Three months after his company paid the largest criminal fine in U.S. history, Pfizer Inc. chief executive Jeffrey B. Kindler called on government and business leaders Tuesday to face up to the 'real and legitimate anger' of citizens fed up with ethics breaches.
'If we fail to change, the future will not be pretty - for business or for society as a whole,' Kindler said in a keynote address to the Boston College Chief Executives' Club at the Boston Harbor Hotel. 'People have had enough, and the backlash is real.'
Kindler told the luncheon meeting of about 250 chief executives in the Boston area that a recent survey found two-thirds of the American people now have less trust in corporations than they did a year ago - and the decline in their faith in government and public officials has been even more drastic.
'When the majority don't trust you, they will find a way to force you to change,' he said. These changes, he added, could include limits on businesses' licenses to operate and might affect private-sector innovation.
Pfizer, he acknowledged, has had ethical lapses as well, capped by the $2.3 billion in fines imposed in September for the company's illegal marketing of various drugs. The company's $1.2 billion criminal fine was the largest corporate penalty in U.S. history.
'It was a real blow to our employees,' Kindler said. 'It did not reflect the company we all knew.'
The government of Switzerland also fined Pfizer and two other firms a total of $5.7 million Tuesday for alleged price-fixing of erectile dysfunction drugs.
Mr Kindler also pledged there would be some changes:
Kindler said he understood those in the audience who might wonder, in the wake of Pfizer's own ethical problems, 'Who are you to talk about trust?'
But he said Pfizer has changed. Golf trips, fancy dinners and tchotchkes left for doctors are now out, and there are fewer company sales representatives in the waiting rooms. Results of clinical trials are now posted for all to see.
Also, according to a Boston Herald article:
'We need to be straight with people,' said Kindler at a Boston College Chief Executives’ Club lunch.
'It’s up to us to earn back the trust we’ve lost,' Kindler said.
Already, the company is much more transparent with its operations, he said. It has begun disclosing a number of its business relationships on its Web site and has ceased the high-priced wooing of the doctors who might prescribe its products.
Let me applaud Mr Kindler's declaration that we "need to be straight with people," and in the spirit of constructive criticism, give him some unsolicited advice about ways the company could be more "straight."
First, he might start by admitting the scope of past problems. As we posted previously, the $2.3 billion settlement alluded to above was the company's fourth major settlement of charges of unethical marketing behavior since 2002, and also as alluded to above, it is not the company's most recent ethical problem. For a catalog of Pfizer's ethical pfailures, see this link.
Second, he might acknowledge some responsibility for past problems, or indicate that someone will be held accountable for them. Note that according to the biographical statement in the 2009 Pfizer proxy, Mr Kindler has held leadership positions at the company since 2002.
Third, he might consider a more vigorous transparency effort, starting with the company's relationships with physicians, and other health care professionals and academics. The company has pledged to put some sort of information about payments to such people online, but not until 2010. Maybe that schedule could be sped up. Furthermore, it is not clear how much information will be disclosed, but the company ought to consider making it clear what payments are for, what division of the company (e.g., research and development, or marketing or public relations) made the payments, and how the payments were linked to particular Pfizer products.
Fourth, he might make a more vigorous effort to disclose the results of all clinical research sponsored by Pfizer. In the past, Pfizer has allegedly been a party to suppression of results of clinical research that turned out not to favor its products (e.g., see this post). It is true that Pfizer pledged to post the results of at least some unpublished studies on ClinicalStudyResults.org, but the completeness of its reporting is questionable. But a report by the German Institute for Quality and Efficiency in Health Care suggested that through this year Pfizer has been dragging its feet about disclosing results that may not make its products look good. Consequently, the Institute is now calling for compulsory disclosure of the results of all clinical trials.
I do hope that Mr Kindler and Pfizer management are serious about their commitment to "earn back the trust we've lost." If so, more power to them.