With Valeant’s management assuring investors that the company is well on its way to a turnaround, the drugmaker’s problems aren’t supposed to be growing larger. But now, Valeant is facing what could be its most serious investigation yet.

Federal prosecutors are probing the Canadian drugmaker’s relationship with specialty pharmacy Philidor, The Wall Street Journal’s sources say. And while that relationship has already garnered plenty of attention from investigators, media and Wall Street, this particular set of allegations--which claim Valeant defrauded insurers by hiding its close Philidor ties--is new.

The new probe could also be a bigger threat. Philidor managers and Valeant itself might face criminal charges, the WSJ notes.

"We have been fully cooperating with the authorities throughout the investigation, and we are in frequent contact and continue to cooperate with the U.S. Attorney’s Office for the Southern District of New York," Valeant said in a statement.

Prosecutors are looking into whether the specialty pharmacy made false statements to insurers about its link to the drugmaker. They’re trying to figure out whether insurers thought Philidor--which helped patients snag insurance coverage for pricey Valeant meds--was neutral, rather than in Valeant’s service.

And Philidor’s business practices, which include the use of rebates and other compensation to Valeant customers, are also under the lens. The specialty pharmacy is now dead after Valeant severed ties with it last year.

As Philidor’s lawyers wrote in an April letter to a Senate committee, the pharmacy’s conduct was “agnostic” to its ties to Valeant, and it doled out meds that “mirrored the independent judgment” of prescribing doctors, the newspaper notes.

But if government lawyers determine otherwise, both Valeant and Philidor’s execs could find themselves contending with criminal action, the Journal source said. And as Wells Fargo analyst David Maris pointed out in a Thursday note to clients, considering Valeant’s debt mountain--a vestige of its days as a serial buyer--“the impact of financial or commercial penalties is high.”

Valeant, which first came under fire for its Philidor ties last October--when a short seller accused the company of using Philidor to inflate its top line--is already under investigation by state attorneys general, the IRS, the SEC and others. But new CEO Joseph Papa has assured investors that things are turning around at the company. He has also promised to improve transparency.

Some analysts, though, aren’t convinced--including Maris, who earlier this week brought to light that influential Valeant board member Bill Ackman had attended an investor discussion during the company’s pre-earnings quiet period. “Are things really changing, or is it just new paint on the same old shed?” he asked Papa on the company’s Q2 conference call.

Shareholders apparently have their doubts, too. Valeant's stock dove 9.6% in premarket trading Thursday.

- read the WSJ story (sub. req.)

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