Gary Tanner, Healthcare Fraud and Kickback Scheme, New York 2023

A former top executive at Valeant Pharmaceuticals International, Inc., Gary Tanner, and Andrew Davenport, ex-CEO of Philidor Rx Services LLC, were hit with federal charges Thursday in a sprawling $100 million healthcare fraud and kickback scheme that exploited specialty pharmacy networks to bilk insurers and inflate drug prices. The indictment paints a picture of corporate greed and calculated deception that reached into the heart of America’s prescription drug crisis.

Tanner, once a key architect of Valeant’s controversial pricing model, allegedly conspired with Davenport to funnel millions through a shadow network of controlled pharmacies, including Philidor, to disguise the sale of high-cost drugs and manipulate reimbursement systems. Prosecutors say the pair orchestrated fraudulent billing practices, falsified patient records, and used shell entities to conceal their control over pharmacies supposed to operate independently—violating anti-kickback and wire fraud laws.

The scheme, which ran for years, allowed Valeant to report higher sales while shielding itself from public and regulatory scrutiny. By cloaking prescriptions through Philidor and other affiliated pharmacies, the defendants allegedly inflated demand, triggered automatic refills without patient consent, and submitted false claims to insurers—actions that drove up costs for patients, employers, and government programs.

“This was not aggressive business strategy—it was outright fraud,” declared Preet Bharara, U.S. Attorney for the Southern District of New York, during a noon press conference at 1 St. Andrew’s Plaza. “Tanner and Davenport didn’t just bend the rules—they shattered them, treating the healthcare system as a piggy bank for their billion-dollar enterprise.” FBI Special Agent-in-Charge William F. Sweeney added that the investigation uncovered “a web of deception designed to hide who was really pulling the strings.”

Charges against both men include conspiracy to commit wire fraud, healthcare fraud, and violation of the Anti-Kickback Statute. If convicted, they face decades in federal prison and forfeiture of all illicit proceeds tied to the scheme. Authorities emphasized that the probe remains ongoing, with potential charges against other corporate insiders still under review.

The press conference, attended by federal prosecutors and FBI officials, ended with a stark warning: “No corner of the pharmaceutical industry is beyond the reach of justice,” said Bharara. “When executives trade ethics for earnings, we will follow the money—no matter how deep the scheme runs.” Contact for the U.S. Attorney’s Office was listed as James Margolin, Dawn Dearden, and Nicholas Biase at (212) 637-2600. All devices were silenced, as instructed, before the briefing began.