February 23, 2017 / 4:41 PM / 3 years ago

Former Valeant and Philidor executives plead not guilty in fraud scheme

Ex-senior Valeant director Gary Tanner walks on the street after exiting the Manhattan Federal Court in New York, U.S. February 23, 2017. REUTERS/Eduardo Munoz

NEW YORK (Reuters) - A former Valeant Pharmaceuticals International Inc executive and the former chief executive of mail order pharmacy Philidor Rx Services pleaded not guilty on Thursday to charges they orchestrated a multi-million dollar fraud and kickback scheme.

Federal prosecutors accused Gary Tanner, who was a senior director at Canadian drugmaker Valeant, of working with former Philidor Chief Executive Officer Andrew Davenport to drive business and funding from Valeant to Philidor. That, prosecutors said, was part of a scheme that netted Davenport $40 million, $10 million of which was secretly kicked back to Tanner.

Founded in 2013, the now-defunct Philidor was a specialty mail-order pharmacy formed with Valeant’s assistance, prosecutors said. At least 90 percent of the drugs it dispensed were Valeant-branded products, they said.

Tanner and Davenport were indicted on four counts, including conspiracy to commit wire fraud and conspiracy to commit money laundering.

They entered their not guilty pleas before U.S. District Judge Loretta Preska in Manhattan.

Both men and their lawyers declined to comment after the hearing.

Valeant did not immediately reply to a request for comment. The drugmaker had said in November that it was cooperating with the authorities while noting that the charges included allegations that the defendants had defrauded the company.

Editing by Bernadette Baum

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