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Given the below information in bold, please help to complete the 4…
Given the below information in bold, please help to complete the 4 following questions:
1) choose a current event (must be from within the last 30 days)/news article that relates to the case.
2) Summarize the article
3) discuss why it reminds you of the case/what connection it has to the case
4) discuss how you would resolve the issue given what you have learned.
Case 2.8 Valeant, P. 78, Q. 2-3;
Valeant is a Canadian-based company with a new pharmaceutical model. The company had a strategy to purchase the right to older prescription drugs, double the price of those drugs, use a mail-order sales system, and wait for the profits to accumulate. In order to achieve this, Valeant partnered with a specialty pharmacy: Philidor RX Services LLC. Philidor was able to get insurers to not only cover the prescription for Valeant-owned drugs but to have insurers fill it using the most expensive drugs available, not the generics. Philidor served as not only a distributor and extended market of Valeant pharmaceuticals but also received a discount on the Valeant drugs and the fees for filing prescriptions with the Valeant drug; it was a mutually beneficial relationship. In reaction to this relationship and the operations of Valeant and Philidor, near the end of 2015, three major insurance companies announced that they would no longer use Philidor as a processor for prescriptions. The following year Valeant announced that it had improperly booked $58 million in revenue as a result of creative accounting and phantom sales.
2) What issues did Valeant miss in its decisions on accounting practices and pricing of its drugs?
An issue Valeant missed in its decisions on accounting practices and pricing of its drugs was its price inconsistency and accounting mishaps. The company had no regard for possible public and political reaction, and the decisions the company made were unthetically driven by greed, money, and a mirage of numbers. The decision to act in this manner ended up affecting the company’s business and operations.
3) Why is transparency an issue for publicly traded companies? What credo ideas do you learn from this case?
When a company is publicly traded, there can be hundreds or thousands of people involved in the business that has the possibility to be affected by company operations and decisions. When there is less transparency, there is less certainty for investors and more room for error and loss.
Along with this, the Credo Ideas about Valeant were more about “Who are you?” They defined themselves as high rollers with fake numbers that looked like they were running a peak business.
