A Mere $2.3 Billion Later…
30 CommentsBy Ed Silverman // October 16th, 2009 // 7:40 am
Tucked into a Pfizer press release this morning about the rosy future that lies ahead - now that Wyeth is securely in its clutches - is this interesting nugget: the big drugmaker has formed an executive compliance committee. Did someone say compliance?
This innovative notion comes hard on the news that Pfizer paid a record-setting, ground-breaking, chair-swiveling, eye-rolling, jaw-dropping, $2.3 billion fine for illegally marketing several drugs, including Bextra, Zyvox, Geodon and Lyrica, over several years - even as other corporate integrity agreements were in force.
One has to wonder - what took them so long? Maybe it was an ugly round of publicity and lots of cash - that might otherwise be used to retain a few research projects - to prompt ceo Jeff Kindler and his advisors (McKinsey, perhaps?) to come up with such a novel idea. Well, as they say, appearances are everything.
“Our creation of the Executive Compliance Committee will serve as an important addition to our compliance infrastructure, and ensure the dedicated involvement of our senior-most leaders in our continuing efforts to fully integrate compliance and integrity into all that we do at Pfizer,” Jeffs intones in the statement.
For the record, Jeff will chair the new club, which includes Doug Lankler, chief compliance officer; chief internal auditor Hugh Donnelly, who reports both to the board’s audit committee and to chief financial officer Frank D’Amelio. Also on the committee be D’Amelio; Ian Read, who heads the global pharma biz; Cavan Redmond, who runs diversified units, and corporate counsel Amy Schulman.
Justice in Michigan
Time will tell whether the attempt “to fully integrate compliance and integrity into all that we do at Pfizer” (quoting the release) will have an impact.
Judging by history (not just Pfizer’s), any real change in this direction would require a change in incentive structure, leadership (personnel) at several levels, and more.
It is a good sign that the chief compliance officer is actually on the committee. They aren’t always.
Merrill
Cmon Ed, do your homework. This new committee was REQUIRED by the corporate integrity agreement (CIA) signed on Aug. 28, 2009.
Ed Silverman
Hi Merrill,
That’s my point. There were already corporate integrity agreements from the past. There should have been such a committee formed much earlier, government prodding or no government prodding. Bad publicity or no bad publicity, and on and on. This belated move is from the same company that played up its efforts to be transparent…
http://www.pharmalot.com/2008/05/pfizer-to-disclose-grants-and-charitable-donations/
For the record, here’s the Department of Justice press release indicating the steps Pfizer must take.
http://www.usdoj.gov/opa/pr/2009/September/09-aag-900.html
Cheers
ed
BP Watch
It’s just another ruse. Establish an Executive Compliance Committee as required by the CIA you received for your past misdeeds, but leave them powerless to effect any change that may limit your ability to make money. There will never be compliance until the executives are truly held accountable for their actions, pay personal fines, are tried, convicted and spend time behind bars. Until the, the crimes will continue and all they’ll ever get is a little slap on the wrist and a fine that’s paid by the hard-working employees and the stockholders.
FDAer
Agree with BP.
At FDA right after Vioxx a Drug Safety Management Board was formed. Steve Galson had a series of meetings with staff where he discussed this DSMB. When he came to speak to our group the first thing he said was that the DSMB was “simply to quiet our external critics”. I assume he meant Congress and others.
Then there was the Culture of Safety Committee in response to the 2006 UCS survey and the IOM report. It was headed up by the worst of the worst managers involved in harassment, supression, and retaliation of reviewers and who was an ex-Pfizer VP brought in apparently to help shepard through a Pfizer drug that had numerous safety problems. The request for nominations for the committee for review staff included criteria that they be able to use their influence to suppress reviewers who might not like what was going on.
FDAer
Condor
To BP Watch’s point:
“. . . .There will never be compliance until the executives are truly held accountable for their actions, pay personal fines, are tried, convicted and spend time behind bars. . . .”
The difficulty here (in winning a criminal conviction against an individual executive-level officer of big pharma) is proving, beyond a reasonable doubt, that the highest executives explicitly authorized the conduct in the field, usually with some seven layers of shrugging management sandwiched in between. [Not likely.]
