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Valeant Pharmaceuticals has a new distribution deal with Walgreens, sending shares of the beleaguered Canadian drug company up sharply in morning trading.
The company said Tuesday that the agreement will help to lower the prices of its branded prescription-based dermatological and ophthalmological products by 10 percent. The reduced pricing will apply to the wholesale list prices of the products and be phased in over the next six to nine months. The deal also covers over-the-counter products made by Valeant Pharmaceuticals International Inc.
The deal will allow consumers to get Valeant's dermatology and ophthalmology products — including Luzu and Zylet — at a lower out-of-pocket cost from more than 8,000 Walgreens U.S. retail pharmacy locations and participating independent retailers. Walgreens is the nation's largest drugstore chain.
The 20-year deal takes effect early next year.
Patient advocates, doctors and congressional leaders have attacked Valeant and other drug companies like Turing Pharmaceuticals for aggressively increasing prices on some prescription drugs. Critics say the companies have exploited a system lacking in competition to hike prices for critically needed medicines.
Valeant, in particular, has taken criticism for its practice of buying smaller drug developers, hiking drug prices and then slashing spending on research into new drugs.
The Laval, Quebec, company drew the attention of Congress following its purchase of the life-saving heart drugs Nitropress and Isuprel. The company jacked up prices on both drugs shortly after buying them from Marathon Pharmaceuticals in February, tripling one and raising the other sixfold.
Those drugs were not mentioned in Tuesday's announcement regarding price reductions, but the companies said they hope to expand their agreement "over time" to include other therapeutic areas.
In October, Valeant cut ties with the mail-order pharmacy Philidor, saying that it had lost confidence in the company's operations. That followed accusations from the short seller researcher firm Citron that Valeant used Philidor to create a network of "phantom pharmacies" to steer pharmacy benefit managers toward Valeant's more expensive drugs, instead of lower-priced alternatives.
Valeant had previously disclosed that it had purchased an option to buy Philidor, which it used to help deliver drugs more quickly to patients through the mail.
Federal prosecutors have subpoenaed documents tied to Valeant's drug pricing and other practices ahead of a presidential election in which the soaring price of prescription medicines has become a top political issue and the chief health concern of many Americans.
Valeant has said that it sells hundreds of prescription and non-prescription drug, and broad conclusions about its pricing should not be drawn "from any one drug or set of drugs."
U.S.-traded shares of Valeant jumped almost 15 percent, or $13.75, to $107.98 in morning trading Tuesday. The stock had soared past $260 to a new all-time high price as recently as August, but had plummeted since then.
Shares of Deerfield, Illinois-based Walgreens Boots Alliance Inc. climbed 60 cents or $83.16 Tuesday morning, matching a roughly 1 percent gain registered by broader indexes.