(Bloomberg) --Valeant Pharmaceuticals InternationalInc. refilled patients’ prescriptions without theirpermission and steered them to more expensive drugs in order toboost sales and profits, according to a lawsuit that sheds newlight on the drug company’s secret operations.

T. Rowe Price Group Inc. sued Valeantand its top executives, using information from former employees toback its claims that the mutual fund giant was a victim offraud.

The former Valeant workers expand on previous disclosures aboutthe Laval, Quebec-based company that has been the subject ofcriminal, congressional and regulatory investigations of how itshielded branded drugs from generic competition to inflate revenueand profit.

Employees cited in the lawsuit provided fresh insight into howthe mail-order pharmacy Philidor Rx Services LLC helped Valeanthide cheaper generic versions of its drugs and channeledprescriptions to brand names. One pharmacy worker in Phoenix saidPhilidor had a group of 10 employees “devoted to calling patientsto enroll them in the automatic refill program without theirpermission,” according to the complaint.

Philidor workers would leave messages for patients saying “if wedon’t hear from you in 24 hours, we will process your refill,”according to the intake specialist cited in the complaint. Theworker said people “were upset with this practice becauseregardless of whether or not the patient is billed, the refill isbilled through their insurance and has an impact on a patient’spolicies.”

Ongoing investigations

New York-based insurer Alleghany Corp. joined theT. Rowe Price securities fraud case,which claims the investors relied on Valeant’s misrepresentationsand omissions. Valeant is facing investigations from Congress andthe U.S. Securities and Exchange Commission. The WallStreet Journal reported last week that federal prosecutors areinvestigating potential fraud.

Valeant’s Chief Executive Officer Joe Papa said the companyhasn’t set aside any money to pay for potential fines or litigationjudgments, David Maris, a senior analyst at Wells Fargo SecuritiesLLC, said in a note to investors Thursday. He said he expectsValeant will have to pay $2 billion in litigation expenses.

“We find the growing list of investigations potentiallyoverwhelming for any management team, let alone one that is dealingwith a significant business disruption and management turnover,”Maris said.

Confidentiality agreements

Secrecy was so important to the Valeant-Philidor relationshipthat the employees had to sign confidentiality agreements“empowering the pharmacy to sue workers who divulged informationabout its activities,” according to a patient-care specialist citedin the complaint.

Philidor’s internal policy also mandated that Valeant-brandeddrugs be dispensed, even if a prescription called for a generic,said an adjudication specialist cited in the complaint.

“Philidor told employees to always put ‘brand’ in Philidor’scomputer system and to change the prescription in order to dispensea brand drug,” the specialist said. “Indeed, her supervisor toldher that, ‘We do not dispense generics. You give them the branddrugs.”’

None of the employees cited in the complaint are named.

‘Massive risks’

Valeant engaged in a “growth by acquisition strategy” andcontinually reported revenue and earnings growth while shieldingthe secret network of controlled pharmacies and other practicesfrom investors, exposing it to “massive risks,” T. Rowe Price saidin the lawsuit, filed in Trenton, New Jersey, on Aug. 15. Thecompany’s U.S. unit is based in Bridgewater, New Jersey.

Company spokeswoman Laurie Little said the complaint repeatsallegations and claims made in a suit filed last October that seeksclass-action status.

“Valeant intends to defend itself and cannot comment further onongoing litigation,” Little said in an e-mail.

T. Rowe Price owned 1.48 million shares of Valeant as of June30, down 31 percent from the previous quarter, according to datacompiled by Bloomberg. Valeant shares fell 2.7 percent to $29.19Thursday in New York trading. The stock hit a high of $262.52 onAug. 5, 2015.

Valeant severed its ties with Philidor in October, followingreports about tactics the mail-order pharmacy allegedly used togain more insurance reimbursements for Valeant medicines. Theyincluded submitting claims using other pharmacies’ identificationnumbers and altering codes on some doctors’prescriptions. Valeant didn’t originally reveal its fullrelationship with Philidor, which included shared staff and anoption to acquire the business.

Ex-CEO sued

Beyond Valeant, the complaint cites six current and formerexecutives as defendants, including former Chief Executive OfficerMichael Pearson and former interim CEO Howard Schiller.

According to the complaint, Valeant hired former Medco HealthSolutions Inc. executive Laizer Kornwasser in 2013 to oversee itsrelationship with Philidor. Kornwasser, who left Valeant last year,received $8.8 million in cash and stock awards in his first year,according to the complaint, which didn’t cite the source of itsinformation.

Valeant put a 30-person team inside Philidor “with instructionsto show doctors how to direct patients to Valeant products,”according to the complaint. “At different points in Philidor’sevolution, Valeant employees were responsible for performing avariety of key business functions for the pharmacy, includinginterviewing Philidor job applicants and overseeing the pharmacy’sbilling operations,” the complaint said.

The case is T. Rowe Price Growth Stock Fund Inc. v. ValeantPharmaceuticals International Inc., 16-cv-05034, U.S. DistrictCourt, District of New Jersey (Trenton).

AlleghanyCorp.

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