But it would end the practice, if even one prosecutor could win a conviction, with a jail sentence. This is, in some respects, a very-well-organized set of crimes — with insulation built in, at each layer of management (Much more on that notion, here, from the date of the September 11, 2009 agreement being discussed above).
These Compliance Committees are also (primarily) defense mechanisms — ways to insulate executives and board members by saying, in effect, we set up a process to review these matters — and it isn’t our fault if the review misses some bad apples.
So this whole area remains deeply vexing — to even the most able of prosecutors.
Namaste
harry
Kindler & Co have to complete a compliance certificate. what is that, I ask myself? will Kindler hang this certificate on his office wall as a reminder of 2009.Who will conduct the compliance certification? The FDA..are they qualified to do this? following ethics charges amongst other things.
Pfizer just bought Wyeth, they will do what they always do, promote the drugs they have earmarked for billion dollar status. Then come the whistleblowers, then the forced government investigations. this takes about 6 years,.then the dog and pony show by the feds, congratulating themselves..billion dollar fine, but by then pfizer will be planning another take over and so it goes on.
Pharma Giles
These are the guys who put the “lie-ance” in “compliance”…
pharmagossip
Big Pharma = very-well-organized crime!
Lee Howard
Hey Ed,
As one journalist to another, it’s good to have you back in this spot … along with the smart and informed people who always respond to your blog. You probably noted somewhere how Pharmalot came to be reborn, but I obviously missed it. Are you planning the same format as before? Are you still doing your other blog work? Inquiring reporters want to know…
Best,
Lee Howard
The Day
New London,CT
Lisa Van Syckel
Lee,.. I am a fan of The Day, also.
Condor
For anyone interested in discerning “where the lank finger of accusation points” (that is, toward the executives actually responsible) for the off-label messaging strategies that led to the Bexra’s “largest ever” criminal fine — I’ve now traced Bextra®’s ignomious history, from GD Searle (as the experimental compound Valdecoxib), to Pharmacia and Upjohn (via the old Monsanto pharma businesses), ultimately to be acquired by Pfizer, when it bought all of Pharmacia, in April 2003.
Do go take a look — you know you want to.
Namaste
Matthew Holford
Hey Ed. Good to see you back.
My experience of compliance in the financial services industry tells me that the *appearance* of compliance is altogether more important than the actuality. What are these companies complying with? The Law, obviously, along with any regulatory requirements that might “flesh out” existing legislation.
We then come to the thorny question of “how do we comply with a legal or regulatory rule?” At this point, we would need to understand what the regulator, in the first instant, would require in respect of, say, proper marketing of drugs. That is, what must a company do, in order to ensure that it is properly marketing drugs, and how does it evidence that? Moreover, if need be, how does it evidence that it’s not marketing illegally?
Once the company has set down its procedure (in a Procedures Manual), it should be possible to scrutinize its activity to see if it’s doing what it says it’s doing and if what it says it’s doing ensures that it complies with the relevant rule. This sounds great, but if the compliance team isn’t sufficiently senior such that they may be intimidated and/or starved of information, or else it’s peopled by marketing types whose interests lie elsewhere, then it will be ineffective. Similarly, if the regulator isn’t sufficiently diligent in its inspections, or is intimidated by the companies that it’s inspecting (a recent example being the way that the SEC was intimidated by Madoff), then the system will fail.
In fact, the system is designed to fail, at almost every turn, because nobody is quite clear as to what they’re trying to achieve, as far as I can see.
Matt
Jackson Roe
Ed:
OIG Guidance dating back to 1992 stated that a manufacturer should have a compliance committee in order to have an effective compliance program. Pfizer may have missed the mark with “strict liability” with its executives where the top brass is held accountable even though they did not have implicit knowledge.
This is window dressing, and it’s time the government and companies stop acting like the industry doesn’t know what each hand is doing. If we can generate all this revenue, surely we know the tactics used on the way to the bank? And if you don’t, as an executive, well, shame on you, for not asking questions.
Jaynesday
Pfizer’s Jeff said - “Our creation of the Executive Compliance Committee will serve as an important addition to our compliance infrastructure, and ensure the dedicated involvement of our senior-most leaders in our continuing efforts to fully integrate compliance and integrity into all that we do at Pfizer,” Jeffs intones in the statement.
