Former Valeant, Philidor execs plead not guilty to kickback charges
- Former Valeant senior director Gary Tanner and former Philidor CEO Andrew Davenport pleaded not guilty on Feb. 23 to charges of wire fraud and money laundering related to an alleged kickback scheme, reports Reuters.
- Tanner allegedly helped Davenport secure a favorable acquisition of Philidor by Valeant and together the two set up several shell companies to route kickback payments to Tanner, according to a complaint filed by the U.S. Attorney's Office for the Southern District of New York.
- The two were arrested last November in what some see as the first domino to fall in an investigation into the business relationship between Valeant and Philidor — which was at the heart of the drugmaker's high-profile accounting scandal. Valeant declined BioPharma Dive's request for comment.
While Gary Tanner no longer works for Valeant Pharmaceuticals, the company is still under a microscope for its handling of the Philidor scandal.
Under the alleged kickback scheme, Tanner promoted Philidor inside Valeant, building up the pharmacy as a major channel for Valeant's branded pharmaceuticals. His support for Philidor was so effective, the Nov. complaint alleges, that over Philidor's existence more than 90% of drugs dispensed were Valeant-branded drugs.
Valeant eventually acquired an option to acquire Philidor at no future cost, which resulted in a payment of $40 million to Philidor CEO and beneficial owner Andrew Davenport. In return, Davenport paid Tanner $10 million from personal profits earned through business with Valeant, prosecutors say.
This hasn't been Valeant's only Philidor-related headache either. The Canadian drugmaker is also under investigation by the Securities and Exchange Commission, a Canadian financial regulator, the state of New Jersey and the California Department of Insurance for matters relating to Philidor, according to a third quarter regulatory filing.
Fourth-quarter and 2016 earnings are due next week, on Feb. 28, and could shed more light on the ongoing scrutiny. Even with a new CEO and recently completed asset sales to help with the company's debt problem, Valeant is still feeling the hangover from a no-good 2016.
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