784 Layoffs at Embroiled Mail-Order Pharmacy

After multiple reports that mail-order pharmacy Philidor Rx Services used questionable tactics to get insurance companies to pay for the drugs it dispensed, the company is closing two Montgomery County facilities and laying off a total of 784 workers in the region. It’s also closing a plant in Phoenix and laying off a total of 264 people there.

Specialty pharmaceutical companies typically dispense high-cost drugs that require special packaging and handling like refrigeration. Think injectable shots for ailments ranging from diabetes to arthritis to cancer. Philidor came under fire for reportedly “changing doctor’s prescriptions and using other pharmacies’ identification numbers — to get insurers to pay for the drugs it dispensed,” according to the New York Times. The Wall Street Journal adds that the company allegedly “used unorthodox tactics to ensure payment, such as submitting a prescription over and over at different prices until an insurer would agree to pay, according to former employees and pharmacy industry officials. And the medicines weren’t drugs requiring special handling, pharmacists say.”

Philidor also faced scrutiny for having just one client, Valeant North America, which promptly dropped Philidor after news broke of the company’s alleged practices. (That’s why Philidor is closing the three plants.) In a WARN notice filed with the Pennsylvania Department of Labor & Industry, Philidor admitted as much — calling Valeant its “only client.” (The WARN notice is embedded below.)

Here’s how the layoffs break down:

• Nov. 23: Philidor permanently laid off 72 employees in Horsham, 190 in Hatboro and 117 in Phoenix.
• Nov. 23-Jan.31: Philidor expects to lay off 214 in Horsham, 308 in Hatboro and 147 in Phoenix.

In the WARN notice, Philidor said that on Oct. 30, Valeant North America advised Philidor that it intended to immediately terminate its distribution and services agreement without prior notice. J. Michael Pearson, chief executive of Valeant, also made that crystal clear in a statement.

It also said in the WARN notice that Valeant’s announcement about the termination agreement has negatively affected Philidor’s volume of business.

“Since that date, the company has been in negotiations with Valeant in an effort to put in places an orderly wind down of the business.”

Is Philidor just fighting the good fight to get insurance companies to pay for drugs? A Philidor spokesperson declined to comment but the WSJ reports that a company spokesperson previously said the company is “the patient’s advocate in seeking to ensure that they receive the medication that was prescribed by their doctor at the lowest possible cost to them.”

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