So Condor I agree with your Oct 16 comment -
“These Compliance Committees are also (primarily) defense mechanisms — ways to insulate executives and board members by saying, in effect, we set up a process to review these matters — and it isn’t our fault if the review misses some bad apples.”
However Jeff’s statement says in effect - from now on our senior most level of management will be integral in compliance and ethics.
Therefore in my opinion a line has been draw in the sand that says from this point forward if you didn’t know you should have known and it is your failure if you didn’t.
Justice in Michigan
As discussed in the other thread (that started with drug pricing), preserving “deniability” at the top is as old as corporations (and earlier large organizations) themselves.
Nobody wants to bring “bad news” to the boss, and the “just get it done; don’t tell me how” has a long tradition. Of course, that’s why John Dean was apparently so surprised when he earned that Nixon already knew what was going on with Watergate. The knowledge chain wasn’t supposed to work that way.
Nevertheless, there have been cases in which senior management has been held accountable–including serving time–even when they demonstrably did _not_ know. The usual argument for not pursuing that line further is that CEO’s are “too big to jail.”
In any event, being responsible for what their companies do–for good and for ill–is what senior managers get paid for.
JohnSaab
It agree with “pharmagossip” - “Big Pharma = very-well-organized crime”. It so…
Peter
What I don’t get is that all of these shenanigans by Pfizer happened while Kindler was head of the legal department which must have looked the other way. Now it’s the same Kindler chairing the committee?
Talk about the fox guarding the chicken coop
Anonymous
Nothing will change until sales force goals reflect the dollar value of an FDA indication instead of any and all off-label use of the drug. This forces field sales to talk off=label in order to hit their numbers.
harpy
I’m too lazy to go look it up right now, but didn’t Pfizer have a monitor to go with their multiple CIAs? like unto Ashcroft and Zimmer? Who has oversight for those people? The DoJ?
And good point about Kindler, Peter. As head of legal he would’ve been intimately involved with negotiating terms, no?
mole gerbil
ED:
Goozner was right.. do your research (or at least assign it to some green Pink Sh1t writer). You wrote this as if Pfizer came up with the committee on its own, when all along the government has required this. Admit your error and save some credibility.
Ed Silverman
Hi Mole,
As I indicated, I was using a dollop of sarcasm, which apparently wasn’t conveyed very well. Pfizer execs like to pay McKinsey to come up with ideas, for instance. Sorry for the miscue, though. I should have explicity noted the DoJ stipulation so there was no confusion.
In any event, government prodding or no government prodding, Pfizer should have taken that step long before it came to this. You may not agree, but hopefully you follow my point. Kindler, after all, was general counsel while some of this occurred. Where was the commitment to compliance then?
And now a question for you - what do you have against The Pink Sheet? Whether or not you reply, for the record, I run Pharmalot as a stand-alone operation. I may link to other media - of all sorts - but I write the posts, unless I invite a guest columnist, which I have done in the past.
Hope this helps,
ed
Condor
“. . .to prompt ceo Jeff Kindler and his advisors (McKinsey, perhaps?) to come up with such a novel idea. Well, as they say, appearances are everything. . . .”
Well, I guess I’m simple-headed (or something), because I, too understood from the go, above, that Ed was being sarcastic. . . .
Maybe it is because I am aware of most of Ed’s prior reporting on Pfizer/Kindler/CIAs (and I share his jaundiced view of McKinsey’s occasional role at most big pharma companies) more generally — so, it seemed implied that the earlier $2.3 billion settlement contained this Committee bolstering/establishment provision. . .
You run a great, independent joint here, Ed — fret not.
Namaste
mole gerbil
Hi ED:
Thanks for the response. The Pink Sheet stinks for many reasons, most importantly it charges too much for over-written, marginal copy, and its association with Elsevier. Your association with the Pink Sh1t makes me suspicious of your independence. I don’t believe your superiors would allow you to respond to comments (such as mine and others), post stories, and generate email distributions during normal Pink Sheet business hours unless there was some quid pro quo (pharmalot’s mentioning and links to certain pink sheet stories). One of my employees would be fired for trying to sell real estate during normal business hours, which is no different from what you are trying to pull off. Either your management is really dumb or they are on board with pharmalot’s use as an advertising vehicle.
