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Sprout Pharmaceuticals has accused Valeant Pharmaceuticals of overcharging for the Sprout's Addyi treatment, TheStreet's TV anchor Rhonda Schaffler reports in the video, above. 

NEW YORK (TheStreet) -- Valeant Pharmaceuticals (VRX) stock is down by 8.26% to $28.54 in midday trading on Monday, after SproutPharmaceuticals said the company could be violating its merger agreement and CEO Michael Pearson was subpoenaed for a Congressional hearing. 

In a letter to Valeant, Sprout investors alleged the Canadian pharmaceutical company has overcharged for the company's Addyi treatment, Bloomberg reports. Sprout was acquired by Valeant in 2015 for about $1 billion. Addyi is a treatment for women with Hypoactive (low) Sexual Desire Disorder.

The letter asks for proof that Valeant is not violating the companies' merger agreement, such as details surrounding Valeant's investment in marketing for the drug, according to Bloomberg. 

"Valeant predatorily priced Addyi at $800 a month even though Sprout had established a price point of approximately $400 a month for the drug based on market research," the investor group said, according to Bloomberg. "As a result of this predatory pricing, insurance companies refused to cover the drug, which has led to the drug not being affordable for millions of women."

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Additionally, Valeant CEO Michael Pearson has been subpoenaed to testify at a U.S. Senate Special Committee on Aging hearing on April 27, Reuters reports. The committee is investigating drug pricing.

Last week, Valeant announced that Pearson would step down from the company.

Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings rates this stock as a "hold" with a ratings score of C. The company's strengths can be seen in multiple areas, such as its robust revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

You can view the full analysis from the report here: VRX

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