Two Executives Arrested in Valeant Kickback Scheme

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Summary: In a kickback scheme between Valeant and Philidor, two executives have finally been charged and arrested.

The charges filed against two executives in a kickback scheme involving Valeant Pharmaceuticals is getting a more focused look. The scheme was created to inflate the value of a specialty pharmacy that Valeant was going to purchase. Gary Tanner worked for both Valeant and Philidor. Philidor was responsible for selling Valeant products to patients directly.

  

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Tanner and Philidor CEO Andrew Davenport were arrested Thursday morning. They have both been charged with wire fraud, paying kickbacks, and Travel Act Conspiracy.

Once the scheme was exposed by the Southern Investigative Reporting Foundation, Valeant severed all ties with Philidor. A few months later, Tanner filed documents with the Arizona State Board of Pharmacy to open a dermatology-focused pharmacy in Arizona.

Tanner’s role in the scheme was to boost how Valeant viewed Philidor, eventually leading Valeant to buy Philidor for $100 million. Davenport made $40 million from the deal, giving $10 million of that to Tanner for helping to organize the deal. The executives he reported to were hesitant of his desire for the deal to happen because of his financial interest and pushed-back. He was placed under a code of conduct prohibiting him from having conflicts of interest but this did not stop him.

Congress sought an interview with Tanner back in November 2015, the same time he was going before the Arizona State Board. Rep Elijah Cummings wrote at the time, “Mr. Tanner has been identified by former Philidor employees as a key figure in the pharmacy’s operations. These former employees also report being directed to alter physician-written prescriptions so pharmacies would have to dispense Valeant drugs instead of cheaper generic versions in order to maximize Valeant’s profits.”

With the charges now filed against Tanner, Cummings added, “I commend the U.S. Attorney’s office for aggressively pursuing an investigation to hold these executives accountable for their corrupt business practices. I have repeatedly requested interviews with Mr. Tanner and several other Valeant employees to determine how deep their involvement was with Philidor, but Valeant refused to cooperate with Congress and prevented information about their relationship from coming to light sooner.”

Do you think Valeant should be penalized for not cooperating with the investigation? Tell us in the comments below.

To learn more about other cases involving pharmaceuticals, read these articles:

• Much Hated Pharmaceutical Exec Arrested on Fraud Charges
• Valeant Pharmaceuticals International Inc. Offers to Buy Botox Giant Allergan Inc.
• Teva Pharmaceutical Industries Tries to Block Generic Competition

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