Ex-Valeant, Philidor executives get prison for fraud

A former executive at Valeant Pharmaceuticals International Inc and the former head of a start-up mail-order pharmacy were sentenced to one year in prison on Tuesday after being convicted of defrauding the drugmaker through a secret kickback scheme. Gary Tanner, 41, the former Valeant executive, and Andrew Davenport, 50, the former chief executive of Philidor Rx Services LLC, were also ordered to forfeit $9.7 million, representing the alleged kickbacks. The sentences were imposed by U.S. District Judge Loretta Preska in Manhattan. Both defendants had been convicted in May on four charges, including honest services wire fraud and conspiracy to commit money laundering. Prosecutors had recommended prison terms of between 2-1/2 and 10 years for Tanner, and 2-1/2 and eight years for Davenport. The defendants said no prison time was justified. Lawyers for Tanner and Davenport did not immediately respond to requests for comment.

The case was the first criminal prosecution arising from multiple probes into Valeant’s business practices, including its ties to the now-defunct Philidor. Those ties began drawing scrutiny in October 2015, when investors learned that Valeant had in 2014 acquired an option to buy Philidor, and was suspected of using it to boost sales. The revelations contributed to a steep fall in Valeant’s share price that was compounded by the probes and the Laval, Quebec-based company’s heavy debt load. Management was overhauled, and Valeant changed its name to Bausch Health Cos in July, taken from the name of its Bausch & Lomb eye care unit. Tanner had managed Valeant’s relationship with Philidor as well as Valeant’s “alternative fulfillment” program, through which the drugmaker sought to increase prescriptions for its own drugs instead of generic substitutes.

Prosecutors accused Tanner of steering Valeant business to Philidor, while concealing a $9.7 million kickback from Davenport that came from the roughly $50 million Davenport received when Valeant acquired the option to buy his company. “I deeply regret giving money to Gary Tanner,” Davenport told Preska. Prosecutors said that to keep the scheme secret, Tanner often used an email account with the name “Brian Wilson” to communicate with Davenport and sabotage potential business with rival pharmacies. “Tanner was entrusted to manage Valeant’s relationship with Davenport’s company,” U.S. Attorney Geoffrey Berman said in a statement. “Instead, they devised a scheme to pillage Valeant and share the proceeds.” The case is U.S. v Tanner et al, U.S. District Court, Southern District of New York, No. 17-cr-00061.

https://www.reuters.com/article/us-bausch-health-valeant-sentencings/ex-valeant-philidor-executives-get-prison-for-fraud-idUSKCN1N42EP?il=0

Uber defends its business model over UK worker rights

Uber defended its business model at the Court of Appeal on Tuesday in the latest stage of a long-running battle over the classification of its drivers as self-employed, a designation that entitles them to few workplace rights in Britain. The Silicon Valley-based company, which could be valued at $120 billion in a flotation, has faced protests, regulator crackdowns and license losses around the world as it challenges existing competitors and rapidly expands.

In 2016, two British drivers successfully argued at a tribunal that Uber exerted significant control over them to provide an on-demand taxi service and that they should be given workers’ rights, which include the minimum wage. An employment appeal tribunal upheld that decision last year prompting Uber to go to the Court of Appeal.

Unions argue that the gig economy - where people often work for various firms at the same time without fixed contracts - is exploitative, whilst Uber says its drivers enjoy the flexibility and on average earn much more than the minimum wage. It says its practices have been widely used for decades in Britain by minicabs, private hire vehicles which cannot be hailed in the street like traditional black taxis. “Many mini-cab companies operate a business model under which drivers are self-employed, own their own cars, and bear the risk of their own expenses,” the firm said in a court document. But co-claimant in the case and chair of the drivers’ branch of The Independent Workers Union of Great Britain James Farrar criticized the company. “It’s two years since we beat Uber at the Employment Tribunal, yet minicab drivers all over the UK are still waiting for justice, while Uber exhausts endless appeals,” he said ahead of the hearing.

