Valeant and its captive pharmacies: some questions

Some Questions for State Attorneys General and Boards of Pharmacy

• Is a pharmaceutical manufacturer allowed to own or effectively control a pharmacy in your home state?
• If a third party obtains effective control over a pharmacy licensed in your state, is a new registration filing required?
• If a pharmacy owner sells all or a portion of its economic interest in a pharmacy in your state, is it required to update its registration?
• Is it a violation of state law in your state to fail to disclose the ultimate holder of control and/or economic interest in a pharmacy? That is, if Valeant exercises control or holds an economic interest in Philidor, and Philidor is a regulated owner of a Pharmacy, has Philidor violated your state registration laws by failing to mention the ownership and/or control of Philidor by Valeant?
• May two pharmacies “share” a National Provider Identifier when dispensing medications in your state, as it has been alleged R&O and Philidor have done?
• Does the law in your state allow a pharmacy to seek reimbursement for prescriptions filled from government or private payers using an identifier such as an NPI#, NDPCP#, or NABP# not assigned to it? If not, what potential legal consequences and penalties would attach?
• For the California Attorney General: as Philidor Rx Services LLC is not licensed as a mail-order pharmacy, is it allowed to purchase directly or indirectly, the equity of or an option to purchase the equity of a pharmacy (R&O) that is registered in California?
• For the California Attorney General: if we interpose another entity into the prior question—Valeant owns and controls part of Philidor that owns and controls part of Isolani that owns and controls part of R&O Pharmacy—has R&O complied with California licensing and disclosure laws, on penalty of perjury?
• For the Pennsylvania Attorney General: as Isolani LLC is not registered as a foreign corporation in your state but owns an interest in a pharmacy (R&O) that is registered in Pennsylvania, how is it able to operate based in Hatboro, PA?

Some Questions for US Attorneys and Inspectors General of Medicare, HHS, and the VA

• May two pharmacies “share” a National Provider Identifier when introducing medications into interstate commerce, using the telephone and mail, as Philidor and R&O are alleged to have done?
• Does federal law allow a pharmacy to seek reimbursement for prescriptions filled from government or private payers using an identifier such as an NPI#, NDPCP#, or NABP# not assigned to it? If not, what potential legal consequences and penalties would attach? 
• It has been alleged in documents filed with the court in a lawsuit by Isolani against R&O Pharmacy that Philidor encouraged the owner of R&O to falsely certify the results of a prescription audit by one of its payer clients. It has also been alleged that Philidor used identifiers (such as NPI#, NCPDP#, and NABP#) belonging to other pharmacies to send invoices to payers for prescriptions filled.
• Will you investigate whether the actions of Philidor Rx Services to constitutes “health care fraud” under 18 USC § 1347, which applies to public and private providers of health benefits and does not require actual knowledge or specific intent?
• Similarly, if proven, will you investigate what is alleged to be a specific intent to deceive payers in this way could potentially constitute mail or wire fraud, as defined in the federal statutes?
• What steps are pharmaceutical manufacturers and/or their wholly-or-partially owned pharmacies required to take to ensure that persons eligible for government-paid prescriptions are not offered waivers, coupons, or charity assistance, in whole or in part, for prescription co-payments?  Will you investigate whether such steps have been taken by Philidor and its affiliate pharmacies?

A Question for Senator Claire McCaskill

• Will your staff investigate and will you convene a hearing of the Senate’s Permanent Subcommittee on Investigations to discuss these issues and others related to Valeant's business practices and their compliance with state and federal laws?

Some Questions for Government and Private Payers

• Have you - as alleged in some internet posts by disgruntled employees - failed to reimburse drugs distributed by Valeant but then been shopped by Valeant to other "seemingly independent" pharmacies. [Philidor it is alleged tried switching distributor codes to fool your controls.]
• Will you continue to accept claims for payment from Philidor Rx Services LLC, R&O Pharmacy, West Wilshire Pharmacy, Safe Rx Pharmacy, Orbit Pharmacy?
• Will you undertake an audit (or re-open past audits) of these pharmacies to determine their continued eligibility to seek reimbursement from you for prescriptions dispensed?
• Will drugs manufactured or marketed by Valeant in the future require more stringent pre-clearances or other restrictions?

