THE WHISTLEBLOWER

CONFESSIONS OF A HEALTHCARE HITMAN

PETER ROST MD

SOFT SKULL PRESS                     2006

www.pgw.com

PART 2

 

Chapter 3: The Art of Firing People

As the April 2003 Pfizer take-over date rapidly approached, some more Pharmacia employees received job offers from the new organization, many of whom said no thanks – but many didn’t hear anything at all from Pfizer. At the same time we silently watched as wave after wave of Pfizer managers were promoted into new positions and the level of cynicism at Pharmacia grew day by day.

As the merger loomed, those of us with managerial responsibilities were told that we needed to learn how to properly fire our subordinates.

• By now, we really felt like cattle on our way to the slaughter chute, certain that after we had killed off our subordinates, we’d be next.

 

No crying

We were told that we needed to choose an appropriate setting for the termination meetings. If we expected trouble, we could have an “exit team” waiting around the corner, invisible to the unsuspecting target. The exit team could, if needed, carry out a screaming and panicked employee that refused to leave, I suppose.

• It was important to note that “small talk” should be kept brief, e.g. two minutes. The presenters – by now I was thinking of them as “Terminators” – strongly suggested not waiting too long before letting the ax fall.
• The second step was to “set the stage.”  The third step was to do the deed.
• There were hundreds of managers in the room and you could hear a pin drop. We all waited for the next set of instructions.
• The man at the podium explained that it was “imperative to plan and rehearse the statement that announces the separation.”
• I thought of the day when I would have to fire Isadora Pelozzi. Perhaps I would say, “You’re being separated because you asked questions. We don’t ask questions at Pfizer.”
• The final step was to “listen and allow time to react and ask questions.”
• We were also instructed that company policy was not to provide any references.
• Next we were going to learn how to handle the “difficult employees” – the ones who won’t walk docilely through the slaughter chute.

 

The very angry person

The emotional employee

 

Chapter 4: Crimes and Misdemeanors

From the beginning of my time at Pharmacia, the flagship drug of my endocrinology franchise had been Genotropin, a human growth hormone. Though we sold it for use in both short children and adults with growth hormone deficiency, the big market was children – they had to inject the drug daily for many years until they reached their adult height. A patient base like that made for stable sales that didn’t fluctuate a lot. Our only worries were our three major competitors, each with their own genetically engineered growth hormone, virtually identical to ours.

This situation resulted in an unusual practice called “rotation,” in which doctors played “eeny meeny miney mo,” giving the first patient our drug, the second patient a competitor’s drug, and so on. They did this so that they could enjoy the meetings, travel, and other incentive programs that all pharmaceutical companies provided. “Why go to an exotic resort only once a year when you can go four times?” appeared to be the general motto among physicians. This was one of my first concerns as I started my new job back in the summer of 2001. I found out that we paid for many hundreds of physicians to go to wonderful locations in the Caribbean and Mexico. Against AMA guidelines we paid their way, and we even allowed spouses to attend for a very low price. The way this was explained to me was that Pharmacia didn’t consider them to be regular doctors. They were “investigators.” Needless to say, few of them did any real studies. To become an investigator was all too simple: fill out a form with information about how much Genotropin they had given a particular patient, write down a few patient measurements, send it to Pharmacia and – voila – you’re an “investigator.” I asked Darren McAllister about this in the fall of 2001, and he told me that Pharmacia’s legal department had approved the program.

An unusual memo

Darren McAllister apparently had his own concerns about my area of responsibility, and one of the first documents he gave me was a memo he had written to all the foreign affiliates and to our U.S. sales department, with a copy to Pharmacia’s senior management. It was titled “Growth Hormone in Aging Patients.”

• The memo stated in bold letters that “Pharmacia does not, may not and will not promote or encourage the usage of our products outside of the approved labeling.”

