will be available in the deal. Some of these drugs include toe fungus treatment Jublia and oral antibiotic for acne Solodyn. The deal will also cover over the counter offerings of Valeant. Overall, the United States healthcare industry is expected to save more than $600 million with the new agreement.