Thursday, November 26, 2015

Valeant affiliates still setting up and operating bogus pharmacies

Valeant has responded to my last blog post. To quote:
Short sellers have been making false, unsubstantiated claims about Valeant for months in an attempt to drive down our stock price, and today’s allegations also contain significant inaccuracies. Valeant has already disclosed that 7.2% of our sales this year through the third quarter went through specialty pharmaceutical channels, and that has not changed. As we have said, in October we decided it was appropriate to sever our relationship with Philidor after allegations about their business practices came to light. The entities mentioned today appear to have been formed on or prior to 8/18/2015, based on public records. Furthermore, our board of directors has appointed an ad hoc committee to review allegations related to Valeant’s business relationship with Philidor and related matters
There is no denial the entities were set up either by Valeant or Valeant associates.

They can't and don't deny that because it is the truth.

But they deny that they are still setting up or running these pharmacies. I could have fun with that assertion - lists of transactions if they want.

However one will do. A chess named pharmacy from that list (ELO Pharmacy) registered in Illinois on 28 October - after the Philidor expose.

Here is a screen shot.

It is in chess 50 moves without pawn-move or capture until we declare a draw.

My claims are neither false nor unsubstantiated.

And you dear Valeant management have a problem.

On fifty moves without pawn-move or capture: we just reset the clock.



Anonymous said...

Can you provide proof this was done by Valeant?

marioyu said...

Nice work man.
Now the question is, what were those chess pieces set up for and to what end had they affected the VRX financials. Great stuff. Let me know when to short this guy.

Anonymous said...

From your previous post: "But here is the gem. The registration of false pharmacies continued AFTER Philidor was exposed and after Valeant said that they would stop doing business with Philidor."

From this post: "However one will do. A chess named pharmacy from that list (ELO Pharmacy) registered in Illinois on 28 October - after the Philidor expose."

Your wording was more careful this time: "after the Philidor expose," but, as you know, not after Valeant said they would stop doing business with Philidor, which was on 10/30.

You had, and still have, no evidence to back up your assertion of continuing activity after Valeant cut Philidor ties, do you? Otherwise you would have posted it. But you wrote it anyway.

Anonymous said...

Is Valeant trying to draw a distinction between date of formation and date of registration or activation in another state? That's a distinction which doesn't disorove the substance of what you say but VRX might in a strictly literal sense be correct.

Anonymous said...

What is "bogus" about these pharmacies?
Why should they deny setting up or running pharmacies? (They don't deny it, if you read the text carefully.)
Why should VRX not have the right to set up pharmacies?
What are you talking about?!?

Anonymous said...

So these additional pharmacies... I presume they're to stuff PBMs? Since it's often not the PBM's money at risk, they're going to be less likely to stringently police exactly who they're reimbursing, so if you're Valeant you might as well keep changing the storefronts, so to speak, to stay one step ahead and keep those four-figure Jublia scrips paying off.

You know, there are a couple of media-related questions about this stock that boggle my mind. One: Philidor is still out there and no one seems to care. The VRX press release on October 20th was hilarious, simultaneously saying that VRX was "severing all ties" with Phildor, and that Philidor will "shut down operations as soon as possible." And still Philidor is operating, probably still stuffing PBMs with who knows what affiliated pharmacies. They might shut down by January. I'd love to be a fly on the wall in those offices to hear exactly what's going on.

Second, there's that Philidor manual, which is worth literally tens of millions of dollars at this point because it's the most critical document to show systemic fraud or not. At least two news organizations had access to it. Why hasn't it been released anywhere? Do the news orgs doubt its veracity? If the manual is bogus, much of the short thesis goes up in smoke, or at least their case gets much tougher to prove. What's going on there?

Anonymous said...

In fairness your prior list was for Delaware and if you check the Secretary of State the ELO in Delaware was set up 6/8/2015 so it seems like the company is telling the truth. This is for Illinois. Do you have evidence these two entities are related or that they continue to process VRX scripts? Otherwise who cares?

Anonymous said...

I don't understand.

How do you tie these random LLCs to Valeant?

Anonymous said...

Hi John

On stock boards, people say that Bronte Capital is a discredited company

Is this true?

Hope you will not censor my question as it is not ill-intentioned.

tragic longVRX said...

As a previous commenter pointed out, the registration date 28 Oct for this pharmacy is BEFORE Valeant cut ties with Philidor on 30 Oct. And the registration dates for all the pharmacies listed in your previous post are before 30 Oct too.

