What the Pfizer (V)? - Few Consequences of a Long History of Bad Behavior

The recent in-depth investigation by Fortune reporters of 10 years of dysfunctional leadership at Pfizer, the "world's largest research-based pharmaceutical company," raised many issues about leadership and governance in health care (see our post here).  In a series of posts, we then discussed lack of transparency in Pfizer's communication about management performance here, how bad management was rewarded with outsize compensation here, and how a board of directors dominated by members of the "CEOs union," with a number of apparent conflicts of interests and multiple ties to the financial firms that brought us the "great recession," seemed happy to continually reward poor executive performance here.

The Latest Settlement

A recent article also serves as a reminder that Pfizer's dysfunctional leadership and stewardship coincided with an amazing series of ethical missteps.  Just the latest legal settlement by Pfizer appeared in the Washington Post (from the AP).

The drugmaker Pfizer Inc. has agreed to pay the government $14.5 million to settle charges it illegally marketed its drug for a condition called overactive bladder.

The settlement disclosed Friday resolves the last of 10 whistleblower lawsuits, dating back to 2003, that claimed Pfizer marketed a number of its prescription medicines for unapproved uses. Pfizer agreed to pay $2.3 billion in September 2009 to settle both criminal charges and civil claims in many of those cases. The rest were dismissed.

In the final case, Pfizer was accused of marketing overactive bladder drug Detrol for men with enlarged prostates and related conditions including bladder obstruction. The drug wasn’t approved for those uses.

As usual,

New York-based Pfizer, the world’s biggest drugmaker by revenue, said in a statement it denies all allegations of wrongdoing and that the 'settlement allows Pfizer to avoid the cost and distraction of litigation.'

Maybe the company will stay out of trouble for a little while. Its statement noted,

the company has put 'numerous controls and oversight mechanisms in place to ensure compliance with state and federal laws,' including a corporate compliance committee.

A History of Misbehavior

Based on recent history, it seems unlikely that the company will be able to stay out of trouble.  This settlement is just the latest chapter in a long story of misbehavior.

Pfizer paid a $2.3 billion settlement in 2009 of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post here).  Pfizer was involved in three other major cases from then to early 2010, including two involving settlements of fraud charges, and one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post here).  The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).  Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (see post here).   In March, 2011, a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see this story in Bloomberg).

And going back a little further, from the Philadelphia Inquirer,

Repeat Offender: Previous Pfizer Settlements

April 2007: Pfizer agreed to pay $34.7 million in fines to settle Department of Justice allegations that it improperly promoted the human growth hormone product Genotropin. The drugmaker's Pharmacia & Upjohn Co. subsidiary pleaded guilty to offering a kickback to a pharmacy-benefits manager to sell more of the drug.

May 2004: Pfizer agreed to pay $430 million to settle DOJ claims involving the off-label promotion of the epilepsy drug Neurontin by subsidiary Warner-Lambert. The promotions included flying doctors to lavish resorts and paying them hefty speakers' fees to tout the drug. The company said the activity took place years before it bought Warner-Lambert in 2000.

October 2002: Pfizer and subsidiaries Warner-Lambert and Parke-Davis agreed to pay $49 million to settle allegations that the company fraudulently avoided paying fully rebates owed to the state and federal governments under the national Medicaid Rebate program for the cholesterol-lowering drug Lipitor.

By my count, Pfizer made nine separate settlements from 2002 to 2011.  Some other bad behavior by Pfizer that did not necessarily result in legal action can be found under our label "Pfizer."

Summary

Looking at a summary of this bad behavior, it seems remarkable that no individual in a leadership position at Pfizer has suffered any obvious negative consequence of these events, that Pfizer's whole leadership has not been forced to reorganize, maybe even that the company is still in business.

Naively, one might ask why trust a company with such a track record? Why is there not so much mistrust of this organization that it could no longer continue business as usual?

Yet, while as noted in previous posts, Pfizer has not had the best financial results, and has gone through several CEOs, the company has made no fundamental changes in its leadership or governance despite this sorry history.

Perhaps one reason for the lack of response to these events is that they have not previously been presented together so that their pattern is evident, as we did above on Health Care Renewal.  It is true that in 2009, then Pfizer CEO Jeffrey Kindler acknowledged the company has had ethical lapses, and called on government and industry leaders in general to face up to ethical breaches or else the people would find a way to force changes upon them (see post here.) However, not even then did Kindler detail Pfizer's own troubled history, and he did not last much longer as CEO.

I have not found any other publication that puts together the list of bad behaviors that appears above. Most publications in business sections of the news media focus on only the most recent lapses. The medical, and health care/ services/ policy research literature generally ignores these issues entirely.

So here is the tragedy of the anechoic effect. Because it is still simply not done to talk about the poor stewardship, bad leadership, and ethical misadventures of big health care organizations, the dysfunction just continues.

As long as we fear to even talk about what has gone wrong with the leadership and governance of health care, how are we ever going to make any real improvements?