Gary Tanner, Andrew Davenport Charged in Valeant Fraud Scheme

Former Valeant Pharmaceuticals executive Gary Tanner and Andrew Davenport, the ex-CEO of Philidor Rx Services, were arrested Tuesday and charged with orchestrating a multimillion-dollar fraud and kickback scheme that looted shareholder funds through a sham pharmacy operation. The charges, unsealed in Manhattan federal court, expose a brazen betrayal at the heart of one of the pharmaceutical industry’s most controversial partnerships.

Tanner, arrested in Gilbert, Arizona, allegedly used his position of power within Valeant to funnel company resources directly into Philidor—a mail-order pharmacy formed in January 2013 with Valeant’s backing. Despite being paid to protect Valeant’s interests, Tanner arranged $2 million in company financing for Philidor and deployed a Valeant-funded sales force to push prescriptions through the pharmacy. Over 90% of Philidor’s dispensed drugs were Valeant-branded, creating a closed-loop system ripe for abuse.

Davenport, taken into custody in Haverford, Pennsylvania, relied heavily on Tanner’s support to keep Philidor afloat. In a damning email, Davenport wrote to Tanner: “We both know that this endeavor would face a nearly insurmountable uphill struggle to succeed in the present Valeant environment without your confident support and the efforts of your team.” Prosecutors say the two men, though posing as arms-length business partners, operated as co-conspirators enriching themselves at the expense of investors.

The Southern District of New York alleges that Tanner sabotaged efforts to diversify Valeant’s alternative fulfillment program, blocking competing pharmacies to deepen the company’s reliance on Philidor. That manipulation amplified “payor risk”—the danger that insurers would reject claims—jeopardizing Valeant’s financial stability. All the while, Philidor thrived as a profit machine for Davenport, propped up by corporate resources meant for shareholders, not private gain.

U.S. Attorney Preet Bharara didn’t mince words: “Gary Tanner and Andrew Davenport allegedly concocted a fraudulent scheme to illegally use Philidor as a vehicle for personal profit and self-dealing. Their alleged kickback scheme illegally converted Valeant shareholder money into their own personal nest eggs.” The FBI’s William F. Sweeney added that today’s charges strike at the core of investor trust: “Our right to honest services is sometimes exploited by those who engage in kickback schemes.”

Tanner will appear before a magistrate judge in Phoenix; Davenport faces a court appearance in Philadelphia. Both are charged with conspiracy to commit wire fraud and violations of the anti-kickback statutes. As the case unfolds, it promises to peel back the curtain on corporate corruption masked as pharmaceutical innovation.

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