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In a chaotic day of trading, once-highflying Valeant Pharmaceuticals International Inc. defended itself Wednesday against some of the most severe criticism yet of its business practices, denying allegations of improper accounting from an investor who is betting against the company. The short-seller’s report knocked Valeant’s stock down 40%—wiping some $20 billion from its market value—before the stock made up some of the loss after analysts expressed support and shareholder William Ackman jumped in to buy more stock. (Rockoff and Farrell, 10/21)

The stock at one point plunged below $90 per share, a more than 30% intra-day drop. The sell-off followed allegations in the report by short-seller Citron Research that Valeant might have created "phantom accounts" as part of a purported "fraud to create invoices to deceive the auditors and book revenue." ... Valeant issued a response that attempted to rebut the Citron Research report by calling it "false and misleading." The company said the allegations "appear to be an attempt to manipulate the market in an effort to drive down Valeant’s stock price." The high-stakes financial debate focuses on the Valeant's links to Pennsylvania-based pharmacy Philidor RX Services. (McCoy, 10/21)

A simple promise turned Valeant Pharmaceutical International Inc and some of its rivals into stock market darlings: we will buy more companies and make more money selling drugs. Now investors worry if they can still deliver. ... Valeant refuted the claims, but its shares still ended down 19 percent, as the report brought into the spotlight risks involved in its business model based on rapid expansion driven by acquisitions and aggressive price hikes. Mounting political opposition to rising drug prices combined with sliding shares, often used as currency to pay for acquisitions, are now casting doubt on whether specialty pharmaceutical firms such as Valeant can deliver promised brisk earnings growth. (O'Donnell, 10/21)

Back at you, Bill Ackman. Ackman, the billionaire hedge fund manager, has long maintained that Herbalife Ltd. is a house of cards -- a suggestion that’s drawn howls from the company. Now another Wall Street scold, Citron Research’s Andrew Left, says one of Ackman’s picks looks like the Enron Corp. of Big Pharma -- a claim the company, Valeant Pharmaceuticals International Inc., rebutted Wednesday. (Renick, Jackson and Ciolli, 10/21)

Shares of Valeant fell 19 percent on Wednesday after influential short-seller Citron Research accused the company of using specialty pharmacies, through a network led by its partner Philidor Rx Services, to inflate its revenue, an allegation the drugmaker denied. Specialty pharmacies are designed to deliver medications with unique handling, storage and distribution requirements, often for patients with complex conditions such as cancer, multiple sclerosis or rheumatoid arthritis. They can provide more detailed guidance for patients on how to take the drugs. Specialty drugs are often expensive, sometimes priced at over $100,000 a year. (Beasley, 10/22)

In September, a drug company executive named Martin Shkreli gave patients fits after hiking the price of a drug called Daraprim by more than 5,000% overnight. He also gave politicians a gift: a scapegoat. The high price of drugs isn't a new problem; 72% of respondents to a Kaiser Family Foundation tracking poll in August said that drug costs are "unreasonable." But since Shkreli's price hike became a national news story, several presidential candidates have spent weeks skewering his behavior and scrutinizing his company, Turing Pharmaceutical. (Diamond, 10/21)