Some Questions for Valeant

• Are there any other entities with whom Valeant has relationships like Philidor Rx Services LLC or its affiliates that haven’t been disclosed yet? 
• Are there any other entities for which Valeant holds an option to acquire ownership that have not yet been disclosed?
• You have stated that Philidor administers Valeant’s patient co-pay assistance programs. In the last conference call, Mr. Pearson indicated that spending on these programs has grown at a compounded rate of 128% annually, rising from $53M in 2012 to a projected total of over $1 billion in 2016. (In your letter to Senator McCaskill, Mr. Pearson indicated that spending on such assistance programs totalled $544M in 2014 and an estimated $630M for 2015.)
• What portion of these annual amounts does Philidor administer?
• What instructions have you given Philidor in administering these programs?
• What criteria have you instructed Philidor to use in determining patient eligibility for these programs?
• How do you monitor Philidor and other entities to ensure that patients meet the criteria you have established?
• How do you reward (or punish) Philidor and other entities for adhering (or not) to these criteria?
• What controls do you have in place to ensure that Philidor administers these programs legally? Systematically waiving co-pays for claims that would otherwise be paid by Medicare or other government programs is illegal.
• Have you ever, prior to the arrival of subpoenas from US Attorneys, disciplined Philidor or withheld or otherwise delayed payment because individual staff of Philidor have broken these laws? If so, what actions were taken? In what amounts, when and why? How have you ensured that any such problem has not recurred and will not do so again in the future?
• How many Valeant employees, contractors, or agents (whether full or part-time) are responsible, in whole or in part, for monitoring Philidor’s compliance with your guidelines and state and federal law? How often do you and your executive team review Philidor’s adherence to your guidelines and to state and federal law regarding co-pay assistance?
• How is Philidor compensated for operating this program on your behalf? Is any portion of their compensation based on prescription volume dispensed or revenue generated?
• In the conference call Mr. Pearson stated that Valeant funds multiple outside foundations that have multiple donors. What are the names and locations of these foundations and what portion of its operating revenue do Valeant donations represent? Who are the five largest donors to each?
• Presumably these foundations fund copays for medicare and other government sponsored pharmaceutical insurance. Which outside institutions? How much money?
• How are these donations accounted for in your GAAP accounts? Where do these donations appear in your audited financials reported on form 10-K?  
• How do you determine the amount of assistance to provide each year? How did you select the $1B projected total for 2016?
• How do you assess whether you are getting value for money for your charitable deductions?
• What controls do you maintain to ensure that shareholders receive value for the $1B in contributions? Have your auditors inspected those controls?
• Who (which individual or group of individuals) determines which patients will receive co-pay assistance, and for which products? Are the individuals making such award determinations employees of Valeant, Philidor, or a third party? (If a third party, who?) How are these individuals compensated?
• Of the billion dollars of patient assistance expense that you expect in 2016 how much is administered through Philidor and how much is through other parties? Who are the other parties and for what amounts of this expenditure do you expect each will be responsible?
• Can you provide a detailed breakdown of patient assistance costs by product or business line? How much for instance is neurology, dermatology, ophthalmology, etc.?
• It is our impression that Philidor is heavily focussed on dermatology. Is that correct?
• If so, who administers the patient assistance outside dermatology and how do you control them?
• What proportion of your dermatology products are sold with patient assistance?
• What proportion of your products (in dermatology or not) are sold to government-insured patients?
• What proportion of your products (in dermatology or not) are sold to government-insured patients with patient assistance programs?
• How is it the case that Philidor administers your co-pay assistance programs, yet you indicated that Philidor is responsible for only certain of your products, most of which are dermatological in nature?
• You indicate that the form of assistance ranges from capped co-pays to subsidized prescriptions to referrals to a foundation (for patients in federal programs) to which you contribute. What was the total amount of assistance awarded for each category?
• Which foundations received such grants from Valeant, and in what amounts, over the past three years? How much did each of those foundations dispense as part of the assistance programs for drugs produced and or marketed by Valeant? What portion of each charity’s total funding does Valeant represent in each case?
• What portion of this and prior years’ “patient assistance” programs funding was used to reimburse prescriptions filled by Philidor or other affiliated pharmacies? What portion went to non-Valeant affiliated “specialty pharmacies?” What portion went to non-Valeant affiliated “traditional” pharmacies?
• For each of the products that you indicate is covered by your patient assistance programs, how much assistance has been provided for each, in what form, and by whom?
• How do you ensure that patients who receive a reduced co-payment, in whole or in part, do not subsequently submit reimbursement requests to government-paid programs for which they may be eligible?
• Before you received the subpoenas from two US Attorneys had you been having ongoing dialogue with them or did the subpoenas come entirely by surprise?
• I know that you are not disclosing the detailed questions in these subpoenas but can you answer one question: in aggregate, how long are these document requests by number of pages? Are they five pages, fifty pages or five hundred pages?
• Do you know if any of your independent administrators of your patient assistance programs have received subpoenas? Has Philidor (or any of its affiliates) received subpoenas?
• How is Philidor compensated for the services it provides to you? Is any part of Philidor’s compensation based on the volume of prescriptions filled, revenues or co-pay assistance (of any type) awarded?
• You have stated that Philidor will dispense a drug in advance of an insurer’s commitment to reimburse you for the cost of that drug, and that Valeant thus bears the risk that the insurer billed by Philidor will not pay.
• If a co-pay is waived, diminished via a coupon, or paid in whole or in part by a charity, how do you ensure that prescriptions filled by Philidor will ultimately be approved by the insurance company?
• Are Philidor employees given any sort of incentive to ensure that the prescriptions are indeed reimbursable?
• What portion of insurance claims submitted by Philidor over the past several quarters were disputed or went unpaid?
• To your knowledge, has Philidor ever failed an audit by a payer? If so, who, when, and why?
• How often do senior staff members of Valeant meet with senior staff of Philidor?
• Will Valeant file copies of its contracts and agreements with Philidor Rx Services LLC, its owners/members, and its affiliates with the Securities and Exchange Commission?
• It has been reported online by individuals purporting to be former Philidor employees that Valeant had its own employees on-site and that Philidor employees were instructed to deny any link to Valeant. To your knowledge:
• Do any Valeant employees, contractors or agents presently work full- or part-time in any Philidor office? Have they previously?
• Has any employee of Philidor been instructed to deny or otherwise obfuscate the relationship between Valeant and Philidor? Has any Valeant employee, contractor, or agent so instructed any employee or member of Philidor?
• In your relationship with Philidor, past and present, what was and what is the role of Gary Tanner?
• Why does Gary Tanner, upon belief an employee of Valeant until recently, have an internal email at Philidor in the name of a “Super Hero?” Can you tell us which “Super Hero” Mr. Tanner uses for his “avatar?”
• Will the Board of Directors capable law firm/forensic accounting firm be hired to independently assess the situation? When?
• When were members of the Board of Directors first informed of your commercial, operational, and/or financial relationship with Philidor, its owners, or its employees? What were they told? What such information have they been provided since?
• When were your auditors, PriceWaterhouseCoopers LLP, first informed of your commercial, operational, and/or financial relationship with Philidor, its owners, or its employees? What were they told? What such information have they been provided since?
• Had it not been for press reports regarding the relationship with Philidor, the lawsuits between you and R&O, and the lawsuit between Isolani LLC and Russell Reitz, what plans did you have to disclose your relationship with Philidor and R&O? If you had no plans, why not?
• There are reports online of doctors suggesting that their patients fill prescriptions at Philidor to save money on co-payments.
• How do doctors know about Philidor? Do you or your salespeople inform them? If not, how are the doctors finding out about Philidor?
• Are your sales representatives aware of your relationship with Philidor? When were they so informed? Was Philidor or its affiliates mentioned as part of your representative training?
• Are your sales representatives instructed to or in any way compensated for informing the prescribers they visit of Philidor’s existence or its ability to waive or diminish, in whole or in part, co-payments for products produced or marketed by Valeant?
• Do your sales reps carry literature of any kind that mentions Philidor?
• How does Philidor compensate Valeant for such referrals, if any?
• Alternatively, how are patients made aware of Philidor’s existence? If it is by prescribers, why? Are any incentives or materials provided by Valeant or Philidor or its employees or contractors to make patients aware of such pharmacies’ existence?
• You have stated that Valeant takes reimbursement risk on prescriptions filled through Philidor, which is patient-dependent. To your knowledge, have patients filled prescriptions for drugs other than those sold by Valeant at Philidor pharmacies? [On belief this may happen if a Valeant prescription is written along with a prescription for a non-Valeant product. Does it happen when there is no Valeant product on the script?]
• What is the total amount of revenue from Philidor that is consolidated on your financial statements that is derived from cash co-payments Philidor received for prescriptions it filled?
• You stated on your 3Q2015 conference call that “[Philidor] does not restrict prescriptions it fills to any particular manufacturer.” What portion of Philidor’s revenue that is consolidated on your financial statements is from sales of non-Valeant products?
• You also stated that “[Philidor] dispenses generic products as specified in the patient's prescription or as requested by the patient.”
• What portion of prescriptions filled by Philidor are for non-branded generics? What portion of total prescriptions filled with non-branded generics were written on the prescription and what portion were requested by the patient?
• If a patient does not request a generic but a non-branded generic is available, will the Philidor pharmacist suggest such a generic?
• To your knowledge has Philidor or Philidor staff ever written a dispense as written code on the script without being specifically directed to by the doctor or the patient?
• To your knowledge, are pharmacists at Philidor pharmacies allowed to suggest generic alternatives when available?
• If not, why not? Who gave the pharmacists you employ such direction? And if not, what gives you legal comfort that the states in which Philidor is licensed allow a non-pharmacist to give such instruction to a pharmacist?
