Valeant Pharma (VRX), Walgreens Distribution Deal Structure Seen as 'Unusual'

Valeant Pharma (NYSE: VRX) is on watch following news of an "unusual twist" in its agreement with Walgreens Boots (Nasdaq: WBA).

The WSJ noted that Valeant will take a $150 million hit on the deal. Essentially, the company will be buying back its own drugs from Walgreens and reselling them on a consignment basis. The transaction would be a title swap as Walgreens isn't returning the drugs.

With a presentation last week, Valeant mentioned the financial impact of the deal and said it would credit Walgreens for inventory that it had on hand.

Walgreeens might even get more in fees from Valeant than it would under a traditional reimbursement model. Drug companies typically sell products to a wholesaler, who then sells to pharmacies.

In early trading Tuesday, shares of Valeant Pharma are indicated lower.

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