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# Feds Arrest Ex-Pharma Execs Over Fraud/KickBacks
- URL: https://www.fdaweb.com/feds-arrest-ex-pharma-execs-over-fraud-kickbacks/
- Published: 2016-11-17T12:00:00.000Z
- Updated: 2026-09-14T21:48:36.000Z
- Author: David McFarland
- Tags: Drugs, #legacy-id-D5137377

The federal government has arrested former Valeant Pharmaceuticals executive **Gary Tanner** and former Philidor Rx Services CEO **Andrew Davenport** for engaging in a multimillion-dollar fraud and kickback scheme. Philidor was a specialty mail-order pharmacy that was formed in 2013 with the assistance of Valeant, including provisions for financing, personnel, and supervision. “During the course of Philidor’s existence, at least 90% of the drugs dispensed by Philidor were Valeant-branded drugs,” a Justice Department [release](https://www.justice.gov/usao-sdny/pr/former-valeant-executive-and-former-philidor-ceo-charged-manhattan-federal-court?ref=fdaweb.com) contends.  

Tanner was the Valeant executive primarily responsible for the Philidor relationship, the government says, and he oversaw Valeant’s alternative fulfillment program, which attempted to cause doctors to prescribe, and patients to purchase, Valeant drugs instead of generic substitutes by helping obtain insurance coverage for those drugs or providing other incentives for prescriptions.

When asked directly by senior Valeant executives whether he had a financial interest in Philidor, Tanner ER falsely denied having any such interests. In 2014, Tanner And Davenport “took advantage of Valeant’s dependence on Philidor to help orchestrate Valeant’s agreement to purchase an option to acquire Philidor at a cost to Valeant shareholders of almost $300 million, including $100 million in up-front payments, a $33 million time-based milestone payment, and potential future multimillion-dollar sales-based milestone payments,” the government says. “After the option agreement was executed, Tanner continued to use his position at Valeant to advance the interests of Philidor and Davenport, including by expanding the number of Valeant products sold through Philidor and resisting Valeant’s efforts to collect cash from Philidor that Valeant was entitled to collect.”

As a result of the transaction, Davenport collected over $40 million and kicked back close to $10 million of that to Tanner, the government says. “Those sums were laundered through shell company bank accounts,” it adds.

Both men are each charged in four counts: one count of conspiracy to commit honest services wire fraud; one count of honest services wire fraud; one count of conspiring to violate the Travel Act; and one count of conspiring to commit money laundering. Counts one, two, and four each carry a maximum sentence of 20 years in prison, the government says, and count three carries a maximum sentence of five years in prison.