The lawsuit that kicked off all the Valeant drama has been settled

REUTERS/Christinne Muschi

Valeant Pharmaceuticals has settled its lawsuit with R&O Pharmacy, a pharmacy that was once a part of the drug maker's specialty pharmacy network.

It was this lawsuit, when uncovered by short seller Andrew Left of Citron Research, that set off a fire storm for Valeant and sent its stock crashing.

Lawsuit documents publicized by Left's report on Valeant  forced the company to reveal that it had a secret network of pharmacies pushing its products around the country.

Valeant put the following statement about the settlement on its website:

LAVAL, Quebec, March 9, 2016 /PRNewswire/ -- Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) and R&O Pharmacy, LLC (R&O) today announced that they have jointly requested the Court to dismiss the litigation between them pursuant to a confidential settlement agreement that resolves all claims between them.  While the terms of the settlement are confidential, the resolution includes a payment by R&O to Valeant.  As noted at the onset of the matter, Valeant firmly believes it acted appropriately and refutes any suggestion of wrongdoing.

Citron highlighted a demand letter from Valeant to R&O, saying that R&O owed Valeant more than $60 million in unpaid revenue. R&O responded that it had never heard of Valeant before.

"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," said documents from the lawsuit.

Left assumed that this meant that Valeant was creating phantom invoices to book fake revenues. In fact, R&O was a small California pharmacy that had sold itself to now-defunct, Valeant-affiliated Philidor. R&O alleged that it didn't know about Philidor's connection to the pharmaceutical giant.

Regardless, the revelation of the lawsuit set off a flurry of questions about Valeant's business model and transparency that still plague the company today, and at this point have very little to do with R&O.

This small matter may be settled, but the Valeant story is still far from over.

NOW WATCH: This is how rapper 50 Cent made millions and then lost it