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After Valeant, Short-Seller Citron Is Going After This Pharma Benefits Firm

December 9, 2016, 10:22 AM UTC
Interview with Andrew Left, Short Seller Behind Valeant Selloff on Enron Comparison
Photograph by Bloomberg via Getty Images

Short seller Citron Research’s Andrew Left has turned his sights on Express Scripts Holding Co, calling the pharmacy benefit manager (PBM) the “culprit behind pharmaceutical price gouging.”

Shares of Express Scripts (ESRX), the largest PBM in the United States, fell 6.7% to close at $70.75 on Nasdaq. Citron, which profits from bets that stock prices will fall, set a price target of $45 on the company’s shares.

Express Scripts “is Philidor of the pharma industry. @therealdonaldtrumppromises to fix drug pricing? Two words: EXPRESS SCRIPTS,” Citron tweeted on Thursday.

President-elect Donald Trump, in a Time magazine article on Wednesday, said he would “bring down drug prices.”

“We make money when our clients save money,” Express Scripts said in comments emailed on Thursday. “The vast majority of rebates we negotiate go directly back to our clients.”

PBMs like Express Scripts manage prescription drug plans for employers and insurers. Philidor Rx Services, now closed, was a mail order pharmacy linked to efforts by Valeant Pharmaceuticals International Inc to steer prescriptions to its high-priced drugs.

Left, during an interview on CNBC, said Express Scripts benefits from the “opaqueness” of drug pricing, but “by no means am I saying that this company is a fraud.”


PBMs have in recent years taken an increasingly aggressive stance in price negotiations with pharmaceutical companies, in some cases limiting access to rival drugs in specific categories in return for discounts to list prices or rebates.

Shares of Express Scripts have struggled for most of this year after a major customer, health insurer Anthem Inc, sued the company over drug rebates.

Citron sparked the investigation into the relationship between Valeant (VRX) and now-shuttered Philidor with a report issued in October 2015.

A former Valeant executive and the former CEO of Philidor were arrested last month on charges that they engaged in a multimillion-dollar fraud and kickback scheme.

Shares of drugstore operator CVS Health (CVS), which has a PBM unit, fell 3% to close at $78.11 on the New York Stock Exchange.