Here are seven things to know:
1. Congress and the Securities and Exchange Commission are conducting a series of inquiries into Valeant’s business practices.
2. Valeant purchased an option to buy Philidor in 2014, which Valeant revealed in 2015. However, Valeant did not share the acquisition information to investors in 2014, prompting many to question Valeant’s motives. After media outlets said Valeant was purchasing Philidor to boost its sales and changing its prescription to say that Valeant was a brand-name drug, as opposed to an alternate, Philidor and Valeant severed its ties.
3. Federal prosecutors claim Mr. Tanner and Mr. Davenport were integral to this relationship, and said the two officials did not tell Valeant their plans to promote Philidor’s interests through its connection to Valeant. Officials also claim Mr. Tanner used a secret email account to speak with Mr. Davenport under the name “Brian Wilson.”
4. Through its relationship with Valeant, prosecutors allege that Philidor expanded to include 450 employees and had revenue reaching tens of million of dollars at the end of 2014, a substantial amount of growth as it was a small start-up in 2013. The federal complaint stated before the pharmacy was shut down in January 2016, Valeant sold at least 90 percent of the drugs that Philidor dispensed.
5. Through their relationship, Mr. Davenport allegedly used various shell companies to transfer a kickback payment to Mr. Tanner following the purchase-option agreement, NYT reports. Prosecutors said Mr. Davenport made $40 million from the Valeant and Philidor deal, and paid nearly $10 million to Mr. Tanner.
6. Following the arrest, Valeant said neither the company nor its top executives have been charged in the case and Valeant is cooperating with investigation officials. Mr. Tanner’s lawyer said Mr. Tanner’s innocence will be revealed at trial while Mr. Davenport’s lawyer said his client will defend himself during the trial.
7. A lawyer for Mr. Tanner said, “It was Gary Tanner’s job at Valeant to grow and promote Philidor. He performed that job exceptionally well, greatly benefiting Valeant’s shareholders, and regularly communicated to his superiors what he was doing.”
Mr. Davenport’s lawyer said his client acted with “full transparency” and that Philidor benefited Valeant, “which is why Valeant and its highly sophisticated and active management team sought to buy it.”
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