Once again, your "gem" turns out to be a piece of coal. How many pieces of coal do you think you can present as gems before people stop taking you seriously?

Anonymous said...

tragic longVRX,

You have completely misread the post. The Valeant spokesperson said this:

"The entities mentioned today appear to have been formed on or prior to 8/18/2015, based on public records."

As you say, the registration was on the 28th of October which is after the 18th of August.

It's very simple.

Anonymous said...

Looks like Bronte is looking for a Bontey but is getting a Fontiy..............

Anonymous said...

@tragic longVRX - shows activity in mid November.

AmericanCynic said...

Valeant has not denied that it isn't using these LLCs. And Bronte did not state that the long list of LLCs were formed post Philidor severance. It did say that LLCs were formed post Philidor severance. You should re read the blog.

Anonymous said...

anonymous at 9:30 AM, 26 Nov 2015 asked: "How do you tie these random LLCs to Valeant?"

For the one example John gave, ELO Pharmacies LLC, you can visit the website where it is listed. On the ELO Pharmacies LLC page that you request to see, there is an entry "Management type: MBR view". Click on the "view" link, and you will see the ELO Pharmacies LLC address is held at "400 Horsham Rd., Suite 109, Horsham, PA 19044". This is the address of BQ6 Media, owned by the Davenports, which is an entity of Philidor, which as we know now, is essentially owned by Valeant (even if Valeant management keeps insisting they do not own them or have responsibility for them).

Anonymous said...

Its important to parse every single word that comes out of Valeant, because they have repeatedly shown that they are willing to wander into legal gray zones and hope either: 1.)no one notices, or 2.) let the courts sort it out.

It is interesting that in their counter statement to the Hempton dump on the chess/Stephen King pharmacy registrations, that they noted "The entities mentioned today appear to have been formed on or prior to 8/18/2015, based on public records." Yes, Valeant earlier announced they cut ties to Philidor on 30 October 2015, but they didn't mention that. They are just taking it to 8/18/2015. What else is going on behind the scenes?

So Valeant management didn't know that ELO Pharmacies LLC ownership is being laundered through Illinois on 28 October 2015, another obfuscating layer as to the true ownership? What about the other companies on the list? Are some of them in a holding pattern to be deployed at a later date? Who really knows with Valeant?

marioyu said...

Lay off on John, he's done a great job in finding bread crumbs, let alone picking them up. He's laid out these bread crumbs for investigators, that's where the real damage will be dealt. John has just as many public access as a normal joe like you and I. The investigators have 100% access and with these tips, Valeant will die....die in a horrible horrible death. I am short, just don't know when.

tragic longVRX said...

Now that Philidor is closing down the management people there need to find something else to do. Probably this will be something involving pharmacies, running existing ones or setting up new ones, since that is the business they know. E.g. Gary Tanner has already applied for a pharmacy permit recently, as you know. When this happens, you will try to say they are doing this on Valeant’s behalf, right? The question is, do you have a shred of evidence to support it? Common sense says no, because the Valeant management would not be so stupid as to set up a new pharmacy network using the Philidor people responsible for the supposed wrongdoing that caused Valeant to break its ties with Philidor.

Anonymous said...

Hi john,

People are saying that you are posting fake information to forums under anonymous pseudonyms and then using that as proof of channel stuffing. It appears the Slovenian article has been completely discredited as linking to a cafe Pharma post. I am genuinely concerned the accusations against you are false, but then stumbled upon this:

@bauhiniacapital said...

Agree that 10/28 date of ELO Pharmacy in Illinois is BEFORE Valeant cut them off but AFTER the expose. If you have other info on ELO with a date on or after 10/30 (because they cut off pre-open 10/30), that would be different.

You should have paste the link inside the link to show the ELO/Philidor connection. I know you saw it but not showing it leaves the connection open to debate.

I see Gary Tanner doing Forsta LLC with Jake Power on 11/18 and if Forsta LLC was indeed previously named Ludlow LLC and Ludlow was Fifty Moves LLC entity (and that can be proved) then we have a question of whether
1) Gary Tanner was moonlighting competitively when he set up the entities and applied for Forsta's hearing.
2) Gary Tanner was the 'name' on the entity and it was then transferred to Philidor and Gary was still working on behalf of Philidor (which would constitute 'proof' Philidor is still opening phantom pharmacies).
3) Gary Tanner purchased the entity from Philidor, is not working for Philidor/Valeant now, and is setting up on his own using an entity which he set up and did NOT transfer to Philidor, or transferred to Philidor then bought back.

