April 17, 2018

A proposed class of Valeant Pharmaceuticals shareholders told a New Jersey federal judge Thursday that all of the claims against the company, its executives and several banks over a price-gouging scheme that cost shareholders $80 billion were adequately pled, contrary to a volley of partial dismissal bids pushed by the defendants.

 A group of New York City retirement funds claimed in January that Valeant and its executives, helped by PricewaterhouseCoopers LLP, schemed to jack up their drug prices and block generic alternatives in a clandestine network of pharmacies. When the scheme was revealed, Valeant shares plunged more than 90 percent, costing shareholders billions and leading to claims of racketeering, fraud and securities violations under federal and New Jersey law.

In the months since, Valeant, its executives and PwC have attempted to wriggle free from Racketeer Influenced and Corrupt Organizations Act claims under New Jersey law, while PwC has further attempted to extricate itself from securities law violation claims and common law fraud claims, saying the suit doesn’t allege the bank knew of or agreed to take part in the scheme.

The court has already concluded that the complaint offers a strong inference of wrongdoing on the part of Valeant and its executives, which the funds say should offer support for securities violations claims against PwC, which helped facilitate the company’s financial documentation, including Valeant’s purchase of a covert network of pharmacies led by company Philidor Rx Services that created the lion’s share of Valeant’s revenue growth. That purchase was “highly unusual,” the funds argue, as rather than an outright purchase, it was structured as a $100 million option contract to purchase at a price of $0.

The entire article can be accessed here.