By Carl O'Donnell and Caroline Humer
NEW YORK (Reuters) - Valeant Pharmaceuticals International Inc sought to reassure doctors on Monday that the company's decision to cut ties to a controversial specialty pharmacy would not disrupt doctors' ability to prescribe the company's drugs to patients.
In a letter to healthcare professionals seen by Reuters, Chief Executive Officer Michael Pearson said that Valeant would pay for the cost of its products through Nov. 8 and make sure patients could fill their prescriptions with no out-of-pocket expenses, wherever possible. Patients on government-run health plans such as Medicare are not eligible.
Pearson said that Valeant's former partner pharmacy, Hatboro, Pennsylvania-based Philidor Rx Services, will file no further insurance claims.
Philidor, which almost exclusively handled prescriptions for Valeant medications, has been accused of improperly pressing insurers for reimbursement for the drugs after they were dispensed to patients.
Valeant said on Friday it was cutting ties with Philidor, effectively shutting down the pharmacy's operations, as Valeant investigates whether Philidor engaged in any illegal activity.
"We know many doctors and patients were concerned about the recent allegations surrounding Philidor’s business practices, and so were we," Pearson said in the letter.
Valeant’s stock has plunged more than 40 percent since Oct. 21, when a report by a short seller raised questions about Valeant’s relationship with Philidor.
After its role in the transition plan is complete, Philidor will wind down its operations and let go of its employees over the coming weeks, according to a statement from Philidor.
"We remain steadfast that Philidor has adhered not only to all applicable laws but to the highest standards of ethical business practice,” the Philidor statement said.
As part of the transition plan outlined in Valeant's letter to doctors, Valeant will continue to rely on Philidor to complete a number of minor tasks, including providing an option for certain patients to pay cash for drugs they would previously have claimed on insurance, and contacting patients about refills, according to the letter.
Philidor will continue to dispense Valeant prescriptions for the next week and may dispense some beyond that, according to Philidor's statement.
“We plan to replace Philidor over the next few weeks with one or more other specialty pharmacies to ensure continuity of this cash pay program,” the letter said.
After Nov. 8, Valeant is developing a program that will be available through major drugstore chains and independent pharmacies.
“Over the next few months, we will work to develop a new, more comprehensive program to ensure your patients can continue to have access to Valeant’s products at affordable prices,” the letter said.
“This decision will certainly have a near-term impact on Valeant's revenues and profitability,” an RBC Capital Markets analyst said of Valeant’s plan to cut off Philidor. “Having said this, we expect that the company will maintain some portion of these sales as Valeant will be able to transition a portion of this business to traditional distribution channels.”
(Reporting by Carl O'Donnell and Caroline Humer; Editing by Michele Gershberg and Bill Rigby)