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The executive who once ran the specialty pharmacy at the heart of the Valeant Pharmaceutical accounting scandal was arrested Thursday morning, along with a former Valeant executive, and charged with a multimillion-dollar fraud and kickback scheme.

Andrew Davenport, an executive at Philidor Rx Services, and Valeant’s Gary Tanner allegedly conspired to use the specialty pharmacy, which was shepherding prescriptions for some Valeant drugs, as a way to enrich themselves, according to a complaint filed in federal court in New York. As a result of the scheme, prosecutors say, Tanner received about $10 million in kickbacks and he helped Davenport reaped more than $40 million and stood to pocket “potentially tens of millions of additional dollars” in milestone payments.


Their strategy hinged on forging an unusual relationship between the two companies. Tanner promoted Philidor as a vital conduit for Valeant medicines. The drug maker eventually acquired an option to buy Philidor. The agreement meant that Davenport received large option payments, some of which he allegedly gave to Tanner for his assistance, and expected to gain huge milestone payments, according to the complaint. The payments made to Tanner were allegedly “laundered” through a series of shell company bank accounts.

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