Federal criminal charges leveled against former Valient exec and Philidor Rx CEO alleging multi-million dollar fraud

Federal charges have been leveled against against former Valeant International Inc. executive Gary Tanner and  Philidor Rx Services LLC Chief Executive Andrew Davenport, alleging they participated and committed in a multimillion-dollar fraud and kickback scheme. The  federal complaint alleges they conspired to promote Philidor to Valeant to win and control its business. It also says Mr. Davenport  paid Mr. Tanner $10 million in kickbacks for his promotion of Philidor’s business, including by facilitating transactions aiding Mr. Davenport make more than $40 million from Valeant. The complaint also alleges the two worked without Valeant executives’ knowledge to shut out other mail-order pharmacies from getting Valeant business and helped persuade Valeant to buy an option in Philidor.

Both men were arrested in their homes early Thursday morning the Federal Bureau of Investigation said.

The complaint also alleges that Mr. Tanner acted as a kind of double agent for Philidor, using his role as a Valeant executive to discourage the company from doing business with other pharmacies. At the same time, the complaint alleges, Mr. Tanner privately counseled Mr. Davenport on how to negotiate better terms for an option agreement in December 2014 that required Valeant to payabout$300 million for the right to acquire Philidor.

 

The Canadian drugmaker issued a statement saying  its former CEO Michael Pearson, former CFO Howard Schiller, and current executives haven’t been charged. The company said Mr. Tanner’s employment ended Sept. 13, 2015, and Mr. Davenport has never been an employee there.

The government says that the investigation is continuing.

Jeffrey Newman represents whistleblowers.