In 1995 Douglas Durand went to work for Tap Pharmaceuticals as vice- president of sales. Several months after starting at Tap Pharmaceuticals, Durand was in disbelief to find out that the company was bribing urologists to purchase the new Lupron drug for prostate cancer. Durand found the culture at Tap Pharmaceuticals to be in misalignment. In order for Durand to protect his good name, he began to document all his findings over a 6 year period and submitting the information to federal prosecutors. The documentation that Durand submitted to the federal prosecutors was so overwhelming that it caused Tap Pharmaceuticals to plead guilty to conspiring with doctors and cheating the government. As result of the guilty plead, Tap Pharmaceuticals paid a staggering $875 million dollar fine, which Durand received 14% of the settlement for his efforts to remedy the situation.
The symptoms found in the Tap Pharmaceuticals case are primarily driven by numbers and monetary rewards. The more the top sales reps could sale or distribute the bigger the monetary reward. Durand tried to institute a more structured environment to help remedy some of the illegal practices he encountered. Many of the sales reps at Tap Pharmaceuticals did not accurately track the samples of Lupron given out to doctors. Durand offered a year salary to sales reps to help the company keep accurate records of distribution of the drugs offered. It worked until upper management shut down the bonus program, furthermore; the reps settled back into their old ways. Symptoms of dishonesty, unethical behavior, inadequate record keeping, crooked doctors, and a complete disregard for laws and regulations set forth by the government are derived from the root cause of poor upper management found at Tap Pharmaceuticals.
The root cause and unresolved issues that Durand encountered at Tap Pharmaceuticals are a direct result of the monetary driven culture created by then president Yasu Hasegawa and senior management. Durand found that when he tried to implement new policies or practices that Hasegawa and the sales reps were not interested, or he was undermined by senior management. Tap pharmaceuticals primary sales niche was to bribe and payoff the people who prescribed the drugs offered by purchasing televisions, vacations, and office equipment.
The unethical practices are a direct result of a lack of unethical leadership and ethical standards and practices not being in place. Tap Pharmaceuticals did not have a hose counsel to help keep practices ethical and meet government requirements because it was thought to be a sales-prevention department. Durand eventually found himself excluded from marketing and sales meetings and told that he just did not understand the culture. The lack of ethical leadership in the company is the root of the problem found at Tap Pharmaceuticals and left all the issues that Durand found unresolved.
Analyze and evaluate alternatives.
Decide on the most valid alternative, and make recommendations.
When thinking of alternatives, people think of other options that may apply in order to have a different outcome than the current outcome. When Durand was offered the position as Vice President of Sales with Tap Pharmaceuticals, he had no idea what he was getting involved with. All he saw was a potential for a promotion in an industry where he had already served his time and made a name for himself. Durand has a couple alternatives in this ethical situation. He could have kept his mouth shut and adhered to Tap Pharmaceuticals’ policies and procedures and unethical practices. The outcome to this alternative could have proven to be very poor for Durand. If Durand continued to allow Tap Pharmaceuticals to conduct business in the sales department as they always had in the past, eventually, the federal government would have caught on to the unethical practices and levied fines against Tap Pharmaceuticals and Mr. Durand.
He could have even been prosecuted for the practices he witnessed at Tap Pharmaceuticals. When employees are directed to blatantly break the law in order to keep sales up and to give out medicine samples without charging for them, there is a huge ethical problem. Tap Pharmaceuticals instructed the doctors to charge Medicare for the samples even though they never paid for them in the first place. It seemed as if Tap Pharmaceuticals planned to break every law of the trade in order to make the most money in the least amount of time. This alternative would not work for Mr. Durand. He had a steady head on his shoulders and would not stand for the unethical practices he had witnessed. But what would he do about the problem? This question would later come into play when Mr. Durand was faced with a tough decision.
A second alternative Mr. Durand had was to leave Tap Pharmaceuticals with a resignation. But a resignation would land him and his family out on the streets. He did not want to jeopardize his family’s lifestyle and affect the way his children would grow up. After all, Mr. Durand did leave a well paying job with a huge medical pharmaceutical company. This alternative would be even worse than staying with Tap Pharmaceuticals and pretending nothing wrong was going on. He had to support his family and to Mr. Durand this was the most important issue to handle. If Mr. Durand resigned from Tap Pharmaceuticals, he would have to start all over again and work his way back up the corporate ladder as he did 20 years before with Merck & Co.
Mr. Durand had very few options or avenues to take in his ethical dilemma. He was virtually stuck “between a rock and a hard place.” He truly made the perfect decision when he decided to file suit against Tap Pharmaceuticals. This was the best possible option he could have used. First, Tap Pharmaceuticals was breaking the law and if they continued to practice unethical business, they could have hurt someone or continued to defraud the United States government and Medicare. Since Mr. Durand was familiar with the practices of the pharmaceutical industry, he had no other choice but to blow the whistle on Tap Pharmaceuticals.
