The embattled Canadian drug maker — which has been hit with stinging criticism from politicians for its big price hikes, and is subject to a related Congressional investigation — is now the target of a probe by the Securities Exchange Commission (SEC).
Valeant announced on Monday that it is being investigated for its links to drug distribution company, Philidor Rx Services. Sources also told the Wall Street Journal that the company may be facing scrutiny for improper financial bookkeeping.
Valeant announced in October that it was cutting ties with Philidor after reports that the distributor had changed doctors' orders to overbill insurers.
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The news caused the company's stock to drop 18 percent by Monday evening.
The disclosure of the SEC investigation comes amid other big news for Valeant, including the return of its CEO, Michael Pearson, who just took two months of medical leave. Pearson may not return to his previous position of influence, however, since the company also announced that he would no longer occupy the company chairmanship. Instead, Robert Ingram, a former executive at GlaxoKlineSmith, will take over.
Valeant's controversial price hikes have been put on display by advocates for increased regulation as a symptom of a pharmaceutical industry increasingly dominated by hedge fund investors.
Valeant is one of several prominent drug companies that is partially owned by Pershing Square Capital Management, a major hedge fund run by billionaire William Ackman. It has also gained a large stake in Allergan.
Unlike Martin Shkreli, the controversial CEO of Turing Pharmaceuticals (also under investigation for its price hikes), Valeant officials have been relatively conciliatory in their approach to critics. At a Feb. 4 hearing held by a Congressional committee looking into drug prices, Valeant interim CEO Howard Schiller said the company had "made mistakes."
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