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PHARMA: The Industry Veteran on the new career choice for ambitious young pharma execs

Forbes has an article out called The Dark Side of Whistleblowing which discusses the growth of somewhat dubious methods to make cash by insiders at the scene of the crime reporting and documenting government rip-offs by contractors, rather than the individual trying to stop the practices themselves. They focus on the case of TAP pharmaceuticals which after its "alleged" misbehavior agreed to pay a fine in order to stay in the Medicare program, but more recently had all its executives involved in the scam if not exonerated, at least found not guilty in their criminal trials. In fact this controversy over how culpable is the whistleblower is famous enough that it’s the basis for a book by John Grisham (on of his better ones, The Partner) in which a whistleblower has in fact secretly set up the scam that he’s blowing the whistle on. (I haven’t given away the main part of the plot so you’re still safe to read it) . In general I don’t think anyone really doubts that TAP was sailing pretty close to and in fact beyond the wind. The entire Medicare Part B, infusion center resale of pharmaceuticals has been rife with little scams for many years, whether they are strictly within the letter of the law or not, and in some ways the recent change in pricing in that market contained in the MMA has got something to do with trying to reduce the level of confusion that makes those scams so possible. But of course the Industry Veteran has a much finer interpretation of the real implications of this issue to those searching out their future in the world of big pharma:

In the piece on whistleblowing from Forbes, The author makes the required genuflections at capitalism’s altar by disparaging the archaic Civil War era legislation and a legal system that pays someone $126 million for ratting out his company.  Despite such obeisance, the sheer facts of the case, together with some reflexive fairness that the author couldn’t quite squelch, obliged him to grudgingly admit that the informer did the right thing even if his compensation does seem excessive. My wry reflection concerns the fact that a young person starting out in the pharmaceutical industry can do good and well by pursuing a career as a whistleblower rather than some other position. I base this on the fact that too many land mines and matters of chance stand in the way of ascending to the CEO’s office where one can earn unconscionable sums in the manner of Hank McKinnell or Sidney Taurel.  On the other hand, the Pharma companies routinely defraud the public and all levels of government, as well as other, large corporations. Given the fact that the various tattlers in the cases cited below came from mid-management positions, whistleblowing certainly appears as a more feasible career goal. 

If I were a schoolkid today and an aunt or a teacher asked me what I wanted to be when I grow up, it’s clear that I’d answer with "whistleblower" because the prospects for risky, exciting and noble activity is greater there than in becoming a fiduciary officer.  It used to be that when kids told their elders they wanted to become firemen, ballplayers or astronauts, their parents would begin deflecting them from these choices in favor of one of the professions or business. These traditional aspirations of the middle class offered the promise of stability, prestige and good money.  The beauty of the whistleblower choice is that it provides kids with the perfect response to parental objections.  "How many people, mom, in business or the professions walk off with a $126 million haul at the age of 53?"

Within the pharmaceutical industry I feel that my words of encouragement represent sermons for the choir.  Even today I see in Reuters that the Justice Department is investigating GlaxoSmithKline for failing to provide government agencies with best-pricing on some drugs.  More creatively still, an Associated Press story announced the premier of a tell-all movie by an ex-Pfizer rep while another ex-Pfizerite has published a tell-all book with its own gory details  about being a Viagra salesman.  In short, if the prospect of cashing in as a whistleblower appears too farfetched, then books and the movies offer a more conservative opportunity to make out by denouncing Big Pharma.

As a quick coda, I was modestly amused that while it may not be the Veteran’s newly preferred way to wealth, the titans of big pharma are still managing to get by.  You may have thought that Merck had a tough year last year, what with the Vioxx problem and that nasty little stock collapse, but that didn’t stop CEO Gilmartin raking in a tidy $34 million in stock options.  Meanwhile the relatively impoverished Hank McKinnel over at Pfizer, where shareholders saw their worth drop 30% in 2004, found that his annual compensation went up 72%, albeit to a mere $16 million — although that doesn’t count even more stock option grants and the use of the corporate jet for personal travel. Eli Lilly’s President Sidney Taurel had according to the Indianapolis Star‘s initial version of events to struggle by on $4.7 million but somehow I suspect that he got an easy ride from the hometown paper which somehow missed the minor fact picked up by the AP and printed in the next day’s paper that his actual compensation counting options was $15 million.  Although the poor chap will have to start paying for his corporate jet rides from now on.

And I know that you Silicon Valley folk think options don’t count, and yes my 200,000 options for my failed start-up were never worth much and now are worth nothing. But being given millions of dollars worth of options "in the money" does count as real compensation, even if there’s a chance that the value of the shares underlying those options can go down — something that shareholders of Merck, Lilly and Pfizer know only too well — as this chart below tells you.

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Dane.a.greenhalgh Recent comment authors
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Dan
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Dan

Crime And Punishment For Those Absent of a Mind Corporate crime should not be a new concept to many. However, it has evolved into troubling ways- not only in regards to its severity, but the methods of deterrence now being implemented against corporations. So it may be becoming progressively worse for U.S. citizens as a result. Rather than speak of all corporations, what will be discussed is government health care fraud. Fraud basically is deception with the potential to harm others. In the case of pharma companies, this may include improper promotion and marketing, meaning that such tactics are or… Read more »

e.a.greenhalgh
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you want to be a whistleblower and get rich? you nuts? See my website, http://www.cancerfraudbadbiotech.com and see the letters to the federal police and failure to respond. See letters to Merck and Pfizer concerning bird flu and new vaccines,” I may Love your kids more then you do , CEO McKinnell,” on the website, Red Zone. Boy are you silly. Pharma and government are pulling the wool over the public’s eyes when it comes to propaganda about research and health and safety. Thank you. E.A.Greenhalgh