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by Michael Connor

What’s it like to have your company plead guilty to a crime and pay a $2.3 billion fine?

“To put it bluntly, it’s like being hit in the face by a two-by-four.  Even for a big company, it’s a very, very difficult thing to go through,” said Douglas Lankler, Senior Vice President and Chief Compliance Officer of Pfizer, the world’s largest drug company.

Last September, Pfizer and its subsidiary, Upjohn, agreed to pay the $2.3 billion in fines – and plead guilty to a crime – to settle federal and state charges regarding promotion of the painkiller Bextra and three other drugs. Among other charges, prosecutors said Pfizer had marketed and promoted the drugs for so-called “off-label” uses not approved by Food and Drug Administration.

At the time, the Justice Department said the Pfizer settlement was the largest health care fraud settlement in history and the largest criminal fine of any kind imposed in the U.S. In addition to the federal deal, the company settled with attorneys general in 42 states and the District of Columbia on civil charges regarding promotion of Geodon, an anti-psychotic drug.

Speaking at the Dow Jones Global Ethics Summit today in New York City, Lankler said that since September he’s been involved in a “never-ending dance” to “make sure our reputation gets back to where we want it to be.”

A corporate culture which emphasizes that compliance is “something the company takes seriously” is essential to avoiding new problems, Lankler said, but it’s no guarantee of success.  “99.9 percent of everybody can be doing the right thing, but if you’ve got a problem, and it’s a real problem, that can be gigantic.”

New Rules

In the wake of the company’s problems marketing Bextra and other drugs, monitoring employee activity closely is a critical component of Pfizer’s compliance program, according to Lankler.  “It’s about monitoring and really looking at individual transactions…getting deep down in there and looking for those indicators” of problems, he said.  That includes constant analysis of sales and marketing tactics across the company.  “If a sales technique works in California, it (reaches) Florida in three hours,” Lankler said.  “Effective sales techniques spread very quickly.”

Under terms of a stringent “Corporate Integrity Agreement” with the Office of the Inspector General of the Department of Health and Human Services, Pfizer agreed that its Chief Compliance Officer would report directly to Pfizer’s Chief Executive Officer, make at least quarterly compliance reports directly to the board’s audit committee and would not be subordinate to the company’s General Counsel or Chief Financial Officer.

While noting that he now attends all meeting of Pfizer’s audit committee, and many of its board meetings, Lankler hinted that the changes in reporting structures were difficult and unpopular.  “This was a really significant change for Pfizer,” he said, noting that because the company operated in the highly-regulated health care industry, Pfizer’s compliance function had traditionally been housed in its legal department, generating a “close connection” that was “a tremendous benefit” to the compliance.

One of “the most mind-changing aspects” of Pfizer’s dealings with federal prosecutors over the course of several years was “the notion of putting yourself in the other guys’ shoes,” especially those of prosecutors, said Lankler, a former assistant U.S. Attorney.  While Pfizer’s management and board might have been persuaded that “I have a good company,” facts as seen by law enforcement, the public and media often indicated otherwise, Lankler said.

One of the more important lessons from Pfizer’s recent troubles, according to Lankler, is that “you can have a problem and still have an effective compliance program – the two are not mutually exclusive.”