Bausch Health Q4 Losses: Valeant, SEC, and Xifaxan Cases

Bausch Health Companies Inc., the pharmaceutical company formerly known as Valeant, has been through more than a decade of major litigation, and the lawsuits and settlements involving Bausch Health now total well over $1.7 billion in resolved matters, with several significant cases still active in 2026. The company’s legal history breaks into three main threads: securities fraud tied to the Valeant era, SEC enforcement against the company and its former executives, and antitrust cases involving generic drug pricing and pay-for-delay arrangements.

The $1.21 Billion Valeant Securities Class Action

The case that shaped Bausch Health’s legal reputation began in October 2015, when investors filed four putative class actions in the U.S. District Court for the District of New Jersey after the company’s stock collapsed. The suits were consolidated as In re Valeant Pharmaceuticals International, Inc. Securities Litigation, Case No. 3:15-cv-07658.¹

Investors alleged Valeant had inflated its stock between 2013 and 2015 by hiding aggressive drug-pricing practices and its secret control of Philidor Rx Services, a specialty pharmacy network used to push prescription volume. Plaintiffs said the strategy drove shares from about $15 to over $262 before the truth came out. One analysis cited in the case found that among the 19 drugs with the steepest U.S. price increases, ranging from 300% to 1,200% over two years, half were Valeant’s.² The claims covered Sections 10(b) and 20(a) of the Securities Exchange Act, Securities Act violations, common law fraud, negligent misrepresentation, and New Jersey RICO.³

The court denied motions to dismiss in April 2017. On December 16, 2019, Bausch announced a $1.21 billion settlement, one of the largest securities fraud settlements in U.S. history.¹ The number exceeded Bausch’s last reported cash balance of $825 million, so payments were structured over time with interest, funded from cash on hand and an existing credit line.⁴ The company admitted no liability and denied all wrongdoing. The court gave final approval on January 31, 2021.⁵

Opt-Out and Canadian Cases

Thirty-seven groups of institutional investors opted out of the class to pursue individual claims. As of October 2025, thirty-six had settled, again without any admission of liability. The last remaining active opt-out involves Hound Partners Offshore Fund, LP, which Bausch says it will defend vigorously; no trial date has been set. Hound Partners also filed a separate 2018 action in New Jersey Superior Court alleging common law fraud, negligent misrepresentation, and state RICO violations, and that case is currently stayed.⁶

Parallel Canadian class actions were filed in 2015. The lead case, Catucci v. Valeant, settled in 2020 for $94 million CAD (roughly $69 million USD).⁷ By November 2025, an initial distribution to approved claimants was complete, and a second distribution went out to claimants whose entitlement was $50 CAD or more.⁸ Separate Canadian proceedings brought by CalSTRS and BlackRock remain ongoing, with a BlackRock settlement agreement executed in April 2025 and a new Ontario action filed in December 2024.⁶

SEC Enforcement Against the Company and Executives

The SEC opened its investigation into Valeant in late 2015, looking at the Philidor relationship and accounting practices from 2014 and 2015.⁹ Reporting in November 2016 indicated that former CEO J. Michael Pearson and former CFO Howard Schiller were also the focus of a criminal probe by the U.S. Attorney’s Office for the Southern District of New York.¹⁰ No criminal charges were ever filed. The matter was resolved through the SEC’s civil process.

On July 31, 2020, the SEC instituted and settled administrative proceedings against Bausch Health, Pearson, Schiller, and company controller Tanya Carro at the same time. The SEC found that starting in 2014 the respondents had misstated revenue, improperly recognized revenue from Philidor sales, and failed to disclose the impact of a 500% price increase on a newly acquired drug.¹¹ Total civil penalties came to roughly $45.4 million. The company paid $45 million. Pearson paid a $250,000 penalty and reimbursed Bausch $450,000 in incentive compensation; Schiller paid $100,000 and reimbursed $110,000.¹² All respondents consented without admitting or denying the findings. The SEC acknowledged the company’s cooperation, its executive turnover, and a largely new board.⁹ The Commission established a Fair Fund for harmed investors and approved a distribution plan in August 2024.

The Bausch + Lomb Spinoff Shareholder Suit

Bausch announced in August 2020 that it planned to spin off its Bausch + Lomb eye-care division into a separate public company. That plan produced its own class action. In July 2023, shareholders filed Kelk v. Bausch Health Companies Inc. (Case No. 3:23-cv-03996) in New Jersey, alleging misleading statements about the spinoff between August 2020 and May 2023.⁶

Plaintiffs alleged the spinoff was designed to undermine opt-out plaintiffs from the earlier securities litigation, that the company hid how overleveraged Bausch would be without Bausch + Lomb’s cash flow, and that it did not disclose the potential damages exposure from those opt-out cases.¹³ Judge Zahid N. Quraishi dismissed the amended complaint in February 2025 with leave to amend. Plaintiffs refiled in March 2025. On November 20, 2025, the court granted the defendants’ motion to dismiss the second amended complaint with prejudice, ending the case.¹⁴

The spinoff itself has not been completed. Reporting indicates Bausch + Lomb has been exploring a sale as an alternative, in part because distributing the company’s 88% stake to shareholders could trigger fraudulent conveyance litigation given questions about Bausch Health’s solvency without that asset.¹⁵