In Britain, the self-employed are entitled to only basic protections such as health and safety but workers receive the minimum wage, paid holidays and rest breaks. Uber has introduced a number of benefits for drivers in recent months. The U.S. firm is embroiled in legal action around the world where courts have taken differing approaches to the issue of workplace rights. The matter has risen up the political agenda in many countries as more people work for companies without fixed hours or a guaranteed income. A march backed by several trade unions and involving cleaners, receptionists and security officers was held in central London last Tuesday. The government launched a review into working practices last year but has yet to respond after a consultation closed in the summer. A reply is due in “due course,” according to a business ministry spokeswoman.

https://www.reuters.com/article/us-uber-britain/uber-defends-its-business-model-over-uk-worker-rights-idUSKCN1N4008?il=0

UK, Norway agree right to remain for their citizens after Brexit

British citizens already living in Norway and Norwegian citizens living in Britain will have the right to remain residents, even in case of a no-deal Brexit, the prime ministers of Britain and Norway said on Tuesday.

The agreement announced Tuesday was the first concrete step agreed between Britain and the Nordic country on terms that would apply after Britain leaves the EU in March. Norway is not a member of the EU but is part of the single market as a member of the wider European Economic Area (EEA). “Prime Minister May and I agreed that Norway and UK will put in place a comprehensive citizens rights’ agreement,” said Erna Solberg, prime minister of Norway. “We will treat all UK citizens living in Norway … so they will have the same opportunities as they had before also after March 2019,” she said, adding that Britain and Norway were “very close” on agreeing a deal to mirror any Brexit deal London concludes with Brussels.

British Prime Minister Theresa May, visiting Oslo, said she was making the same commitment to Norwegian citizens, as part of a wider pledge to grant such rights to citizens of all EEA countries already living in Britain. “Whatever happens, we confirm that people from the EEA, the Norwegian citizens and those others who are living in the UK, and who have made their life choice to be in the UK, well, to be able to be in the UK. We want them to stay.”

Solberg said that in the event Britain leaves the EU without a free trade deal with the EEA countries, the most challenging issue between Norway and Britain would be the trade in goods. “The most difficult part will be goods, especially from Norway to Britain, because there will be problems on the British side more than on our side,” she told Reuters. “We will have to deal only with Britain, but (Britain) will have to deal with everybody,” she said after a session of the Nordic Council at the Norwegian Parliament where May spoke earlier. Britain is Norway’s most important trading partner, buying oil, gas and fish. Still, Solberg said she “absolutely believed” that Oslo and London would be able to make “things function” between Norway and Britain even in the case of a hard Brexit.

https://www.reuters.com/article/us-britain-eu-may-right/uk-norway-agree-right-to-remain-for-their-citizens-after-brexit-idUSKCN1N41RE?il=0

Israel, Boeing sign reciprocal spending deal: ministry

Boeing (BA.N) has agreed to spend billions of dollars in Israel over the coming decade if it wins major defense contracts, Israel’s Economy Ministry said on Tuesday. The “reciprocal procurement” agreement calls for Boeing to collaborate with Israeli industries for at least 35 percent of the value of any transaction it signs with the Israeli government. This could ease concerns in Israel over new requirements in a U.S. aid package that divert funds away from local industries.

Boeing is competing in Israel for a number of key Defence Ministry contracts, including the purchase of additional F-15 aircraft, fueling planes and a squadron of transport helicopters, the ministry said. With Israel expecting to make about $10 billion of military purchases from Boeing over the next decade, the agreement with the U.S. aerospace company means $3.5 billion in new business in Israel, the ministry said in a statement. “A reciprocal procurement agreement of this magnitude is a significant achievement that will lead to the growth of many companies in the economy, increase their activity and also their success in international markets,” said Economy Minister Eli Cohen. Under a defense aid deal signed in 2016 by Israeli Prime Minister Benjamin Netanyahu and then U.S. President Barack Obama, the United States agreed to provide Israel with $38 billion in military assistance over 10 years. However, one component of the deal was to phase out a special arrangement that had allowed Israel to use 26.3 percent of the U.S. aid on its own defense industry instead of on American-made weapons. All the aid will now have to be spent on U.S. equipment by 2026.