• Have Valeant officers or employees, whether full or part-time and present or former, given any direction to pharmacists employed, whether current or former, full or part-time, as to whether to suggest substitution of generic drugs? To your knowledge, have officers or senior staff at Philidor or its affiliates so instructed the licensed pharmacists they employ?
• What portion of the revenue from Philidor that you consolidate on your financial statements is derived from products not produced or marketed by Valeant? What portion of such revenue is for generic substitutes for prescriptions written for brand-name products, and for which products?
• In its rejected filing in California, Philidor indicated that its upstream wholesale supplier was Kinray, a division of Cardinal Health.
• To your knowledge, is that correct? To your knowledge, has Philidor purchased your products from any other wholesalers? If so, whom? Do you now, or have you previously, shipped products produced or marketed by Valeant directly to Philidor?
• Do you include inventory held at Kinray or any other wholesaler used by Philidor or its affiliates as part of the consolidated inventory of Philidor held on your balance sheet?
• Were you aware that Philidor’s application for licensure as a mail-order pharmacy had been rejected by the state of California? How were you so informed and when? What actions did you take or communications did you have with your employees, the management, or the owners of Philidor, if any, upon learning that information?
• To your knowledge, did Philidor ship any prescriptions to consumers in California or other states in which it was not licensed?
• If so, when were you so informed? What corrective action did you suggest if any?
• If not, what impact did Philidor’s inability to legally fill prescriptions in California have on its relationship with you and/or the entries consolidated on your financial statements?
• What steps did you take, if any, to ensure that Philidor was licensed in each of the states to which it shipped prescriptions for your products?
• Before you acquired an option to purchase Philidor, did your employees or agents perform any sort of audit or inspection of Philidor’s state licensing status? Did they inquire as to whether Philidor had ever had a license denied or revoked, or if Philidor had improperly shipped product to states in which it was not licensed?
• Were any Valeant officers, employees, agents, or contractors aware, as Philidor CEO Andy Davenport indicated in an email to Russell Reitz and filed in a court proceeding, that Philidor had a practice of using an identifier (such as an NPI, NCPDP, or NABP number) belonging to another entity to bill payers for prescriptions it filled? Did you inquire about this in your diligence process as part of the option to acquire equity in Philidor? If not, why not?
• Was any officer, employee, agent or contractor of Valeant involved in the acquisition of R&O Pharmacy from Russell Reitz by Isolani LLC?
• To your knowledge, as you consolidate its results, when was the last inventory audit at Philidor or its affiliate pharmacies?
• To your knowledge, as you consolidate its results, has a payer ever ceased accepting prescriptions from Philidor or so threatened? If so, who and when?
• Did you investigate Norma Provencio’s co-investment in Recom/Signalife alongside Mitchell J. Stein before renewing her position on the Audit Committee? If not, why not?
• According to online sources, several employees at Philidor Rx Services formerly worked at Unitek, a Blue Bell, PA, company that was alleged to have experienced a fraud. Before they were hired, did you determine that these employees were not in any way involved in the alleged fraud? Are these employees involved in any accounting function at Philidor? 
• You failed to inform shareholders of the nature or purpose of KGA Fulfillment Services Inc., the entity that holds secured interests over the owners of Philidor. There are a few other such entities about which you have mentioned little. For instance, you registered many Delaware entities, some on roughly the same day in 2012, by the names of Audrey Enterprise LLC, Emma Z LP, Erin S LP, Katie Z LP, Kika LP, Stephanie LP, and Tori LP.
• For what purpose were these entities established?
• What is the nature of these partnerships and what assets do they hold?
• Who besides Valeant has or may potentially receive an economic benefit from these entities? Is Valeant the sole member or limited partner?
• Prior to the lawsuit in California Central District Court, had you or your employees had any direct communication with officers or employees of R&O Pharmacy?
• Why did Robert Chai-Onn identify $69 million at R&O as owed to Valeant? Is any money owed to Valeant by R&O additional to monies owed to Philidor - or is Philidor just an arm of Valeant. 
• Have you or any of your employees had direct communication with officers or employees of Brighton Way Pharmacy (d/b/a West Wilshire Pharmacy), Safe Rx Pharmacy, or RAAS Pharmacy (d/b/a Orbit Pharmacy)? If so, when and on what topic?
• Are the payers Philidor invoices for prescriptions filled aware that Valeant has the option to acquire an equity stake in Philidor? Are they aware that, as you stated, you bear the reimbursement risk on prescriptions filled by Philidor and presumably by these related pharmacies. 
• Several of your competitors have indicated that they have arms-length relationships with their specialty pharmacy channel, and that they do not own any equity or equity-like stake in such pharmacies. Yet you own an option to acquire Philidor, and when I called them, a Philidor representative said they deal almost entirely in Valeant products. Why do you believe your competitors not chosen to replicate your arrangements with Philidor (and its affiliates) with their own semi-captive specialty pharmacies?
• Philidor was incorporated in early 2013. When did your relationship (of any type) with Philidor begin? What was the first quarter in which Philidor was consolidated into your financial statements? Since that time:
• Has your accounting treatment of Philidor on your own financial statements changed? If so, how and when? If not, do you believe the acquisition of an option to acquire the equity of Philidor require a restatement of any prior year’s filing before the Securities and Exchange Commission? Why or why not?
• By quarter, what was the total amount of your revenue (gross and net) for products that have been dispensed by Philidor?
• By quarter, how much inventory have you had on your balance sheet on consignment with or related to Philidor? Is that inventory held at Valeant or at a distributor?
• By quarter, what was the total amount of receivables from payers generated from prescriptions filled by Philidor (and its affiliates)?
• By quarter, what was the total amount of your provision for potentially uncollectible receivables from payers generated from prescriptions filled by Philidor (and its affiliates)?
• How did your relationship with Philidor develop? Who brought them to your attention?
• Were any Valeant or Medicis employees or agents, current or former, whether full or part-time, involved in launching Philidor?
• How many days worth of R&O's revenue does the $69M you sought to recover represent? How many square feet is R&O pharmacy? How does a small pharmacy generate that substantial an amount of business?
• If Philidor holds an option to acquire R&O or other pharmacies, are those pharmacies' results consolidated on your financial statements as well?
• Are Philidor owners, executives, or employees eligible to receive any form of monetary incentive from Valeant?  Have any such incentives been delivered? If so, in what amounts? What are the criteria for receiving such compensation? Have such amounts been disclosed to the Board?
• Mr. Pearson, have you ever met with or communicated with Philidor executives or employees? If so, how often? For what purpose?
• In addition to Robert Chai-Onn, which other members of your executive team were aware of the Valeant's relationship with Philidor, R&O, and its other possibly-affiliated pharmacies, such as West Wilshire, Safe Rx, and Orbit Pharmacy?
• Which executive at Valeant has responsibility for the relationship with Philidor? Which executive has oversight and profit-and-loss responsibility for Philidor's operations?
• What direction have you given your employees, contractors or agents with regard to discussions of the existence of Philidor and its relationship with Valeant, if any?
• Why did you decide to purchase an option to acquire Philidor? What did you pay for that option? When did you purchase it, and when does the option expire?
• Before the most recent disclosures, was the Board of Directors aware of your commercial and financial relationship with Philidor, its owners, and its affiliate pharmacies? Were these relationships discussed by and/or approved by the Board of Directors, the Audit Committee, and your external auditors?
• Did the Board of Directors approve the acquisition of an option to acquire Philidor?  If so, when?  What due diligence did you perform on Philidor, and what was the investment case presented to the Board?
• Are the insurance companies whom you/Philidor invoice, and from whom you bear reimbursement risk, aware that patients have been offered co-pay coupons, waivers, and/or charity assistance for the co-pay portion of the claims submitted?
• Regarding your auditor, PriceWaterhouseCoopers LLP:
• Are they aware of your relationship with Philidor? What information did you provide to them about this relationship? When?
• To your knowledge, have they audited Philidor, its operations, or its financial controls?
• To your knowledge, did they inspect Philidor to determine whether it maintains effective internal controls?
• Were there any disagreements with PWC over how your relationship with Philidor should be disclosed in your filings before the Securities and Exchange Commission?
• What portion of the operations of Philidor and its affiliates were included in the audit scope on which you and PWC agreed for your 2014 Annual Report?
• What evidence did you provide to your auditors to convince them that Philidor Rx Services constitutes a variable interest entity that meets the tests for consolidation on your financial statements?
• Did you have any discussions with your auditor regarding the need, if any, to disclose your relationship with Philidor and its affiliates?
• Which products were fulfilled through Philidor (and its possible affiliates), and what has been the rate of growth in prescription volume and revenue for those products?
• You have stated that Valeant takes reimbursement risk for products fulfilled by Philidor. Does this extend to Philidor's affiliates as well? So if an insurance company in California declines to cover a prescription shipped by R&O or West Wilshire, who is out the money for that prescription?
• Have you established a reserve for prescriptions dispensed by Philidor for which the payer refuses to pay? If so, what is the present level of that reserve and how has it changed over time?
• Is the inventory held at R&O and West Wilshire (and other Philidor affiliates) consolidated on your balance sheet?
• Why did you purchase an "option to acquire" Philidor rather than the equity itself? At any point in your internal discussions of such a transaction did anyone, whether an employee or agent of Valeant or Philidor, indicate that pursuing a transaction in this form would perhaps avoid the need to file updated pharmacy registration forms in any state in which Philidor or its affiliates operate?
• How many of your former employees, contractors or agents work at Philidor? What are their names and titles and what is the nature of their responsibilities?
• What was Valeant's role in establishing Philidor or its affiliates, if any?
• As suggested online by Probes Reporter:
• What communications, if any, has Valeant had with the SEC’s Division of Enforcement, the US Attorney/DOJ, or Canadian regulators, regarding any matter, in the past 30 days?
• If such communications exist, what was the purpose and date of those communications?
• Last week the company said it received a subpoena from the U.S. Attorney's Office for the District of Massachusetts and a subpoena from the U.S. Attorney's Office for the Southern District of New York. Who they were sent to?
• Have you received any as-yet undisclosed subpoenas, requests for documents, or notices of the commencement of investigations by any other government entity since your prior disclosure?

