T. Rowe Price Group Inc has sued Valeant Pharmaceuticals International Inc, alleging that investors in the Quebec-based drugmaker lost billions of dollars as a result of the company's "fraudulent scheme".

Valeant's U.S.-listed shares reversed course to trade down 4 per cent at US$28.80 on Thursday. They had risen as much as 5 per cent, after the company's lenders agreed to an amendment to loosen covenants on its US$31 billion of debt.

T. Rowe Price, one of the biggest investment managers in the world, said Valeant had used a secret pharmacy network, deceptive pricing and reimbursement practices, and fictitious accounting to shield the company's branded drugs from generic competition and artificially inflate revenues and profits.

Valeant's relationship with specialty pharmacy Philidor RX was revealed last fall, including the aggressive tactics used to receive payments from insurers.

Scrutiny of the company's dealings with Philidor and sharp increases in drug prices last year sent the company's shares plunging. The stock is down about 90 per cent from its August 2015 high.

The lawsuit comes a week after the Wall Street Journal reported that lawyers at the U.S. Attorney's Manhattan office were probing whether Valeant obscured from insurers its relationship with Philidor.

T. Rowe Price, which held a 6.4 per cent passive stake in Valeant as of Dec. 31, filed the lawsuit in the District Court of New Jersey on Monday. The filing was made public on Thursday.

Valeant has taken a series of steps to restore investor trust, including cutting off ties with Philidor last October, replacing Chief Executive Michael Pearson and adding its top investor Pershing Square's Bill Ackman to its board.

Valeant was not available for comment. T. Rowe Price and Pershing Square Capital Management declined to comment.