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Business

Feds arrest two execs in Valeant kickback scheme

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Business

Feds arrest two execs in Valeant kickback scheme

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COMING UP:Feds arrest two execs in Valeant kickback scheme

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00:00:00
>> Two former pharmaceutical bigwigs arrested Thursday in an alleged multi million dollar fraud and kickback scheme. Gary Tanner former senior executive at drug company Valeant. And Andrew Davenport, ex-CEO of mail order pharmacy Philidor charged with conspiring to drive business to Philidor with the goal of selling it to Valeant.
00:00:22
At a press conference, US attorney Preet Bharara describing a complex scheme that involved shell companies phony email addresses and and lavish purchases. From extravagant homes to custom wine sellers purchased with illegally obtained shareholder money. Reuters reporter Carl O'Donnell.>> Philidor was involved in distributed drugs for Valeant and billing some of the insurance companies that paid for its drugs.
00:00:47
And prosecutors are suggesting that these two men worked together, agreeing secretly to pay Gary about $10 million in kickbacks. In exchange for not only pushing as much business as possible from Valeant through this specialty pharmacy. But also getting Valeant to eventually agree to buy the company which could have led to a payoff of as much as $40 million for Andy Davenport.
00:01:10
>> The company's shady relationship first came to light about a year ago. The firm's allegedly conspiring to jack up drug prices. A widespread issue in health care and a hot topic on this year's campaign trail. Several insurers then cut tie with Philidor as did Valeant. Forcing Philidor to shut down in January.
00:01:29
The departure of Valeant CEO soon followed. Valeant's biggest investor Bill Ackman likely hoping Thursdays arrest may actually help restore the company's reputation.>> The fact that it seems that this Gary Tanner character was getting paid a potentially $10 million kickback by the CEO of Philidor. Suggests that maybe really this was not something that was coming from the top.
00:01:56
But was instead an example of one bad egg.>> Barrera described a secret email exchange between Tanner and Davenport. In which they discussed riding into the sunset together like Butch Cassidy and the Sundance Kid. As long as they quote played the game, on Thursday Bharara said that game was up.
00:02:15
>> And self dealing.