https://www.reuters.com/article/us-israel-boeing/israel-boeing-sign-reciprocal-spending-deal-ministry-idUSKCN1N42B8?il=0

Denmark will push for fresh EU-wide sanctions against Iran: Foreign Minister

Denmark will push for fresh EU-wide sanctions against Iran following a suspected attempted attack by an Iranian intelligence service on Danish soil, Foreign Minister Anders Samuelsen said on Tuesday. Samuelsen also told a news conference he believed the Iranian government was behind the attempted attack and said he would recall the Danish ambassador in Tehran for consultations.

Earlier, Copenhagen said it suspected an Iranian intelligence service of plotting to assassinate the leader of the Danish branch of an ethnic Arab separatist movement in Iran.

https://www.reuters.com/article/us-denmark-security/iranian-intelligence-service-suspected-of-attempted-attack-in-denmark-security-chief-idUSKCN1N41N4?il=0

General Electric reveals deeper regulatory probe, restructuring

General Electric Co slashed its quarterly dividend to a penny a share, promised to restructure its power unit and said it faced a deeper accounting probe as new Chief Executive Larry Culp took his first steps to revive the struggling conglomerate.

GE said the U.S. Securities and Exchange Commission and Department of Justice had expanded ongoing investigations to include a $22-billion writedown of goodwill from GE’s power division, which GE reported on Tuesday. GE’s restructuring of Power comes as the 126-year-old company, once the most valuable U.S. corporation, is reeling from missteps that have eroded profits and forced it to announce more than $40 billion in writedowns in less than a year, among the largest such actions in U.S. corporate history.

Culp, who took over on Oct. 1, delivered more bad news on Tuesday: GE will significantly miss its full-year cash flow target of about $6 billion, and cannot estimate profits for the year until Culp gets more detail about its ailing power unit. GE all but eliminated its quarterly dividend of 12 cents a share to conserve $3.9 billion in cash. Analysts viewed that positively, and Culp said there were no plans to raise equity capital, as some analysts had feared. “My priorities in my first 100 days are positioning our businesses to win, starting with Power, and accelerating deleveraging,” Culp said in the results statement. GE shares were down 8.5 percent at $10.21. They had been up earlier after the results.

NEW POWER STRUCTURE

Former CEO John Flannery, who was on the job for just 14 months, said in June that GE would pare its focus to jet engines, power plants and renewable energy by disposing of its healthcare and Baker Hughes units, along with other restructuring already in the works. Culp added on Tuesday that GE will put its gas turbine equipment and services businesses in a new unit, a move analysts said likely foreshadows the sale of other power assets, such as steam turbines, nuclear plants and power grids.

GE took on much of that capability in 2015 with a $10-billion acquisition of power assets from Alstom SA. It argued it could boost margins and profits. But profits fell as demand for fossil power plants slowed in response to cheaper solar and wind systems. Power services faced stiff competition in Saudi Arabia and elsewhere, and use of large power plants has declined, slowing repair revenue.

https://www.reuters.com/article/us-ge-results/general-electric-reveals-deeper-regulatory-probe-restructuring-idUSKCN1N41BJ?il=0

Chamber president warns US is 'out of people,' needs more immigration

Chamber of Commerce President Tom Donohue said Tuesday that the U.S. has run out of workers and needs more immigration to ensure that that the economy remains strong. He also warned that Congress would face a "big time brawl" with the nation's leading business trade group if it doesn't pass immigration reform that gives existing legal immigrants a pathway to citizenship. [There simply aren't enough people - out of] "The United States is fundamentally out of people," Donohue said in a speech at the Chamber's headquarters. "I used to run the American Trucking Association. There is demand for 300,000 long-haul truck drivers in this country … and the ability to get them is shrinking very quickly, and we can find 15 other industries where this is going on." He added: "Immigrants have long been a vital part of our economy, and they can help fill those gaps now…. Our nation must continue to attract and welcome the world's most industrious and innovative people and finally fix our broken immigration system."