Got anything to move ELO/Philidor/Valeant relationship action past Oct29?

@bauhiniacapital said...

To the first anonymous comment "Can you provide proof this was done by Valeant?", try the following:

1) Go to,
2) Check "Corporate and LLC" and "By Name"
3) Input "ELO Pharmacy"
4) Choose either one
5) click on the "View" link on the lower right of the screen which pops up (next to the word "MBR").

The address which shows up under "management" for either one is the office address of PhilidorRXServices in Horsham PA (i.e. the original HQ of Philidor).

Anonymous said...

tragic longVRX,

I'm curious, which other 'gems' have turned out to be pieces of coal? Most if not all of the facts which have been presented by anyone who has done deep-dive work - whether it be some of the people who are being attacked for being short-sellers, or others who have done similar work and posted elsewhere, appear to be correct. Sometimes there are conclusions jumped to, but every new release comes up with some interesting tidbit. None of it makes Valeant look like it was more honest or more above-board in its business practices and disclosure than thought the moment before that point.

tragic longVRX said...

@Anon (Nov 26 10:15pm):
The Delaware ELO Pharmacy listed in the previous post was set up on 6/8/2015, as pointed out already by Anon (Nov 26, 8:53pm). In the latest post JH mentions an Illinois ELO Pharmacy and hopes we don’t notice that Illinois is not the same as Delaware.

@Anon (Nov 28 8:54pm):
The other ‘gems’ I had in mind were

1) His Slovenia channel stuffing story, where the Slovenian journalist’s sources turned out to be anonymous posts on cafepharma (which could have been written by JH himself for all we know).

2) His claim that Philidor committed fraud by writing “dispense as written” on scripts to prevent generic substitution. Philidor claim they ok’d it with the prescribing doctor first before doing that – this is mentioned in the Bloomberg article he references in the previous post, so JH knew this when claiming fraud.

3) His general claim that Valeant is reliant on the “captive pharmacy network” to sell its “overpriced” drugs. In fact, despite the existence of Philidor, the majority of Valeant’s dermatology sales in USA this year still went through regular channels. (Philidor accounted for 40% of it iirc.)

Those are the ones I remember off the top of my head; there might be some more…

I do acknowledge and respect the good work that JH and others did in exposing Philidor and the sneaky and possibly illegal things it was doing. Disappointing to see the stuff he has been putting out since then. Especially his latest stuff insinuating without a shred of evidence that Valeant continues to use Philidor to set up “captive pharmacies” after having cut ties with them.

Lance L said...

I have been long , short & flat VRX multiple times over six weeks.
Thanks to my first Bronte read (which had been out there for few days before I found it) ; I liquidated my VRX realtime during the first few minutes of the 102 to 74 drop . I had not even finished your piece !!!! MANY THNX !!!
I am a believer that there are good assets & real cash flow @ VRX which has been augmented by something that falls between sharp business practice and outright insurance fraud .
Given the excellent work you have done on Philidor/VRX gaming the ultimate payers.
I would urge you to place your detective work in context & not abandon your theme quite yet .
Here are some segways with which your past work is symbiotic:

What specific contractual breaches caused the PBM's to sever Philidor relations?
What has historically ensued when a private health insurers uncovered pharmacy practices similar to VRX/Philidor?
Can discern investigations ongoing at State AG's or insurers ?
What is the likely timing of civil suits against Philidor/VRX ?
Which lapses in P:V separation are most likely to enable the corporate veil between to be pierced?
Are you aware of members associated with the independent committee or the PBM's or the insurers studying your work ?
Did the Board disavow Philidor because of PBM action or did the PBM announcement merely accelerate the VRX termination ?

Anonymous said...

@Lance Lessman - Shouldn't those questions be directed to VRX company investor relations rather than to a blog writer? The company is the one with definitive answers.

General disclaimer

The content contained in this blog represents the opinions of Mr. Hempton. You should assume Mr. Hempton and his affiliates have positions in the securities discussed in this blog, and such beneficial ownership can create a conflict of interest regarding the objectivity of this blog. Statements in the blog are not guarantees of future performance and are subject to certain risks, uncertainties and other factors. Certain information in this blog concerning economic trends and performance is based on or derived from information provided by third-party sources. Mr. Hempton does not guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Such information may change after it is posted and Mr. Hempton is not obligated to, and may not, update it. The commentary in this blog in no way constitutes a solicitation of business, an offer of a security or a solicitation to purchase a security, or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author. In particular this blog is not directed for investment purposes at US Persons.