Some Questions for Philidor Rx Services LLC

• Who owns and has owned Philidor?
• Do you fill prescriptions for patients living in California? When we phoned, your representative indicated that you ship to "all 50 states." How are you legally able to ship products to states such as California, where you are not licensed?
• What advice did you obtain, and from whom, that you could legally fill prescriptions and mail them to customers in California, a state in which you are not licensed?
• Why did you, as the California Pharmacy Board found, omit required information from your filing to become licensed in California?
• For what products (and from what manufacturers) do you fill prescriptions? What is your annual prescription volume and revenue from each product?
• Has Philidor Rx Services ever submitted a claim for reimbursement to a payer, whether government or private, using an identifier (such as NPI, NCPDP, or NABP) assigned to R&O Pharmacy, West Wilshire Pharmacy, or any another entity?
• Your CEO said in an email to Russell Reitz, filed in a court proceeding, that you no longer do so. For how long did you do so? From when to when?
• How many prescriptions were filled using another entity’s identifier? What was the total amount of revenue from these prescriptions, at wholesale cost and net to you?
• What advice did you obtain, when, and from whom, that made you comfortable, as your CEO Andy Davenport indicated, that such practices were legal and did not constitute insurance fraud or “health care benefits fraud” as defined in 18 USC § 1347? 
• Did you switch as was alleged for the purposes of reducing the scrutiny of insurance companies on your claims?
• What portion of your prescription volume and revenue is for products sold by Valeant and its subsidiaries?
• When did you first form a business relationship with Valeant?  What has been the nature of your relationships (financial, legal, commercial) with Valeant over time? What is the nature of that relationship today?
• Does Valeant provide your owners, officers, or employees with any incentive derived in whole or in part on the volume, type, or price of prescriptions filled?
• What are your responsibilities for administering Valeant’s prescription access programs? How are you compensated?
• What happens if an insurance claim for a prescription is denied? Does Valeant compensate you for the wholesale cost of the medication you dispensed?
• From which wholesalers do you purchase products? Are these products physically located in and dispensed from premises owned by or leased by Philidor?
• What procedures do you have in place to ensure that patients receiving co-pay waivers do not subsequently submit claims for reimbursement to government-funded programs such as Medicare, Medicaid, TriCare, and the VA?  What portion of your customers (and what portion of your revenue) is from customers eligible for such government-funded programs?
• How much investment capital, working capital, or other funding has Philidor Rx Services LLC received since inception? Who provided that funding?
• Did Valeant or any of its subsidiaries, current or former, provide any equity, debt or other form of financing to Philidor, now or in the future?
• It has been reported by several sources that patients have received calls from Philidor to refill prescriptions, whether they requested such a refill or not. Do your employees or automated systems place outbound phone calls to patients for the purpose of or with the effect of generating refill requests? Have your employees offered to waive co-pays on prescription refills generated through outbound phone calls? Were any of these calls made by automated means, commonly known as “robocalls?” If so, did you secure your customers’ prior permission to place such automated calls, as required by the Telephone Consumer Protection Act?
• If such reminder calls are indeed placed, who is placing them? Are these persons licensed pharmacists, pharmacy technicians, or pharmacy interns?
• Do any of your employees have quotas or other volume-based incentives, monetary or otherwise, for generating prescription refills from prior patients?
• Do any of your customers have their prescriptions refilled automatically, whether requested or not?
• If a prescription that you mail is returned as undeliverable, is the claim cancelled and the payment refunded to the insurance company?
• Who are the largest customers for your services and how much revenue do you generate from each?
• How are your employees compensated? Are any employees required to meet quotas in terms of numbers of prescriptions filled (or refilled), claims filed, or reimbursements obtained over a specified period? Are any employees rewarded through incentive compensation for exceeding such targets?
• What is the nature of your relationship with BQ6 Media and its employees, who are members of Philidor Rx Services?
• Are any executives, employees, contractors, or agents, whether full or part-time, of Valeant or its subsidiaries, current or former, assigned to, resident in, or commonly present in your offices in Pennsylvania or Arizona? Who? How much time did they spend in your office? What was the nature of their responsibility?
• How many of your employees, current or former, are or have been employees of Valeant Pharmaceuticals and its subsidiaries, current or former?
• How many employees do you have? How many hold state licenses as pharmacists, pharmacy technicians, or pharmacy interns?
• Are any of your employees subject to quotas or other incentives (positive or negative) for number of phone calls or prescriptions filled over any period? If so, what are the terms of the quotas and/or incentives and to whom do they apply?
• How many prescriptions do you dispense per day? What has that total been, per quarter, for the past three years?
• Have any payers ceased to cover prescriptions filled by Philidor Rx Services or its affiliates? If so, who, when, and why? 
• Did you solve this by changing the pharmacist identification number to as small pharmacist that you had purchased for the person of diversifying the distributing pharmacy.
• Have you at any time failed an audit by a payer? If so, who, when, and why?
• Has any payer ceased to do business with Philidor, including withholding payment for prescriptions filled? Has any payer so threatened? Who, when and why?
• What portion of your revenues from drugs sold by or produced by Valeant Pharmaceuticals and its subsidiaries?
• What was the total amount of co-payments collected, by quarter, for the past three years? What was the median, average, and total co-payment amount collected, by drug?
• Are the operations of any other entity consolidated on the financial statements of Philidor Rx Services LLC?
• At any point was the work or performance of any current or former employee, whether full- or part-time, or member of Philidor Rx Services subject to direction or review by any other person or entity currently or formerly employed or retained by Valeant Pharmaceuticals and its subsidiaries, current or former?
• Has Philidor Rx Services LLC or any entity other entity in which it owns an economic interest or exercises operational control received an audit from a PCAOB-registered accounting firm? If so, whom?
• How often did you meet with executives, employees, or agents of Valeant Pharmaceuticals or its subsidiaries, current or former?
• Did Valeant’s auditors, PriceWaterhouseCoopers LLP, conduct an audit of your operations and financial results before your operations were consolidated into Valeant’s financial statements? If not, why not?
• When did Valeant purchase an option to acquire an equity interest from the members of Philidor Rx Services LLC? What did they pay for that option? What were the terms of the agreement? Why did you choose to sell an option rather than your membership interests directly?
• When your members sold an option to Valeant to acquire your interests, did you update your registration with any state or federal authorities, such as Boards of Pharmacy, the DEA, VA, DOD/TriCare, HHS, or CMS? If not, why not?
• You stated in your press release that “Philidor does not currently have a direct equity ownership in R&O Pharmacy or the affiliated pharmacies, but does have a contractual right to acquire the pharmacies now or in the future subject to regulatory approval.” As court documents filed by Isolani LLC indicate that it is Isolani LLC that would own 90% of R&O upon consummation of the transaction with Mr. Reitz, how is it that you came to own an option to acquire R&O?
• Do you believe that an entity that has been denied a license to operate a mail-order pharmacy in California can purchase—either directly or through an option to acquire—a licensed pharmacy in California?
• What is the nature of your relationship (commercial, legal, financial, operating) with R&O Pharmacy now and over the past three years?
• What is your role in R&O’s pharmacy operations?
• Why did you send invoices, as filed with the court, from Philidor to purchase products from Valeant Pharmaceuticals, to the attention of the R&O Pharmacy finance department?
• Why did your employee send emails suggesting to Russell Reitz
• Why did you use and then discontinue the use of, as the email from your CEO Andrew Davenport filed with the LA County court by R&O Pharmacy indicates, the various identifiers (NPI, NCPDP, NABP) assigned to R&O Pharmacy?
• As you are licensed in many states, why did you desire to use such identifiers assigned to R&O Pharmacy?
• As the acquisition agreement filed with the LA County Court indicates that such identifiers were to be assigned to Isolani LLC as part of the purchase of R&O, how did Philidor Rx Services obtain the right to use such identifiers itself?
• To your knowledge, have any of your employees—including licensed pharmacists or pharmacy technicians—resigned due to reservations about the conduct they observed and/or in which they were asked to participate? What did you do, if anything, to learn of those concerns and/or ameliorate those of which you were informed?
• What information did Russell Reitz provide you that made you agree to stop using identifiers such as NPI#, NCPDP# or NABP# belonging to R&O Pharmacy?
• Are you aware that this document - that you filed in State Court in California contains a putative list of products distributed by R&O but in fact fulfilled by you. Moreover are you aware that the identification numbers in that document correspond to UPS tracking numbers and hence you have provided evidence that product was shipped to areas where you or R&O were not licensed?
• Are you aware that changing the pharmacist identification number for the purpose of deceiving the payer is wire fraud against a financial institution? Are you aware that the fine is $1 million per instance and the instances are cumulative?
• What is the nature of your relationship (commercial, legal, financial, operating) with Isolani LLC? What services does Philidor provide, if any, to Isolani LLC?
• Is Eric Rice an employee or has Eric Rice ever been an employee, contractor or agent of Philidor or its affiliates? If so, what are/were his responsibilities? What are/were his dates of employment, title, and assigned office location?
• What is the nature of your relationship (commercial, legal, financial, operating) with Lucena Holdings LLC? Are its operations reported on Philidor’s financial statements? How?
• What is the nature of your relationship (commercial, legal, financial, operating) with Brighton Way Pharmacy (d/b/a West Wilshire Pharmacy) now and over the past three years? Why was such a relationship formed? What was the genesis of such a relationship and what benefits did it provide to you? Are Bright Way Pharmacy’s operations reported on Philidor’s financial statements? How?
• What is the breakdown of prescriptions filled by Philidor (and its affiliates) by dispensing code? Where no DAW code has been supplied, do pharmacists in your employ (whether full or part-time) offer a generic alternative to the patient when available?
• Does Philidor report data on the prescriptions it fills to IMS Health or other third-party supply chain reporting services?
• What reports does Philidor provide to Valeant management and on what schedule?
• Why are all the entities related to Philidor (BQ6, Isolini, Lucena, Philidor itself, KGA) named for chess moves?
• What other pharmacy relationships does Philidor have that have not yet been disclosed? What is the nature of those relationships?
• Why did a member of Philidor, Fabien Forrester-Charles, register a second domain name for R&O Pharmacy? Similarly, why were domain names created for West Wilshire Pharmacy, Orbit Pharmacy, Safe Rx Pharmacy, and dandapharmacy.com?
• What exactly is your relationship with West Wilshire Pharmacy today and over time?
• Why is Sherri Leon, a pharmacist you employ, listed as the Registered Agent in CA state filings for Brighton Way Pharmacy, the legal name of West Wilshire Pharmacy?

Some Questions for Eric Rice, Sole Member of Isolani LLC

• Is Philidor Rx Services LLC your full-time employer, as indicated on your LinkedIn profile? If not, who is?
• Did you form Isolani LLC of your own volition, or were you directed to do so by another party? If so, whom? If not, why did you personally decide to acquire a pharmacy in California?
• By name and amount, who has ownership of, or the right to acquire ownership of, an economic interest in Isolani LLC?
• How many employees does Isolani LLC have and what are their names, titles, and dates of employment? Are any of them now, or have any of them been, employees of Philidor Rx Services LLC or Valeant Pharmaceuticals (and its subsidiaries, current or former)?
• Were you the sole provider of initial start-up capital for Isolani LLC? If not, what other person or entity provided capital? Were Philidor, Valeant, or their subsidiaries (current or former), or employees (current or former) among those who provided capital?
• Did you personally provide the $350,000 to purchase R&O Pharmacy from Russell Reitz, as outlined in the purchase agreement you filed with the court in your lawsuit against R&O? If not, who did? Did Philidor, Valeant, their subsidiaries, or their employees provide any capital to you personally or to Isolani LLC to facilitate this purchase?
• As Isolani LLC is entitled to all of the profits and losses of the operations of R&O Pharmacy according to the purchase agreement you filed with the Court, do you personally receive such profits and bear such losses?  If not, who does? Are any of the persons who are entitled to receive such profits or bear such losses current or former employees or entities currently or formerly associated with Philidor Rx Services LLC or Valeant Pharmaceuticals in any respect?
• Have you signed any agreement governing the operations of Isolani LLC or the assignment of its profits and losses to any other entity, including Philidor Rx Services LLC, Valeant Pharmaceuticals, their subsidiaries (current or former), or their employees (current or former)?
• Who is providing the funds to pay attorneys and other expenses in your lawsuit against R&O Pharmacy in California? Are any of these funds provided by Philidor Rx Services LLC, Valeant Pharmaceuticals, their subsidiaries, or their employees?
• Why was Isolani LLC formed to purchase a 90% stake in R&O Pharmacy rather than having Philidor Rx Services LLC or Valeant (or its subsidiaries) purchase it directly?
• Why did you request, as part of the purchase agreement you filed with the LA County Court in your lawsuit against R&O Pharmacy, that Russell Reitz transfer, at your request, his NABP/NCPDP and NPI numbers into Isolani LLC’s name? In using such identifiers, do you believe that Isolani LLC, itself not a registered pharmacy in any state or with the federal government, be in compliance with pharmacy registration requirements?
• Are you based in Pennsylvania, from whence you direct the operations of Isolani LLC? If so, why are you not registered as a foreign corporation in Pennsylvania?
• Why, according to emails filed with the court, did a controller for Philidor Rx Services LLC undertake to assist R&O Pharmacy with its compliance audits by a payer customer, when the 90% owner of R&O is Isolani LLC?
• Philidor Rx Services indicated in a press release that they own an option to acquire R&O Pharmacy, of which Isolani LLC owns 90%. What are the terms of this option? When did Philidor acquire this option and for what compensation? Did you receive any proceeds from this sale personally? If not, as you were the sole member of Isolani LLC, why not?

Some Questions for Brighton Way Pharmacy, Inc., d/b/a West Wilshire Pharmacy?

