Crackdown on the C-Suite - Pharmaceutical Executive


Crackdown on the C-Suite

Pharmaceutical Executive

How do you determine that what has worked in the past is no longer working and other measures are needed?

Let me first say, emphatically, that we think that the majority of drug companies get it—they understand that the days of free dinner parties, all-expense-paid trips to play golf, and all that foolishness are over. And we applaud the drug industry for doing the right thing. But for that small group of companies—or executives—who think they know better, the measure of our success or failure is whether they show up at our door again with the same kind of problems that were before us previously.

Are the corporate integrity agreements having a beneficial effect?

I think they're having a great beneficial effect. And if you talked to any of the compliance officers at the companies that have been under CIAs, I think they would say the same thing. And if you had a side conversation with some of the sales people, I think they would tell you, "This really stinks." The good old days of being able to make your commission within two weeks at the expense of the Medicare program are largely gone.

So our strategy is working, all in all. But we have to always be asking whether we could do a better job. And when we are confronted with companies like Pfizer, AstraZeneca, and Lilly, who have had previous problems and yet are back facing us again, we have to ask if we missed something.

Now, not every case where a company has come in for a second global settlement means that it has necessarily failed to embrace a better corporate culture. A lot of these problems are the result of corporate acquisitions where the parent company bought the proverbial "pig in a poke," and now they've got to pay the piper.

But there are other cases where the fraud is home grown, and where the company and its employees simply have not taken to heart the opportunity to reform their culture. So, what do we do about that group of companies? We talked about part of the remedy, which is to change the company's cost–benefit assessment. If they think there's profits to be made in off-label marketing of a drug, because they can increase their market share by 20 percent, even though the FDA told them not to—well, unless the settlement is going to cost you more than 20 percent of that product's sales, why would they stop doing it? So, to the credit of the Department of Justice, the cost of this illegal behavior is going up. Sound economic creatures—and everybody running corporate America is a sound economic creature—can do a new cost–benefit assessment and decide whether it's worth the risk.

Now what we've talked about so far is just the company's money. The other problem we have come to recognize is that as long as unscrupulous individual executives are getting their productivity bonus for getting that product over the top while the company is the one paying out the fine, the bad behavior is still being rewarded—and not a hell or a lot is going to change.

So, we've been thinking about ways to hold individuals accountable. Now, we aren't making up new law here. The concept of a corporate official being held personally responsible for the conduct of his or her company goes back to the 1940s. The Supreme Court has upheld this enforcement doctrine for the last 60 plus years. The principle is pretty commonsense. A corporation is just a piece of paper—it's people who make corporations run and who make decisions, good and bad. And we need to get individuals at the highest levels of these drug companies to understand that they are going to be held personally accountable if they were in a position to oversee conduct. If bad conduct occurred on their watch, they had the opportunity to do something about it, and they didn't.


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