Generic Drug Price-Fixing: The Multistate Antitrust Case

Separately, Bausch Health has faced sweeping antitrust litigation alleging its subsidiaries conspired with competitors to fix generic drug prices. On February 3, 2026, a coalition of 48 state attorneys general announced a $17.85 million settlement with Bausch and co-defendant Lannett Company covering alleged price-inflation and market-allocation conspiracies for generic prescription drugs sold between May 2009 and December 2019.¹⁶

Beyond the payment, Bausch agreed to run an antitrust compliance program, conduct annual training for sales and management staff, and cooperate with the states’ continuing litigation against other defendants.¹⁷ The broader litigation is far from done. Thirty corporate defendants and 25 individual executives remain across three interconnected complaints led by Connecticut’s attorney general.¹⁸

The first trial is expected in late 2026 in Hartford, Connecticut. It involves a complaint covering 80 topical generic drugs, 26 corporate defendants, and 10 individual defendants.¹⁶ The states’ case relies on a database of over 20 million documents and millions of phone records tracking communications among more than 600 industry personnel. Evidence cited in state filings includes cooperating witnesses and notes referencing executives’ discussions of “fair share” and “playing nice in the sandbox” as code for coordinating pricing.¹⁹

The Glumetza Settlement

Bausch also faced antitrust claims specific to Glumetza, a diabetes medication. Plaintiffs alleged the company settled 2012 patent litigation in a way that delayed generic entry in exchange for an agreement not to launch an authorized generic, keeping prices high.³ In September 2021, a federal judge in the Northern District of California gave preliminary approval to a $454 million settlement with the direct purchaser class. Bausch’s share was $300 million, Lupin Pharmaceuticals contributed $150 million, and Assertio Therapeutics paid just under $4 million. Retailer plaintiffs including CVS and Walgreens reached separate undisclosed settlements after opting out.²⁰

Xifaxan Pay-for-Delay Claims

The newest litigation front opened in late 2025. Multiple antitrust complaints were filed in the U.S. District Court for the District of Rhode Island alleging that Bausch and Teva Pharmaceutical Industries conspired to delay generic competition for Xifaxan, a drug used to treat irritable bowel syndrome. The first complaint was filed on September 22, 2025, by the Rhode Island Laborers Health & Welfare Fund as a proposed class action.²¹

A follow-on suit filed October 7, 2025, by major pharmacy chains and grocery retailers including Walgreens, Kroger, Albertsons, H-E-B, and Supervalu spelled out the allegations. According to plaintiffs, Bausch charges over $2,000 for a 14-day supply of Xifaxan and settled a 2018 patent infringement case against Teva by paying Teva to delay its generic version until 2028. The retailers say the arrangement is illegal monopolization and restraint of trade, and they are seeking treble damages.²² At least four complaints had been filed in the District of Rhode Island by October 2025.⁶

What Remains Open in 2026

Several matters are still in play. The Hound Partners opt-out from the original securities case is unresolved, and its related New Jersey state action is stayed. In Canada, CalSTRS and BlackRock proceedings continue, and a new Ontario action filed in December 2024 is pending. The Xifaxan complaints are at their earliest stage. The multistate generic drug case is the largest active antitrust exposure, with 30 corporate defendants and 25 individuals still in the litigation and the first trial expected in Hartford in late 2026.¹⁸ The company continues to state that it disputes the claims in active matters and intends to defend itself vigorously.⁶

1
PR Newswire. Bausch Health Resolves Stock Drop Litigation Initially Filed in October 2015
2
Seeger Weiss LLP. Valeant Pharmaceuticals Drug Cost Inflation Litigation
3
SEC EDGAR. Bausch Health Annual Report, Legal Proceedings
4
Fierce Pharma. Putting Another Valeant Issue to Rest, Bausch Moves to Settle Investor Class Action Lawsuit
5
Robbins Geller Rudman & Dowd LLP. Valeant Investors Achieve Record $1.21 Billion Recovery
6
SEC EDGAR. Bausch Health Quarterly Report, Legal Proceedings
7
Bausch Health Investor Relations. Bausch Health Announces Resolution of Canadian Securities Class Action
8
Valeant Securities Settlement. Valeant Securities Settlement Canada
9
Bausch Health Investor Relations. Bausch Health Announces Resolution of SEC Investigation
10
CNBC. Valeant Ex-CEO, Ex-CFO Focus of US Criminal Probe
11
SEC. Matters of Valeant Pharmaceuticals International Inc. (Fair Fund)
12
SEC. SEC Charges Valeant Pharmaceuticals and Former Executives
13
Stanford Securities Class Action Clearinghouse. Bausch Health Companies Inc. Securities Litigation Filing
14
CourtListener. Kelk v. Bausch Health Companies Inc., Docket
15
Financial Times. Bausch + Lomb Explores Sale
16
Michigan Attorney General. AG Nessel Announces Settlements with Lannett and Bausch
17
New York Attorney General. Attorney General James Secures More Than $17 Million from Drug Manufacturers Bausch and Lannett
18
Arizona Attorney General. Attorney General Mayes Announces $17.85 Million Settlements with Lannett and Bausch
19
Maryland Attorney General. Attorney General Brown Announces Settlements with Lannett and Bausch Totaling $17.85 Million
20
Schneider Wallace. $454 Million Direct Purchaser Settlement, Bausch Glumetza
21
Bloomberg Tax. Bausch Health, Teva Hit with Xifaxan Pay-for-Delay Scheme Claims
22
Rhode Island Lawyers Weekly. Bausch Xifaxan Antitrust Lawsuit, Walgreens