• Have you mailed any prescriptions to patients outside of California, the only state where you are licensed?
• What is the nature of your relationship (commercial, legal, financial, operational) with Philidor Rx Services at present and historically?
• To your knowledge, has anyone not a direct employee of Brighton Way Pharmacy caused any identifier assigned to Brighton Way Pharmacy (such as an NPI, NCPDP, or NABP number) to invoice a payer for a prescription or other services?
• What is the nature of your relationship with Lucena Holdings, a Delaware LLC?
• Have any employees, contractors or agents of Valeant or its subsidiaries, current or former, been physically present on your premises in Los Angeles? For what purpose?
• Have any employees, contractors or agents of Philidor Rx Services or its subsidiaries, current or former, been physically present on your premises in Los Angeles? For what purpose?
• How many persons do you employ? How many are licensed pharmacists, pharmacy technicians, or pharmacy interns?
• How long has Aisan Zagarian been licensed as a pharmacist in California? Is West Wilshire Pharmacy her first employer as a registered pharmacist? How many prescriptions has she filled in the time she's been employed at West Wilshire?
• For what products do you fulfill prescriptions? Do you fill prescriptions for any products not manufactured or marketed by Valeant Pharmaceuticals or its subsidiaries, current or former?

A Question for Fabien Forrester-Charles

• You know it's always the guy named “Fab” who gets blamed for the whole mess, right?

Some comments on the Valeant conference call

Background: Roddy Boyd wrote a fine article about Philidor - a speciality pharmacy tied to Valeant. You can find the article here. Some of the conference call addresses that article. However I want to start in the Q&A.  

Valeant recently purchased Salix - a company that focused on gastrointestinal disorders. Xifaxan - a drug from Salix - is now the largest drug by sales in the Valeant portfolio. 

The conference call (transcript here) includes this exchange on Xifaxan.

Alex Arfaei - BMO Capital Markets - Analyst 

Sure. Just trying to figure out -- you said [Salix Revenue] was going to be about $300 million, you're recognizing $460 million. So, I'm just trying to figure out what changed since you provided that guidance.

J. Michael Pearson - Valeant Pharmaceuticals International, Inc. - Chairman and CEO 

I think a couple things. One is we don't know exactly -- we know what the inventory is with the big three, we don't know how much inventory there is in some of the other distributors because there were no agreements in place to tell us that. What we're not doing is providing any discounts or any incentives for people to buy Salix products. 

Also, the inventory was not sort of -- it wasn't that everyone had like five months of extra inventory of everything. It really varied by product. So, there might have been a year's worth of one product and four months of another product. That's why it's taking time. It's taking time to reduce those inventories. 

But I think the sales, the fact that sales have increased -- again, there's no sales incentive, I think it's all growth. The products continue to grow above what we had forecasted in our deal model. And, as Rob mentioned, we're going to continue to try to be conservative. We don't want to get ahead of ourselves.
Then integration costs, the integration costs we've exceeded --."

I have highlighted the key sections.

The CEO of Valeant is stating that there are no discounts or any incentives for people to by Salix Products - and that the growth in the sales is thus organic - a result of market demand - and possibly their superior marketing ability. This was repeated multiple times. 

So I just googled Xifaxan Coupon and found this - on Xifaxan's own website. 

Now these are coupons. But whether they are "discounts or incentives for people to buy Salix products" I will leave to you to decide. 

However I am reminded of the famous exchange in Through the Looking Glass: 

“When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’

'The question is,’ said Alice, ‘whether you can make words mean so many different things.’  

You would think however at this time that the CEO of Valeant would be precise - lawyered up - regarding what they said about their incentive programs. After all just last week they received subpoenas on those programs. To quote their press release:

Valeant recently received a subpoena from the U.S. Attorney's Office for the District of Massachusetts and a subpoena from the U.S. Attorney's Office for the Southern District of New York. Most of the materials requested by the subpoenas relate to documents with respect to our patient assistance programs, and also include requests relating to financial support provided by the company for patients, distribution of the company's products, information provided to the Centers for Medicare and Medicaid Services, and pricing decisions.

And indeed the patient assistance programs, and Valeant's relationship with a speciality pharmacy called Philidor Rx services is central to this - and was addressed for the first time in the conference call.

What is Philidor Rx Services?

 Philidor Rx Services is a mail order specialty pharmaceutical company distributing almost entirely Valeant products and whose use is pushed by Valeant sales reps. It does not report its prescription data and hence analysing Valeant based on standard prescription data services gives erroneous results. [This led to some disagreement when Valeant tried to buy Allergan where Allergan were giving sales numbers and Valeant was denying them.]

Here is some sales and marketing material left by Valeant sales reps - including referrals to Philidor.

Note that the phone number for the Valeant access passport and for Philidor are identical.

Philidor is very large - and has grown very rapidly. [State] Senator Stewart Greenleaf recently filmed an interview with Andy Davenport of Philidor and put it on his facebook page.  That video is below:




The interview at no point indicates that Philidor is tied to Valeant. Andy Davenport state they partner with "manufacturers to help bring their branded medications to market as cheaply as possible". He says "manufacturers" plural but in reality they are captive by a single branded good manufacturer. He also says they chose the best manufacturers for the products on the market.

It stated that they have 635 employees nationally - and they think they will get something near to 1000 employees in 2015. They thought they would be 12-15000 prescriptions per day by the end of 2015.

The word Valeant never appears in this video. Similarly the word Philidor never appears in anywhere in the SEC filings for Valeant even though it is probably a double-digit percentage of Valeant's sales. That is right - there is simply no mention of it in SEC files.

Moreover Philidor has gone to some extent to hide its ownership. Here is the "whois" data on website ownership with the key details given:

Domain Name: PHILIDORRXSERVICES.COM
Registry Domain ID: 1774229314_DOMAIN_COM-VRSN
Registrar WHOIS Server: whois.networksolutions.com
Registrar URL: http://networksolutions.com
Updated Date: 2015-07-21T19:49:11Z
Creation Date: 2013-01-17T19:57:48Z
Registrar Registration Expiration Date: 2016-01-17T05:00:00Z
Registrar: NETWORK SOLUTIONS, LLC.
Registrar IANA ID: 2
Registrar Abuse Contact Email: abuse@web.com
Registrar Abuse Contact Phone: +1.8003337680
Reseller:
Domain Status: clientTransferProhibited http://www.icann.org/epp#clientTransferProhibited
Registry Registrant ID:
Registrant Name: PERFECT PRIVACY, LLC
Registrant Organization:
Registrant Street: 12808 Gran Bay Parkway West
Registrant City: Jacksonville
Registrant State/Province: FL
Registrant Postal Code: 32258
Registrant Country: US
Registrant Phone: +1.5707088780
Registrant Phone Ext:
Registrant Fax:
Registrant Fax Ext:
Registrant Email: b45245uq2sj@networksolutionsprivateregistration.com

Ownership it seems is deliberately hidden.

Indeed  Philidor appears to commit criminal offences to hide who their owners are.

The California Board of Pharmacy denied them a license to operate in California and in a court filing stated:

On July 24, 2013, in Respondent's application for licensure, Respondent made a false statement of fact with the intent to benefit Respondent, in that Matthew Davenport certified under penalty of perjury in section "E" of the "Parent Corporation or Limited Liability Company Ownership Information" application form that there were no entities with 10% or more ownership interest in Respondent. In fact, at that time, there was one (1) individual and one (1) corporate entity with more than 10% ownership interest in Respondent.

There are many other allegations of perjury by Philidor or its offices. Most of this [government alleged] perjury was designed to obscure who the owners of Phildor were.

What is Philidor's business model?

Philidor's business model is - as far as I can see - to facilitate the sales of Valeant products. They do this by being flexible about copays and aggressive about filling refills. When I first hinted at Philidor I got several responses from readers that knew precisely what I was talking about - primarily because they had been Philidor customers. This is a typical response:

John, I enjoy your blog very much.  I happened to see your cryptic message and I think I know what it is. 

I'm no expert on Valeant, but I just so happened to have been prescribed one of their pharmaceuticals about 6 months ago.  It was a foot cream to treat athletes foot called Luzu. What was strange was that the podiatrist suggested that the prescription be set up with a "by mail" pharmacy, telling me that they would cover  the co-pay for the first prescription. 

I went ahead and had the podiatrist sign me up with Philidor and the prescription was delivered.  A few weeks later, I got a call from Philidor.  They offered to cover the co-pay for all of the remaining refills, which was maybe 3 more refills.  What is important is that this really isn't the type of prescription that would normally require constant refilling.  I probably wouldn't have never ordered these refills if someone else hadn't offered to cover my cash costs. 

I found this to be a pretty aggressive marketing tactic, which certainly could be used to attempt to stuff sales and bilk insurance companies.  I do understand that Philidor was either created by or strongly associated with Valeant.  

Well, not sure that is exactly what you were getting at with the cryptic message but that's what I got out of it..... 

Cheers

I asked (and you will see why I asked later) who the insurance provider was and got this response:

The provider was Anthem, www.anthem.com 

I'm not versed in the Healthcare world but I just found it so strange and aggressive that it made me question the efficacy of the practice. What was perhaps the most strange was that the doctor seemed to have been incentivized to steer me towards Philidor, and was at least somewhat aware of the relationship between Valeant and Philidor. It made me wonder what perks the doctor may have been receiving to plug Philidor and Valeant drugs.  

With all that said, I now have a least a few years supply of athletes foot cream, haha. 

It is also easy enough to find complaints online (by former staff) about Philidor auto-refilling prescriptions without appropriate customer approvals. [To do this you obviously need to waive copays.]

There are multiple reports online about Philidor robo-calling people and sending them prescriptions. Some reports state that the prescription arrives without approval.

Philidor it seems was established with a great deal of assistance from Valeant sales people. Here is the citation on an award Valeant gave to one of its drug reps. [The rep in question is a former major league baseball player - and a copy of all the awards can be found here.]

It states clearly that the rep helped launch Philidor in six states.  This is what is rewarded in sales at Valeant.