Prove me wrong… I subscribe to various other fee-based services including pink sheet competitors. I’ll send you some links to these stories. Can you add some of these in your posts?
Ed Silverman
Hi Mole,
Well, sorry, but I can’t do much about subscription prices at The Pink Sheet, and we are working at gradually improving the quality of the content.
And believe it or not, there is no formal quid pro quo. I’m perfectly happy, however, to mention and link to stories from The Pink Sheet when they’re newsworthy - which could mean exclusive, insightful or simply different things that I’ve not seen elsewhere.
I did that in the past while running Pharmalot for The Star-Ledger of NJ - I excerpted copy from The RPM Report, another publication in the Elseiver business unit that includes the Pink Sheet - and provided a courtesy link, noting that a subscription was required to see the whole story. I’d done that with a couple of other pubs back then as well. Its just the way I’ve been operating.
That said, if there is a legit reason to link to a Pink Sheet story, presumably, all parties benefit in so far as there could be greater visibility for all involved. But as I’ve explained to all comers, I would, indeed, lose credibility if the site were to suddenly become an empty suit that exists mostly to hawk another publication or web site. In the end, there would be no point for me to run Pharmalot that way.
And I post two or three items at the beginning and end of each (most days, unless I’m busy or away from the laptop), and these generally don’t take very long. I can dash them off in less than an hour and, since I’m up quite early, can handle the morning copy flow without much difficulty. Again, that assumes there are no interruptions, such as getting kids off to school.
Perhaps there’s another way to think of this, which is that, as a journalist, I maintain a degree of visibility that provides me with additional opportunities to meet and talk to people - and learn what’s going on. This, in turn, informs my understanding of the industry and can provide tips and insights, which I’m free to share with colleagues. And yes, since I’m associated, obviously, with the Pink Sheet, the publication gains added visibility as well by extension.
It’s there for you to see and you can be the judge, as time goes on, how this gets handled. And sure, send me links and, if they’re truly newsworthy or quite different or insightful, I will consider linking. Just remember that Pharmalot is a side show and, in its latest incarnation, an experiment. I appreciate the skepticism, but at the end of the day, readers/viewers are either getting useful or interesting info, or they’re not. Hopefully, the mix that shows up over the course of a given week fits that bill.
Regards
Ed
Disgusted
Nothing will change. Never has, never will. Until the culprits are held accountable, receive heavy personal fines and convicted of their crimes.
atlex
The culprits in this case were indicted and convicted. They paid heavy personal fines and were fired from their jobs. Some people who post on this blog would like to see the most senior managers convicted in these cases. Undoubtedly, the federal prosecutors would love to convict a CEO. However, they seem not to be able to make such a case.
Disgusted
In my opinion, the top dogs at Pharmacia escaped absolutely free. I believe they sold off the company to Pfizer, took away tons of money, and left Pfizer holding the bag while moving to their next gig..
Justice in MI
Atlex–Do you have a reference that summarizes info on those who were indicted and convicted? I have not been able to find that.
Do you feel that senior managers in cases like these bear any responsibility? Suspend the issue of indictment or conviction. As is usual in such cases, those on the gov. side, including the whistleblower, talk about a “culture of corruption” in which illicit marketing was at least tacitly condoned, notwithstanding what was said in formal training.
From where you sit, do you see that _ever_ being the case in companies as large as Pfizer? Genuine question.
Carolyn Thomas
Hello from Canada,
Ed, I have included a link to this from ‘The Ethical Nag: Marketing Ethics for the Easily Swayed’ and will feature it in a future post.
As a heart attack survivor who now takes a fistful of cardiac meds every morning, I have become recently gobsmacked by almost-daily scandals like this that make me realize I have no clue which of these drugs have been prescribed for me based on tainted research, ghostwritten medical journal articles bought and paid for by drug companies, and the highly successful marketing machine of Big Pharma - and NEITHER DO MY DOCTORS.
I’ve spent my entire adult life working in public relations, and I can smell a good spin a mile away. That’s why I laughed right out loud at Pfizer’s press release, including the world’s longest disclaimer paragraph at the end. Allow me to translate the PR-speak for you: “Blahblahblah.”
It would be truly hilarious if it weren’t so downright dangerous to all patients whose docs have been ‘educated’ by drug companies like Pfizer.