The U.S. unemployment rate is currently 3.7 percent, according to federal statistics, a 49-year low. Donohue's comments come as the Trump administration is ratcheting up its opposition to illegal immigration by deploying 5,200 soldiers to the U.S.-Mexico border to prevent thousands of Central American migrants from crossing. The Chamber has long supported relatively open immigration policies, viewing immigrants as resources that boost the economy overall. It has avoided direct confrontation with the Trump administration over the issue, instead hoping it could broker a reform deal with Congress and other stakeholders. Donohue reiterated that stance Tuesday. "I'll be the first to admit our current political climate makes that easier said than done, but necessity is the mother of invention, and eventually, it will be done," he said. "I think there is an opportunity to do it in the next few years for a number of reasons. One, the president is determined to secure the border. Two, 1 million immigrants working legally [under federal programs] could be removed from the workforce if we cannot get Congress to act and protect their interests." He added that costing business those workers will result in "a big-time brawl in this [Chamber headquarters] building. You can write that down." A reform deal would have to include the ability of employers to hire workers "at all skill levels," an updated E-Verify system, and the ability of existing legal immigrants to earn citizenship.

https://www.washingtonexaminer.com/policy/economy/chamber-president-warns-us-is-out-of-people-needs-more-immigration

Pfizer's profits soar as Trump fights to lower drug prices

Profit soared at Pfizer in the third quarter, a sign President Trump’s crusade against high drug prices has yet to significantly affect the world’s largest pharmaceutical company. Net income rose 45 percent to $4.1 billion, or 69 cents a share, though revenue at the New York City-based drugmaker was little changed at $13.3 billion in the three months through September. Pfizer lowered the high end of its full-year sales guidance to $53.7 billion from $55 billion, citing a slowdown in its Essential Health unit. Sales in the division, which covers sterile injectables and biosimilars, fell 4 percent, driven by a 14 percent decline in legacy products. Several of Pfizer’s most popular drugs, like Viagra, recently lost exclusivity and are facing sales pressure from generic rivals.

The company is “well-positioned to develop and commercialize” new treatments, outgoing Chief Executive Officer Ian Read said, as well as maximize the opportunity of in-market products, advance key pipeline programs, and accelerate emerging-market growth. Pfizer's stock dropped 1 percent to $42.76 in pre-market trading in New York.

Trump announced earlier this month his administration would seek to tie the reimbursement for drugs covered under Medicare Part B to international prices, which are often lower than in the U.S. His predecessor, Barack Obama, also attempted to advance a Part B-related proposal that would have lowered the reimbursement amount that Medicare pays to drug companies. It was met with significant pushback from pharmaceutical companies, including Pfizer, that said the plan was flawed and “likely to have significant unintended consequences for patients facing serious and life-threatening diseases.”

Read hopes the administration will rethink its proposal, which he claimed "imports price controls from abroad into the U.S." "I don’t think its in the best interest of patients," he said on Pfizer's earnings call. Read previously claimed the administration would take steps this year to reform the drug rebate system, an action that could target the business model of middlemen pharmacy benefit managers. No such proposal has been made public, but it "continues to be a point of interest for the administration," Read said. "It is the most effective way the administration can lower prices for patients at the point of purchase," he told investors.

After hiking the price of several of its drugs earlier this year, Trump tweeted that Pfizer "should be ashamed," prompting the company to postpone the cost increases until the end of 2018 or the administration's drug pricing blueprint takes effect. When asked whether Pfizer intends to raise costs in January – the month that pharmaceutical companies typically institute significant price increases – Read hedged. "We will look at our pricing situation in January and take decision based on what the competitive set is and what our value proposition is in the new marketplace," he said.

https://www.washingtonexaminer.com/business/pfizers-profits-soar-as-trump-fights-to-lower-drug-prices