Ethics Take The fiz Out Of Pfizer

The news that Pfizer has been hit with a $2.3bn fine by the US Government is just the latest in the continuing dilemma over governance and ethics.

According to ABCNews “The main whistleblower, a former company sales rep, said in a statement, ‘at Pfizer, I was expected to increase profits at all costs, even when sales meant endangering lives. I couldn’t do that.'”

The charge against Pfizer is that their sales reps. consistently misrepresented the qualities of certain drugs, deliberately encouraging unauthorized use to boost sales.

In the end, the issue here is not dissimilar to that which caused the collapse of the financial system.  The pressures for growth and increased profits lead to the creation of bonus and incentive schemes that generate undesirable behavior and reckless risk-taking.

Once again, I turn to the final communique of the April G20 Summit, assembeld to consider the fiancial meltdown. World leaders concluded: “Staff engaged in financial and risk control must be independent, have appropriate authority, and be compensated in a manner that is independent of the business areas they oversee and commensurate with their key role in the firm. Effective independence and appropriate authority of such staff are necessary to preserve the integrity of financial and risk management ….”

The Pharmaceuticals industry – like financial services – is among the most regulated, yet despite (or perhaps because of?) that, it continues to struggle with these fundamental governance problems. In part, the challenge is endemic to the role of Sales and its continuing bonus culture. Yet other industries appear able to achieve greater balance and to control the inclination of the Sales organization to exaggerate product or business capabilities.

One way that control is created is through the use of contracts. Sales statements are constrained by the specific commitments contained in the terms and conditions. A feature of large-scale, ethical misrepresentation appears to be that it occurs more frequently in the business-to-consumer market, especially where there are intermediaries (brokers, car dealers, doctors etc). These intermediaries are also often swayed by incentives – in the Pfizer case, it was claimed “in exchange for hearing company sales pitches, doctors were paid up to $1,500 to attend meetings, and were treated to conferences at lush resorts, given air fare, hotels, meals, even massages.”

Once again, this case points to the fundamental role and value of an organization that oversees commercial practices and policies and ensures appropriate vehicles for their implementation – just like the G20 Summit envisaged necessary for the finance industry. Such a group could certainly have saved Pfizer a lot of money. And I am sure there are many IACCM members who would be willing to help set it up!