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What: It was another rocky day for Valeant Pharmaceuticals (NYSE: VRX), which ended down 10% today, after releasing third-quarter earnings on Monday. The earnings report came before the bell, so investors had all day on Monday to digest the news. Shares fell 7.7% yesterday giving Valeant Pharmaceuticals a two-day loss of 17%

So what: On the conference call yesterday, Valeant Pharmaceuticals' management said that it would scale back on its practice of buying companies and raising prices of the drugs and is looking to divest its neuroscience business where much of the price increases have come. The business model has taken Valeant Pharmaceuticals far, but it's also caused its stock to tank over the last month as politicians continue to bring up high drug prices as a campaign issue.

VRX Chart

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Investors are also concerned about Valeant Pharmaceuticals' dealings with a specialty pharmacy called Philidor Rx Services which sells Valeant's dermatology products. Some companies encourage doctors to point patients toward a specialty pharmacy rather than regular pharmacies because the specialty pharmacy, rather than the doctor, takes care of authorizations and other insurance issues. Insurers don't like the practice because it encourages doctors to prescribe drugs that may cost more than alternative treatments.

The deal between Valeant and Philidor is a little more complex because Valeant has an option to acquire Philidor and is adding Philidor's earnings to its own financial reports. The combination makes it harder for investors to determine Valeant's financial state and future potential.

Now what: Where Valeant goes from here is anyone's guess. Management said it would consider share buybacks if its share price stays low, which could help prop up the price. Of course, if politicians continue to complain about high drug prices or the subpoenas from federal prosecutors in New York and Massachusetts amount to something, we could be far from the bottom.

Brian Orelli has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Valeant Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.