Efforts to find out who really owns Philidor

We made extensive efforts to work out who owns and who facilitated Philidor. As we noted the website gave no clue. As of 24 June 2014 (according to the Great State of California) there was one individual owner and one corporate owner with more than a 10 percent stake.

So we dug and dug.

Philidor Rx Services LLC is a Delaware LLC that was formed in early January 2013.

The head office is in Pennsylvania, and it formed an LLC in Pennsylvania a few weeks later.

As Philidor operates in a number of states, it needs pharmacy licenses and "foreign" incorporation in several of those states. One of them is North Carolina, where Philidor Rx Services registered as a foreign LLC in late 2014.

Helpfully, North Carolina's registration lists some of the people involved in the LLC. (This is a bit nuanced, as North Carolina law indicates that all "members" aka owners of an LLC are automatically considered managers, unless the Articles of Formation state otherwise. So we can't prove using this document that the people listed are definitely legally the owners, but it's a pretty strong bet. Some of this is explained here:

Anyway you can find a list of the "members" of Philidor here which for convenience I have cut-and pasted as a picture.

In early 2015, something changed, for reasons we are don't quite understand. At that time, all on roughly the same day, each "manager" listed in the NC filings above had an identical UCC filing placed on their holdings in Philidor in their respective home states of PA, NJ and NY. We think this corresponds to a mortgage or lien over the shares. There should be a similar lien in Florida but we have not found it yet.

The lien covers all equity interests of any type that the individuals would acquire. Here is one such filing.

You can find the original filing here.

The lien was filed 24 February 2015 and is in favour of KGA Fulfilment Services.

KGA Fulfilment Services was easy to find. They exist in the SEC database only once - as a subsidiary of Valeant in an attachment to the last annual accounts.

So here we have it. A company that (at least in 2015) looks to be financed by Valeant but where management have gone to the extent of [alleged] perjury to hide who the underlying financiers are - and who auto-refill prescriptions waiving copayments.

There are also very big accounting issues with financing your customers [and not disclosing it] and we were very interested in the scale of this financing.

The new disclosure in the 3Q 2015 conference call

We have been poking around Philidor for some time now. Other people have too - as I have been sent things by other people. Roddy Boyd almost certainly tried to get answers from management when he wrote his (above-linked) article.

The conference call was the first time in any correspondence that Valeant has disclosed their relationship with Philidor. Here is the core slides from the conference call presentation.

They specifically state that they purchased an option to acquire Philidor in late 2014 and that they now consolidate Philidor as a variable interest entity. Normally that would be disclosed at least by name. Buying what was probably your biggest customer usually requires disclosure.

Whatever, Valeant say the effectively purchased Philidor in 2014 - but then the question is why there was no charge over Philidor holdings until late February 2015. It is hard to enforce an option if you do not have security over the shares.

R&O Pharmacy

R&O is a relatively small local and mail-order pharmacy operating in Ventura County California. I suspected originally and possibly even now that Valeant used R&O because Philidor did not have a license to operate in California.

This first came to my attention when The Skeptic tweeted a picture of a demand letter sent by Valeant demanding almost $70 million in payment from R&O. Here is a link to the demand letter and below is a picture.

This produced one of the most bizarre court filings I have ever seen. R&O simply deny [under penalty of perjury I presume] that they have received any relevant invoices from Valeant. You can find the filing here - and the key text is below:

On September 4, 2015, R&O received a letter from Robert Chai-Onn, Valeant’s Executive Vice President, Chief Legal Officer and General Counsel. In the letter, which was the first correspondence that R&O had ever received directly from Valeant, Mr. Chai-Onn claimed that R&O, a small licensed California pharmacy, owed Valeant over $69,000,000. However, R&O has never received a single invoice from Valeant in any amount and until September 4 had never received a single demand for payment from Valeant. R&O has requested copies of the invoices, but to no avail. Indeed, it seems that Valeant has no evidence whatsoever to back up its claims.

Therefore, R&O believes that one of two things must be true: 

1. Valeant and R&O are victims of a massive fraud perpetuated by third parties; or 

2. Valeant is conspiring with other persons or entities to perpetuate a massive fraud against R&O and others. 

The purpose of this action is for R&O to get to the bottom of this, avoid accrual of avoidable damages, if any, and secure an early adjudication without waiting until Valeant sees fit to file suit.

To say this was puzzling is understating it. It seems vanishingly unlikely that R&O (a licensed pharmacist) would rush to court to commit perjury regarding a $69 million amount. But essentially that is what Valeant stated in the conference call. To quote Mike Pearson (Valeant's CEO):

Next question: Why did Valeant's General Counsel send a letter to R&O? R&O is one of the specialty pharmacies in our network, and Valeant has shipped approximately $69 million at wholesale prices to them. This represents approximately $25 million at net prices. Any products R&O dispensed to patients were recognized as our revenues, and are reflected in our receivables. Any products still held by R&O are reflected in our inventory. R&O is currently improperly holding significant amounts it receives from payers. We will refrain from comment on active litigation, and look forward to showing in court that we are owed the money.

This is a pretty big difference you might think. R&O says that they have never received communication directly from Valeant and Valeant says that they are one of the speciality pharmaceutical companies in their network and they have been shipping them material for some time.

The problem is that neither of these explanations make much sense to me.

Here is the limited stuff that I can find out about the relationship between Valeant and R&O and (dare I say it) our old friend Philidor.

First there is a name server associated with Philidor's website. You can find all the domain names on the same name server at this link. Here is the list:

Domains hosted on as62559

Domain	IPv4 Address
westwilshirepharma.com	8.34.189.50
saferxpharma.com	8.34.189.50
randopharmacy.com	8.34.189.50
orbitpharmacy.com	8.34.189.50
dandapharma.com	8.34.189.50

Now note this. There is a website for an randopharmacy.com on the same name server as Philidor.

But - and this is really strange - it is a different R&O Pharmacy from the website that received the supposedly spurious demand for roughly $70 million.

These are the two websites for an R&O [or an R and O] pharmacy. Here they are.

http://r-opharmacy.com/

and

http://randopharmacy.com/

Only the latter one of these has the same name server as Philidor. Here - before they disappear - are pictures of the front page of both websites.

The seemingly non-related website:

And the one that shares Philidor's web server:

You will notice if you poke around the website that the phone numbers are also quite different. The Philidor associated website has used the same method to hide its ownership as Philidor. Its domain register as follows (edited):

Domain Name: RANDOPHARMACY.COM 

Registrant Name: PERFECT PRIVACY, LLC

However the randopharmacy.com website contains a privacy policy. You can see an original here, or a copy here or a picture below.

Now if you read it says this:

 It’s Your Information. This Notice describes your rights concerning your health record. 

The law requires health organizations, such as Philidor Rx Services, to: 

-maintain the privacy of your health information
-provide you with this Notice of our legal duties
-describe our privacy practices
-notify you if we have an information breach 

We know your health information is very personal and we are committed to protecting your privacy.

Look at that highlighted section: randopharmacy.com says the law requires organisations like Philidor to do things.

You see this pharmacy has revealed itself. This R and O pharmacy is Philidor or at least a closely associated related party to Philidor.

And now I have a theory about what happened in this law suit. Valeant has sent product to randopharmacy.com and then sent demands to http://r-opharmacy.com/. The latter has responded by telling Valeant that they are the victim of a major fraud.

R&O Pharmacy [the one that received the demand letter] appears to right. Valeant appears to be either involved in or the victim of a major fraud.

But alas again it is not so simple. I phone the phone number on the randopharmacy.com website and got what sounded like a fax machine. [There was no personal contact and the number didn't work for a telephone pharmacy.]

So I rang the phone number on the r-opharmacy.com website [805 319 7260)] out of California hours. They could not take my phone call right now.

However they offered a button to push (the number 1 on my keypad) if I wanted to fill a dermatology prescription.

Philidor Pharmacy answered the phone.

I asked only one question - which was to assert that I lived in California and to ask whether they would ship to me. The answer floored me:

"Yes Sir the whole US of A".

You see the problem. Philidor was denied a non-resident pharmacy licence in California with the Californian authorities alleging perjury. But they ship to California anyway.

We are still trying to work out who is committing fraud on whom. There is clearly some going on but who the victims and who the perpetrators are is not obvious.

But what we have is Philidor (a Valeant consolidated entity) selling pharmaceuticals unlicensed in California and with a fake website for randopharmacy.com. They do this despite being specifically denied a license in California.

However R&O Pharmacy - the real one - clearly has a strong link with Philidor. You can call R&O's phone number and be transferred to Philidor.

It is entirely possible that R&O thought they had no relationship at all with Valeant until the demand letter came. They clearly knew they had a relationship with Philidor - but Philidor and Valeant carefully shielded their relationship and it only became public in the conference call.

One possibility is that Philidor sold scripts in the name of R&O [which would explain the double-website] and kept the money itself - telling Valeant that the money was sitting at R&O and was owed by R&O. I guess other possibilities are also possible and I have no way to handicap them.

Whatever: Mike Pearson has a very big problem and it extends beyond the more $50 million he will need to write off. It is possible - even likely - that some people associated with a variable interest that Valeant consolidates [and I have limited idea which people] have set up an entirely new randopharmacy.com - and have defrauded either Valeant or possibly some insurance companies of almost $70 million.

Valeant has

(a) booked the revenue and
(b) told everyone that they will win in court.

It is does not have decent operational or financial control over Philidor. And Valeant collecting this money seems unlikely.

Trying to work out which Valeant/Philidor/R&O officers committed the fraud - evidence from domain name history

A fraud has been committed here but I can't tell who by. And I can't tell who is the victim of this fraud.

