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Former Valeant exec convicted over kickback scheme with mail-order pharmacy

A former Valeant Pharmaceuticals International Inc. executive and the former CEO of Philidor Rx Services LLC were convicted by a New York federal court jury of being involved in a multimillion-dollar kickback scheme, The Wall Street Journal reported.

Valeant's Gary Tanner was found guilty of accepting about $10 million as bribe from mail-order pharmacy CEO Andrew Davenport by a jury verdict in the U.S. District Court, Southern District of New York (Manhattan).

"As a unanimous jury has found, Gary Tanner sold his loyalty to Andrew Davenport for $9.7 million," said Manhattan U.S. Attorney Geoffrey Berman, according to the Journal. "Unbeknownst to his employer, Tanner became the fox guarding the henhouse."

The sentencing in the case is scheduled for Sept. 19 and the two defendants could be facing a jail-term of up to 20 years on four counts including wire fraud and conspiracy to commit money laundering, Bloomberg News reported.

Prosecutors alleged that Tanner, who managed Valeant's dealings with Philidor, secretly blocked the efforts of other mail-order pharmacies to be part of Valeant's business, the Bloomberg report said.

This made Philidor attractive for Valeant, and the drugmaker agreed to buy the pharmacy for more than $100 million over a 10-year period. The deal helped Davenport take home $40 million. Of that, around $10 million was allegedly doled out to Tanner through offshore accounts set up by the two men, Bloomberg reported citing the prosecutors.

Tanner's lawyers issued a statement saying: "We are of course disappointed in the verdict, but we look forward to addressing the many legal and evidentiary issues on appeal."

The jury verdict is the latest fallout from a number of investigations into the Canadian drugmaker's accounting and pricing practices. Earlier in May, the company decided to change its name to Bausch Health Companies Inc., as it tries to distance itself from past management and scandals.