Valeant ($VRX) is severing all ties with the specialty pharmacy--which a short seller recently claimed it used to inflate its top line--after reports that Philidor altered doctors' orders to squeeze more reimbursement dollars out of insurers. Philidor has also informed Valeant that it plans to shut down its operations as soon as possible, the company said.

"The newest allegations about activities at Philidor raise additional questions about the company's business practices," Valeant CEO J. Michael Pearson said in a statement. "We have lost confidence in Philidor's ability to continue to operate in a manner that is acceptable to Valeant and the patients and doctors we serve."

Valeant CEO J. Michael Pearson

Valeant's connection to Philidor came to light earlier this month, when Citron Research accused the drugmaker of using a network of specialty pharmacies to create "phantom sales." The Canadian pharma denied the claims and later disclosed that it had paid $100 million for an option to acquire the pharmacy. On Monday, it said it had assembled an ad hoc committee composed of its board members to look into the allegations.

Since Citron put Valeant in the hot seat, though, media reports have raised more questions about the way Philidor operates. On Thursday, Bloomberg reported that the pharmacy gave its employees written instructions to change codes on prescriptions to indicate that physicians required or patients requested Valeant's branded drugs rather than less costly generics. Earlier in the week, The Wall Street Journal reported that Valeant employees--placed at Philidor in the pharmacy's early days--used fake names in email communications during their time there.

Ending its relationship with Philidor won't solve all of Valeant's problems, though. Its stock price has plummeted on pricing scrutiny from politicians, and it recently acknowledged it had received subpoenas from the U.S. Attorney's Office for the District of Massachusetts, the U.S. Attorney's Office for the Southern District of New York, and the U.S. Department of Justice. On Tuesday, Senator Claire McCaskill (D-MO) said she'd be conducting her own investigation into Citron's allegations and Valeant's drug-pricing policies.

Meanwhile, Valeant said on Friday it had appointed former Deputy Attorney General Mark Filip to advise its ad hoc committee--all four members of which hold an equity stake in the company.