 

More discoveries

• I discovered more and more details about our business that concerned me. Giving a rebate to doctors who did off-label prescriptions could be regarded as an improper incentive, which could be a violation of anti-kickback statutes.
• I also learned that we could be even worse off if we provided free drugs. Cold chills started to creep down my spine.
• We were giving all kinds of rebates to all kinds of centers, including doctors that specialized in anti-aging.
• We were also giving away free drugs to virtually all new patients for the first few months, before they got approval for insurance coverage. (This was a very expensive drug costing $20,000 per year – not something patients simply picked up in a pharmacy.)

Exploring my options led to the next anomaly: 90% of our sales went to pediatric patients, and only 10% to adult patients. But our sales efforts didn’t reflect this ratio: Half our sales force focused on the adult area, and 17 of the top 20 bonus payments went to sales reps targeting the adult area.

• Why give bonuses mainly to the sales people that generated just 10% of the business? Why push sales to the adult market? Did its potential really justify the expense?

The reason most sales went to children was that they needed very high doses, costing a lot of money, for many years. Adults on the other hand, used very low doses and often stopped treatment after only a few months. Based on the doctors who wrote adult prescriptions, dosing and length of treatment, we concluded that most of the adult sales were being prescribed for off-label anti-aging treatments.

Bonus formulas that didn’t make sense

• We rewarded sales representative per new patient, not per sales dollar.
• We made no money on the adult franchise.
• It was time for some major changes in how we ran our business, and it was time to tell the Pharmacia lawyers what I had learned.

 

Criminal liability

• One day a Pharmacia lawyer left a document on my desk. “… is guilty of an offense punishable by not more than 5 years in prison.”
• To be a vice president would be enough to put me in a bad position if the Feds came looking at our business. I had to take action.

 

The internal investigation

• By the time we were done, we had new people in the U.S. marketing department and had created a new sales incentive system that didn’t reward off-label sales.
• We also stopped giving all those rebates to the anti-aging centers and all kinds of other rebates to various wholesalers and pharmacy benefit managers.
• Genotropin sales went through the roof.
• In 2003 Genotropin became the best performing product vs. budget, if products with sales of more than $100 million were compared. We increased sales by 46% and came in more than 30% over forecast. This was the best performance in the history of Genotropin.
• Now we had new bosses from Pfizer, so we set out to inform them about what had been going on and perhaps get them to agree to take additional action.

 

Breaking the news to Pfizer

• They put us in a dinky conference room, and when the last one of us had arrived, the Pfizer people joined.

I had a lot on my mind, not all of which I got a chance to discuss. After some of my U.S. marketing people had departed six months earlier, I went through their files, which were treasure troves of illegal marketing. I found contracts that paid $50,000 to individual anti-aging physicians for “consulting” services; I discovered an outfit in Canada that was going to establish business for these physicians, to which we paid a $10,000 monthly retainer. Sales people came forward telling us how they had been forced to do off-label promotion. One salesperson in Chicago had been terminated because he had refused. In the years past, Pharmacia had conducted an annual ethics certification of our sales reps and many had stated that they had been forced to do off-label promotion. It was bad, really bad, and I wasn’t sure if Pharmacia’s legal department had done everything it could.

Pens on fire

What really scared Pfizer were the business practices still in place at Pharmacia, the ones I had warned Pharmacia’s legal department about, but that they hadn’t stopped. We divulged the “investigator” meetings and Caribbean trips and we described the program that supplied everyone with free drugs for several months, which could easily be seen as an inducement to off-label sales. We called this the Bridge program, since it bridged the time period until the patient got reimbursement from his insurance company with free drugs, and though fundamentally this was a well-meaning program, it could be abused. All of us had a strong incentive to explain what we had done to stop inappropriate practices, since we didn’t want to be associated with any of this.

A promise

• I didn’t just have legal issues on my mind during this time period; most of all I was concerned about my own future.
• The response came back very quickly from Pfizer’s new Senior Vice President for Global Marketing. “There is no issue whatsoever on our side with your being considered for several positions.”
• While I didn’t have a specific job offer in my hand yet, things were moving in the right direction, and I started to feel comfortable.

 

Pharmacia’s CEO receives a warning