Healthy Skepticism Library item: 18375

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Publication type: Electronic Source

Edwards J
Senate Probe Might Want to Ask Why Drug Companies Invite Lawsuits By Punishing Whistleblowers
BNet 2010 July 8
http://industry.bnet.com/pharma/10008855/senate-probe-might-want-to-ask-why-drug-companies-invite-lawsuits-by-punishing-whistleblowers/

Full text:

Sen. Chuck Grassley’s inquiry into the whistleblower policies at 16 pharmaceutical companies – Pfizer (PFE), AstraZeneca (AZN), and Novartis (NVS) among them – will likely be a fertile one if he pursues it beyond the companies’ response letters. In a string of recent whistleblower cases a common theme has been the worried or disgruntled executive reporting wrongdoing to management, giving them the chance to fix the problem. Instead, management chose to harass or fire the staffer, thus virtually guaranteeing that a lawsuit would be filed.

In the last three years, pharmaceutical companies have paid more than $3 billion in settlements under the False Claims Act for defrauding federal healthcare programs, says Grassley, R-Iowa. Some examples:

AstraZeneca – $520 million (April 2010)
Pfizer – $2.3 billion (September 2009)
Eli Lilly – $1.4 billion (January 2009)
Bristol-Myers Squibb – $515 million (2007)
From a management point of view, drug company whistleblower cases ought to be mystifying. If an executive reports wrongdoing at the company, then the company has an immediate chance to reduce its risk and liability. (Indeed, companies often employ executives who have the sole function of liability reduction.) Instead, corporate counsel and human resources departments often choose to do the opposite: They terminate the employee who complained, creating the very litigation they are hoping to avoid.

Here are some recent examples:

Dr. Stefan Kruszewski was fired by the Pennsylvania Department of Public Welfare after he alerted his bosses to questionable prescribing practices in the state. “I was fired in a demeaning manner,” he told a conference. “My two offices were emptied and the contents of these offices were put in the gutter.” AstraZeneca settled his case over the mismarketing of the antispychotic Seroquel for $520 million.
An unnamed former AZ executive, employed at the company from 1992 to 2001, who was responsible for the medical aspects of the U.K. launch of Seroquel, took the company to the Prescription Medicines Code of Practice Authority with embarrassing allegations that AZ “pressured and manipulated” its staff into burying unfavorable data. He had previously received assurances from management that they would be vigilant against dishonesty.
James Danforth, the former Warner-Lambert sales rep whose whistleblowing litigation on the seizure drug Neurontin was behind a $141 million settlement in addition to $430 million in criminal penalties, says that when he left the company, “We received threats that there was no way the company was going to just let this go.” Thirteen years later, with litigation ongoing, Pfizer (which acquired Warner) sent a former CIA operative to his house, terrifying his family. The spook also called him at home, saying, “We know all there is to know about you,” and then cited the location of his daughter, who was 200 miles away at her college.
Peter Rost alerted Pfizer to its off-label sales of the human growth hormone brand Genotropin. The company then reassigned the 60 staffers he supervised to other executives, and moved his office next to the security station in Peapack, N.J., even though all his colleagues were then located at Pfizer HQ on 42nd Street in New York. He had no work duties. After two years in limbo, Pfizer let him go. Rost’s litigation is ongoing; Pfizer settled with the Department of Justice for $35 million.
Blair Collins, a Pfizer sales rep, alerted the company to illegal “off-label” sales of the painkiller Bextra. His HR department and corporate counsel’s office then accused him of lacking “integrity” and fired him. Pfizer later paid $2.3 billion to settle the Bextra case.
Robert Liter, another Pfizer sales rep, sold the antidepressant Lyrica. When he complained the drug was being pushed far beyond its FDA-approved indications, Pfizer also accused him of lacking integrity and let him go.
Marjorie Salamane was not a whistleblower as such under federal law, but she did report wrongdoing to Novartis when she told her HR department that she had been raped by a customer. HR threatened her with “further disciplinary action” if she ever contacted the alleged rapist again. Novartis lost a $250 million sex discrimination verdict based in part on her testimony.
Doubtless some of these drug companies will regard Grassley’s inquiry as cheap political theater. Who easier to demonize than Big Pharma? If they’re smart, they’ll seize upon it as an opportunity. Even the most cynical manager must realize that a whistleblower’s first report is a golden opportunity to save the company money and public embarrassment.