Healthy Skepticism Library item: 14213

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Attorney predicts next big corporate scandal will be off-label drug marketing
The Dallas Morning News 2008 Aug 27
http://www.dallasnews.com/sharedcontent/dws/bus/columnists/chall/stories/DN-Hall_27bus.ART.State.Edition1.4d79998.html

Full text:

Steve Kardell is about to play Karnack in the classroom.

Wednesday, when the Dallas attorney convenes his first class of corporate compliance and governance at the Southern Methodist University’s Dedman School of Law, he’ll give his predictions for the next wave of corporate scandals to make headlines.

This will be the fourth year that the 60-year-old partner of Clouse Dunn Khoshbin LLP has taught wannabe attorneys how to navigate the often uncharted waters of government regulation. He always starts with his forecast of storms ahead for corporate America.

Last year, it was subprime lending; the year before, Silicon Valley stock options.

Steve Kardell
This year, he expects big pharmaceutical companies to run into legal headwinds for pushing their drugs for uses not approved by the government – so-called off-label marketing.

He also foresees trouble for overzealous promotion of gas shale stock.

Embedded in these predictions is Mr. Kardell’s central message that Sarbanes-Oxley has become an equal-opportunity career threat. In this cover-your-corporate-buns world, companies are pushing liability for misbehaving down to midlevel executives.

“Corporations in real trouble will try to absolve themselves by offering up the guilty parties. It’s almost like an Aztec sacrifice to appease the gods,” says Mr. Kardell in his typical colorful hyperbole to speak what he feels is black-and-white truth. “They’ll take a midlevel exec’s heart out and roll it down the temple steps to prove they have diligence and zero tolerance.”

No longer is this just about criminal wrongdoings, he says.

“If you exclude terminations because of disastrous business decisions, the vast majority of executive firings are based on ethics allegations, best-practice lapses and lifestyle concerns.”

So don’t fall asleep at your company’s compliance training or let your eyes glaze as you certify that online memo on internal procedures, he says.

Doubt what he’s saying?

Mr. Kardell suggests a quick Google search of “internal investigations.” It’ll yield 2.6 million hits – primarily accounting and law firms wanting to help corporations investigate their employees.

To some extent, Mr. Kardell takes perverse delight in the turn of events. His practice of representing executives in wrongful termination cases or helping them quietly exit with a settlement package when they’ve discovered internal wrongdoing is booming.

So what do you do if you feel your boss or company is pushing the ethical envelope?

You avoid taking it public at all costs, he warns.

“There are no happy endings” when you do that, he says. “You ruin the reputation that you’ve spent a lifetime building. You’re radioactive.”

Consider Brian McNamee, the steroids whistleblower.

“He doesn’t have much of a future in any kind of baseball, whether it be the professional variety or coaching T-ball,” Mr. Kardell says.

So why not just keep quiet?

“Unfortunately, you can also be fired for not reporting certain types of conduct,” he says. “There’s a subtle Catch-22 at work here.”

Instead, he suggests working from within to accomplish positive, remedial action, but come armed with your own legal representation.

“This is sorta self-serving, and I feel kinda bad about saying it,” Mr. Kardell admits with a shrug. “But it’s true.”

Congressional hearings looking into off-label marketing by major pharmaceutical companies have led two new clients to Mr. Kardell’s offices in downtown Dallas, worried that their drug companies have pushed the ethical limits. They want to stop the questionable practices without putting their careers on the line.

“A corporate executive without his own personal counsel in today’s ethics environment,” says Mr. Kardell, “is like a SWAT team member without a Kevlar vest.”

No wonder Mr. Kardell’s class is full this semester.

CODE-RED WARNINGS
If there was such a thing as a color-coded danger chart, the following should keep corporate executives on constant code-red, high alert:

•Daily reports expose some new type of corporate wrongdoing.

•External auditors are more adversarial than ever.

•Watchdog agencies are increasing their investigative staffs.

•Boards are testy, often at odds with management, and not reluctant to sacrifice top management at the first sign of trouble.

•In-house counsel and compliance officers are looking for management-level miscreants to justify their policing function.

•Senior managers are looking for underlings to take the fall.

•Everybody is poised to report everybody else on the ethics hotline.