We wanted to see if we could work out in more detail where the fraud was committed - at least for the purpose of telling the relevant Attorney Generals who to subpoena as part of their inquiries.

We went looking for the domain history of randopharmacy.com and we found some useful material. Specifically here was the registration history for 13 May 2015 edited to the core details:

Whois Record on May 13, 2015
Domain Name: RANDOPHARMACY.COM
Tech Name: RX Services, LLC, Phildor
Tech Email: ffcjfc@gmail

This proved that for about one day - 13 May 2015 - the domain was registered to Philidor Rx Services (which we now know is consolidated into Valeant and is effectively Valeant). The probability that Valeant needs to sue itself looks stronger. [You can find the entire domain history here.]

There is also at tech contact email there ffcjfc@gmail. That email it seems belongs to Fabien Forrester-Charles as we discovered from the website of Emily Weaver Photography.

Fabien Forrester-Charles is a name that we had come by in our research and will be known to Valeant
 Management. He is a part owner of Philidor and had pledged his shares to KGA Facilitating. The document by which he pledged his shares is copied below.

Mr Forrester-Charles appears on several domain name registrations. He may not be the person who established the phoney randopharmacy.com but it is likely that he knows who that person is. [The US Attorneys who have subponead Valeant would do well to ask Mr Forrester-Charles for information.]

Valeant's linked specialty pharmacies - the key to their growth - have been compromised

The tied specialty pharmacies and their rather aggressive copay sales tactics - which are the key to Valeant maintaining sales for some often marginal products whilst raising their prices look compromised.

There is a possibility that the biggest one - Philidor - contains fraudsters who set up fake associated pharmacies and then don't pay their bills. I can't tell whether this is junior staff or senior staff - and I can't tell whether the parties being defrauded are just Valeant or a combination of private insurance companies, Valeant and or Medicare/Medicaid.

The biggest specialty pharmacy (Philidor) is clearly delivering product to California despite being specifically (and pointedly) denied a license to operate in California and giving false statements under penalty of perjury by the Government of the Great State of California.

When you have subpoenas outstanding from two US Attorneys offices into the practices of these pharmacies this is going to matter.

Moreover I demonstrated at the beginning of this post that Mike Pearson does not actually know how the incentive programs work on the ground. He repeatedly (and falsely) stated that Valeant does not use those programs on Salix products.

The reason he largely does not know is the incentive programs are outsourced to specialty pharmacies (and as we will see below) also to some charities. And the key specialty pharmaceutical company appears to have a fraud problem (although we do not know the full nature or extent of that problem).

Copays and copay fraud

The two US Attorneys who have sent subpoenas to Valeant asked specifically as follows:

[D]ocuments with respect to our patient assistance programs, and also include requests relating to financial support provided by the company for patients, distribution of the company's products, information provided to the Centers for Medicare and Medicaid Services, and pricing decisions.

[This was quoted above...]

It is worth understanding what the criminal offences they might be investigating are. They relate mostly to copays.

Copayments for drugs exist for good reasons. Firstly and obviously they recoup some of the costs of the drugs from patients. But far more importantly they verify that (a) there is a patient and that they are a real patient, (b) that they actually want the drug at least enough to make a small copayment.

Australia used to have an entirely free pharmaceutical system for people eligible for the pension. A $2 copayment was introduced. This trivial copayment had a surprisingly large effect on the demand for a drug.

Whether it is legal to waive copayments depends on the relationship between the insurance company and the pharmacy. [In many instances waiving of copayment has been deemed to be fraud.] However critically it is a criminal offence to systematically waive copayments when the insurer is Medicare or other Government programs. This is not something to take lightly - the Government does not like to be defrauded.

If the Valeant tied specialty pharmaceutical companies systematically waive copays for Medicare patients then there is considerable doubt whether Valeant can survive. A criminal charge against an entity with $30 billion in debt is likely to be fatal.

Moreover we have found direct evidence that Philidor sells pharmaceutical products in the Great State of California despite being pointedly denied a licence to do so. [Integrity is a question here.]

We looked hard and alas we found no direct evidence that Philidor waives copayments on Medicare insured pharmaceutical products. Indeed if you have a look at any Valeant coupon advertising it specifically states that these coupons are not available for medicare or medicaid patients. Here for example is a picture of the Jublia coupon page. Jublia is an ointment with an 18 percent chance of reducing toe-nail fungus and a cost of over $8,000 per course of treatment:

The relevant text is this: "This offer is not valid for prescriptions reimbursed in whole or in part by Medicaid, Medicare, federal, or state programs (including any state prescription drug programs)."

We have found similar text on every Valeant coupon page.

Drug companies however are a creative lot. They have found a way of ensuring that many Medicare patients are not out-of-pocket on pharmacy purchases. They fund "copay charities". The charities (and you hope they are genuine charities) tend to be funded by many pharmaceutical companies and will make copayments on branded drugs subject to means tests. They are - for obvious reasons - not allowed to be specific to one company's drugs.

Mr Pearson in the conference call was keen to indicate that Valeant was compliant with the law regarding copays. After all this is what the US Attorneys are looking at. To quote:

Valeant's patient assistant programs are administered by a reputable third party, and we fund outside foundations that have multiple donors. Eligibility is determined by the independent foundations. It is also important to note that eligibility for our in-house commercial access programs is limited to patients not covered by government programs. Looking at history, our commitment to patient assistant programs has grown at an annual compound rate of 128% from $53 million in 2012 to approximately $1 billion we expect to spend in 2016.

He specifically says that the "in-house commercial access programs is limited to patients not covered by government programs" and that they use outside foundations with "multiple donors". These programs will of course be the subject of some inquiries by the US Attorneys.

There is a minor contradiction in the statements by Mr Pearson on the call. Earlier in the call he stated that Philidor provides "administrative services for our copay cards" and we now know that Philidor is consolidated and not a "third party".

--

The question of course is whether these lofty standards are upheld in practice. That will be the subject of the US Attorney's inquiries. And there is a problem - we have identified serious issues at Philidor and Philidor provides administrative services for Valeant's copay cards. We have no idea how this will work out - but we suspect there may be some difficulties.

The size of Valeant's "patient assistance" programs and what it says about Valeant's business model

In the above quote Valeant states that their patient assistance programs are growing at 128 percent per annum. They will spend approximately $1 billion in 2016. This will be a high single-digit percentage of revenue and it looks like almost all of their products will have patient assistance for most of their sales.

This is extraordinary. Valeant has long said that they have avoided products which are dependent on reimbursement. If you google the phrase "significant cash pay component" you find literally dozens of Valeant presentations that harp on that as being an advantage of the business model.

That seems to have been a smokescreen. Valeant plans to spend a billion dollars in 2016 so that patients do not have to cash pay for most of their products.

The rest of the call

I could wander through Valeant's numbers in some detail. They are always moderately funky. This time for instance they touted their GAAP profit however did not point out that they had pre-tax losses and their profit was entirely from a sharply negative tax rate. As usual they did not provide a balance sheet anyway - so that is unusually hard to to on the day results are released. However after the

(a) demonstration that the CEO is not on top of the copay program [for instance he falsely denied that the company offers patient assistance on Salix products],
(b) the demonstration that their core distributor (Philidor) has (according to the Great State of California) perjured themselves
(c) the demonstration that they went to extraordinary levels to hide their funding and later effective ownership of Philidor
(d) the likelihood that people at Philidor have been involved in defrauding Valeant by impersonating R&O pharmacy
(e) the demonstration that Philidor sells drugs in California despite being pointedly denied a license to do so
(f) the likelihood that that fraud extends to the programs that are the subject of investigation by two US attorneys and
(f) the demonstration that the company has been misleading about its business model ("significant cash pay") for years

anything I will say about the numbers will be churlish.

I am short this stock. The US Attorneys are actively involved and somehow I think that is bearish.






John

A cryptic post: no comments will be accepted as this is intended to remain cryptic (for a while anyway) (#timestamp)

Me: I just want to say one word to you. Just one word.

Graduate: Yes Sir

Me: Are you listening?

Graduate: Yes, are you?

Me: Philidor.

John

Alibaba - yeah right Jack

Jack Ma - the Founder Chairman of Alibaba - released a letter in response to recent movements in the stock and fears about the Chinese consumer.

Linked here (and quoted below) is the Business Insider story about that letter.

“All in all, China’s economy has immense potential. It will not be easy, but China’s future ‘economic miracle’ will lie in its ability to boost productivity and its use of big data and Internet technology to stimulate domestic consumption and generate exponential development opportunities,” wrote Ma. 

Alibaba is a massive retailer in China. The company estimates that there are 367 million users on the service spending around $US1,056 per person annually.

The GDP of China in 2014 is $10.3 trillion.

The population of China is (estimated) at roughly 1.4 billion people.

This makes for GDP per capita of roughly USD 7,350.

China is also a country which has a very low private consumption rate. The World Bank estimates a domestic consumption rate of about 36 percent of GDP. This is the flip side of China's huge saving rate.

Calculate it: household consumption per capita is roughly USD 2,650.

So the Alibaba amount of spending per user (USD 1,056) is almost 40 percent of that number.

Yeah right Jack.




John

PS. I figured there would be a few objections to this. So lets go through them.

Here is the original Jack Ma letter. He states explicitly that the marketplace does 3 trillion RMB of gross merchandise value. With 6.35 RMB to the USD this says that the gross merchandise value is USD435 billion. This is a bit over 4 percent of GDP or almost 12 percent of all household consumption.

The number of consumers is not stated in that letter - but the number of customers of Alipay is (that is 400 million) and Alipay has more customers than Alibaba. Alibaba's 367 million customers are widely reported. This calculates at about USD1,185 per customer. The 40 percent number estimate above becomes an even more outrageous 44.7 percent.