TAP Pharmaceuticals, a physician, and 7 employees of TAP Pharmaceuticals were charged and indicted for bribing physicians with kickbacks to use the drug Lupron. The federal grand jury also found them guilty of Medicare fraud, and violation of the Prescription Drug Marketing Act. PSA-Rising (2001) states,The seven individuals charged in the indictment unsealed today are:Alan Mackenzie age 49, of 27068 Wellington Court, Barrington, Illinois, andformerly Vice President of Sales for TAP, Janice Swirski, age 40, of 6 BellinghamDrive, Chestnut Hill, Massachusetts, and formerly a National Account Manager with TAP,Henry Van Mourick, age 43, of 23 Golfwood Court, Roseville, California, andcurrently a District Manager employed by TAP, Donna Tom, age 37, of 141 East 56thStreet, New York, New York, and formerly a District Manager employed by TAP,Kimberlee Chase, age 35, of 108 Dedham Street, Dover, Massachusetts, and formerly aDistrict Manager employed by TAP, David Guido, age 30, of 131 New London Road,Colchester, Connecticut, and currently a Hospital Account Executive employed by TAP, DR.
John Romano, age 48, of 110 Long Pond Road, Plymouth, Massachusetts, an urologistwith a practice in Plymouth, Massachusetts.
Four other physicians’ were indicted before the above indictment. TAP Pharmaceuticals bribed urologists to use the drug Lupron by giving them big screen televisions, golf vacations, and free sample of Lupron. The sales representatives also gave the physician’s free samples of Lupron and told the physicians to bill Medicare for full price.
Durand tried to change different aspects of how Tap Pharmaceuticals was run, but all to no avail. Whenever he implemented a new structural change, the employees would try it for a short while and return to the way they had done things in the past. Accurate bookkeeping was a logical idea to put into action. This would tell exactly how much each rep gave out to doctors and pharmacies as samples for them to try out. The old way never showed how much they were paid for each sample given because there was no way to know how many had been given out. Whenever new ideas are put into effect, it still takes people to uphold these new rules and regulations. When Yasu Hasegawa failed to show any sort of business ethics, why would any of his employees? A good leader will lead by example. When people follow someone he/she want to emulate his/her actions, not just his/her words. By having a person with little moral fiber lead the company, it allowed some that might have been on the fence about the situation to fall to the same side.
Durand’s cultural change effort failed because senior management and older sales reps refused to change the company for the better. They had been doing things their way for too long and the payoff incentive was too great. The shady business practices were much easier than trying to keep records of exactly how many samples were given out and who all had been bought. When the president of the company would not even change his ways on how he dealt with his business, how could his employees be expected to change as well?
In a business that deals with healthcare, the most important aspect should always be the patients. Since nobody truly cared about them and all the employees concerns were with lining their own pockets, the business ended up being sued for quite a large amount of money. The only way for Durand’s changes to succeed, would be if there were a total overhaul of management. The company would need to basically start over in order to weed out all the bad eggs. That would take a great deal of time, not to mention a great deal of money. Even though Durand became a whistle-blower on Tap Pharmaceuticals and the company was fined, there are sure to be employees who were guilty but not indicted.
In TAP Pharmaceuticals there was an attitude of a misalignment of culture. The profit driven only environment provided no ethical leadership. Upper management including the CEO, who set the tone of weak unethical leadership, held no interest in change. TAP had no formal cultural system. The bottom line was the only factor and how profits were obtained was of little concern. When Durand attempted to make positive changes to the system through a “Reward System,” upper management put a stop to it even tough it was working and labeled him a trouble maker. TAP was not interested in positive ethical change. The gifts to urologists and doctors TAP pharmaceuticals participated in set an unethical culture.
ConclusionIn the end Tap received one of the largest fines in the pharmaceutical industry and the job of rebuilding its image and reorganizing its business practices. Seven of its senior management team received heavy financial and judicial penalties for their part in the Lupron scandal. Douglas Durand in the end had to start over in a new less lucrative position, furthermore; he did receive a large settlement from the federal government under the Whistle-Blowers Act and currently retired and living in Florida.
Barrett, A. (2002, June 24). A Whistle-Blower Rocks an Industry. Business Week. RetrievedJune 19, 2007, from
http://www.fairness.com/resources/relation?relation_id=9650Nelson, K., & Trevino, L. (2004). Managing business ethics: Straight talk about how to do itright (3rd ed.) . New York: Wiley.
PSA Rising (October 3, 2001). TAP Pharmaceuticals Products Inc. and Seven Others ChargedWith Health Care Crimes; Company Agrees to Pay $875 Million to Settle Charges. RetrievedJune 22, 2007 from http://www.psa-rising.com/wiredbird/tap102001.php
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