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Specialty pharmacy relationships draw federal scrutiny for drug companies

Novartis agrees to a $390 million settlement, and Valeant faces a federal investigation

Specialty pharmacies have been praised for their ability to manage drugs that require special storage and administration, but over the last several days, the cottage industry has been exposed for its questionable relationship with drug companies.

This week, Novartis narrowly avoided a trial that was scheduled to begin Monday, agreeing "in principle" to pay $390 million to settle claims that the drug company paid kickbacks to specialty pharmacies to ramp up the sale of certain drugs, according to Reuters. The proposed settlement resolves a major case in which specialty pharmacies BioScrip and Accredo Health Group, owned by Express Scripts, paid $15 million and $60 million respectively for taking kickbacks from Novartis.

As part of its settlement, Accredo agreed to help prosecutors in the case against Novartis, in which the feds were demanding almost $3.4 billion in damages and fines. A separate kickback case against Novartis is scheduled to go on trial in 2016, according to Reuters.

At the same time, recent reports have highlighted the troubling relationship between Valeant Pharmaceuticals International Inc. and the Phoenix-based specialty pharmacy, Philidor Rx Services LLC. In particular, the Wall Street Journal revealed that one Philidor employee used a different name in emails than he used in person because he was actually employed by Valeant.

This questionable relationship was revealed days after Citron Research accused Valeant of using Philidor to initiate phantom sales, referring to the company as the "Pharmaceutical Enron." But in a statement to CNBC, Valeant called Citron's report "erroneous," the news outlet reported. Earlier this month, the WSJ reported that Valeant was facing a federal investigation into how it prices and distributes drugs. 

For more:
- read the Reuters article
- here's the Wall Street Journal article
- see the Citron Research report
- here's CNBC's report

Related Articles:
Feds want Novartis to cough up $3.4B in damages, fines in kickback case
Does new scrutiny threaten pharma's specialty-pharmacy strategy?
Accredo Health Group pays $60 million for accepting kickbacks for drug refills
Walgreen-owned pharmacy settles Medicaid fraud claims for $22.4 million