You may object that the 367 million customers are richer than the average Chinese person - and you would be right. However they cannot be 4 times richer because then the average income of the billion people who are not Alibaba customers would be below zero. They may be twice as rich plausibly, three times as rich if you really stretch it. But that is stretching it and the really rich in China do a lot of non-online spending (luxury cars, watches, travel etc). The 44.7 percent number calculated above is an overestimate - but however you estimate it the number will seem strange.

I report. You decide.




J

Financial pyramid schemes on Main Street

I can't resist this video - right down to the bullets put on the stack at the end.




A true pyramid scheme.

As the guys with guns, dogs and bad haircuts would say #keepstacking.




John

Pershing Square modifies their performance numbers with an eight day week

Pershing Square (the hedge fund associated with Bill Ackman) has a European listed closed-end fund called Pershing Square Holdings.

Pershing Square Holdings has a website on which it discloses weekly and monthly net asset value and performance.  This performance matches the returns of Bill Ackman's hedge fund.

They also disclose funds under management at Pershing Square (that is all assets under the strategy).

This is the website:

https://www.pershingsquareholdings.com/company-reports/weekly-navs/

Pershing Square Holdings reports both weekly numbers and monthly numbers.

According to prior press releases the numbers were released in the following pattern.

(a) Weekly numbers were reported as per the close of business Tuesday and made public the following Thursday (except when there are holidays).

(b). Monthly numbers are reported for the close of the month two days after the close of the month.

On Friday 2 October I took a screenshot the results. Here is that screenshot.

The observant will notice that the reporting dates are 

1 September,

8 September

15 September

22 September and 

30 September.

The last reporting date should - if the pattern were continued - be 29 September. Instead they reported data for 30 September. 

That last week has eight days.

The results as reported on the 30th of September were bad. Pershing Square scored minus 12.5 percent for the month.

However they were worse as per 29 September than 30 September. Valeant rose 12-13 percent that day. Valeant is Pershing Square's biggest holding. The vast bulk of the book moved in Pershing Square’s favour during the last day of the month.

The rough calculation is that Pershing Square's performance was almost $800 million worse on September 29 than September 30 - which a cynic might say provides an incentive not to report September 29 results. Of course I would say that Pershing Square is being (extremely) modest about their fantastic day on the 30th of September. 

A portfolio calculation is Appendix A.  [Our estimate is a $777 million swing between the 29th and the 30th of September. The only position that is not disclosed is the size of the Herbalife short. We have a fairly accurate estimate of the size of this position but it does not matter much for this calculation.]

Pershing Square was - it seems - would normally have report a minus 16.6 percent number as a month to date number, but possibly in innocent error did not make this (rather shocking) disclosure. 

There are plenty of stories in the press about Pershing Squares bad month (see here, here, here). I know that Pershing Square is a remarkably open institution. Mr Ackman is the king of the three hour press conference. It is unthinkable that he would not tell the world just how good their day was on the 30th of September.

So I will. 

Pershing Square - my estimate - was down 16.6 percent month to date as per the 29th of September but had a miraculous day on the 30th of September and finished down a mere 12.5 percent. 

The press reported about Pershing Square's terrible month but could have equally reported about their fantastic day. Without reporting the fantastic day I suspect the press is treating the Baby Buffett unfairly.

The new footnote

There was a footnote that explains the reporting data on Pershing Square Holding's website. Here it is in text and photo...

Weekly net asset value (“NAV”) is calculated as of the close of business on each Tuesday and posted on the following Thursday. In the event that Tuesday is not a business day, the Company will calculate the close-of-business NAV as of the business day immediately preceding that Tuesday. In the event that Wednesday or Thursday is not a business day, any such weekly NAV will be posted the next business day following that Thursday. End-of-month NAV is calculated as of the close of business on the last day of the month and will be posted within two business days thereafter. In the event that month-end falls on a Wednesday, the Company will report the month-end NAV on Thursday, and not report the weeklyTuesday NAV. In the event that Wednesday or Thursday is not a business day, any such month-end NAV will be posted the next business day following that Thursday...

In summary it says in the footnote says if the month ends on a Wednesday we will not bother reporting the Tuesday numbers. 

And the photo:

If you are really observant you will note the typo in the footnote. It says weeklyTuesday without a space in the text. This was deeply suggestive that the footnote is recent because Pershing Square's presentation material is usually highly polished and without typos. 

This footnote, with its sloppy and atypical typo was almost certainly written by a junior. [As you will see the footnote has been modified within days of its appearance.]

I wanted to confirm the footnote was recent. Did they just do it to hide the fantastic day they had on the 30th of September (or a cynic might say their bad month until 29 September) or did they have it all the time?

The way to tell is to check old months.

The last time that a month ended on a Wednesday is December 2014. 

If the rule applied then we should see a data point for December 31 and no data point for December 30.

Confirming recency Pershing Square Holdings had both a December 30 and a December 31 data point. They were still on the website. Here is a picture. 

This it appears this month is the first time Pershing Square have applied the month-end-on Wednesday rule. 

A cynic might say that this is a ham-fisted attempt to hide an extremely bad month-to-date data point. However I just think someone wanted to hide the spectacularly good performance on 30 September.

But don't worry - we will report Pershing Square missing data point for you.

On our estimate Pershing Square month to date on 29 September 2019 was down 16.6%. For the month to date. And then in brilliance they had a great day and finished the month much better.

They had to muck around with the calendar not to report to you the wonderful day they had on the 30th of September. [A cynic might suggest they mucked around with the calendar to hide bad results - but Mr Ackman would not do that.]

More changing footnotes

I sent this material to the Financial Times. I copied it to Bill Ackman. I think it was also handed around fairly widely. Within a few hours of market open Pershing Square had released a press release about their new market disclosure rules.  You can find a PDF version of that press release here. 

The new rule was as follows:

Pershing Square Holdings, Ltd. has made two changes to its NAV reporting policies. Weekly and monthly NAV reporting will now be provided on a one-business-day lag rather than a two-business-day lag. For weeks that include a month-end NAV report, PSH will provide only month-end performance. As a result of the changes, investors will now receive more timely NAV reporting, but only one NAV report each week.

Now the company will not report weekly results for weeks in during which the month ends.

The short-lived "if the month ends on a Wednesday" rule has gone and has been replaced by another footnote - the picture of which is here... The NAV page has also been reformatted.

The month end on a Wednesday rule was absurd. If there was no reason to give the data point for a Tuesday when the month ended on a Wednesday you could argue there was no reason for a Tuesday data point when the month ended on the Monday.

That suggests yet again they changed it on the spot so that they did not have to report the fantastic data on the 30th of September. [A cynic might suggest that they did it so they did not have to report an atrocious month-to-date data point on the 29th - however Bill Ackman would never risk being so needlessly deceptive.]

Whatever: the [Pershing Square] will not report a weekly number if the month ends on a Wednesday rule is now gone. They will no longer report weekly data in any week that a month ends.

This rule also has problems which indicate it was thought up on the fly. What for instance happens when the month end occurs on a Friday? Do they not provide any results that week (preferring instead to wait to the following Tuesday)?

Pershing Square changed its rules on the fly inventing and thinly disclosing an 8 day week to hide their wonderful performance on the 30th of September. The new rules are a confused and made up to support their modesty.

So we will report again. As of 29 September 2015, a date that Pershing would normally have reported, the funds were down 16.6 month to date. And they had a great day on the 30th.

Eight days a week

For the moment though Pershing Square thinks it is okay to - without prior notice - report on an eight day week. Sure they did it so they could modestly hide the fantastic performance on 30 September. But the motivation is not the issue here.

Having an eight day week opens Bill Ackman up for allegations of deception - allegations that Bill should neutralise immediately by reporting the interim data point as originally planned.

I would expect nothing less.




John

And just because eight day weeks are fun I should finish with a song for Bill Ackman.

As per the Beatles: "I ain't got nothing but love babe, eight days a week".

John

Appendix

Here are the holdings and prices as we estimate them at Pershing Square. The holdings other than Mondalez and Herbalife are from the last quarterly form.

The Mondalez holding is from recent filings.

The Herbalife estimate (which does not matter much for this calculation) is from our own estimate. It does not matter for this calculation as the Herbalife price was almost entirely unchanged on 30 September.

It is clear that Pershing Square had truly miraculous performance on 30 September. A cynic would say the month-to-date that they did not disclose (the month to 29 September) was terrible. I prefer to think of 30 September as wonderful.

J

Company	Ticker	Holding	Price 29 September	Price 30 September	Gain on 30 sep
Valeant Pharmaceuticals	VRX	19473933	$158.08	$178.38	$395,320,839.90
Air Products	APD	20549076	$125.82	$127.58	$36,166,373.76
Canadian Pacific	CP	13940890	$138.14	$143.57	$75,699,032.70
Zoetis	ZTS	41823145	$39.65	$41.18	$63,989,411.85
Restaurant Brands	QSR	38003984	$34.71	$35.92	$45,984,820.64
Platform Specialty Products	PAH	42737394	$12.06	$12.65	$25,215,062.46
Howard Hughes Corp	HHC	3568017	$112.52	$114.74	$7,920,997.74
Mondelez	MDLZ	120265238	$40.81	$41.87	$127,481,152.28
Herbalife	HLF	-21000000	$54.48	$54.50	-$420,000.00
				Total	$777,357,691.33

Hat tip to The Skeptic - and there was discussion with him via email. The core 8 day observation was his. The footnotes and their changes over time was my observation.