How can pharmas avoid scandal? Don't hire rule-breakers, Novartis CEO says

Joe Jimenez gesturing

Novartis chief Joe Jimenez knows a thing or two about dealing with scandals. And his advice to other execs on how to avoid them? It all starts with recruiting the right staff.

The recruitment process is the time to filter out job candidates who will perform no matter the cost--as opposed to those who want to perform, but also want to follow the rules, Jimenez said at a recent leadership symposium. And that’s something he says the Swiss pharma giant has learned to do.

“We tell people, we don’t want you to deliver at any cost. We want you to deliver, but we want you to deliver in the right way,” he said, as quoted by Finews.

The job doesn’t stop there, though. Once you’ve hired the right people, training them in compliance is imperative. But you also need the ability to spot wrongdoing and “wipe it out as soon as you see it.”

“The third line of defense is, are you able to identify if you have a problem quickly and fix it,” he said. “And if you can do those three things, then I would say you’re doing your job as the leader.”

Of course, as a company of more than 119,000 global employees, Novartis can’t guarantee some bad behavior won’t slip through, Jimenez cautioned--and it certainly has before. During his tenure, the drugmaker has faced claims that it rigged trial data in Japan, discriminated against women in the U.S. and more. It’s also shelled out millions on settling legal probes--including a $25 million payment to the SEC it made this year to lay to rest a probe of its payments in China.

And Jimenez well knows the fallout from such bad behavior. The data-manipulation scandal in Japan triggered criminal action under the country's false-advertising law. Then, last spring, the Japanese government suspended Novartis' operations there, putting the company's business there on hold for 15 days as punishment for failing to properly report drug side effects. It was the first time Japan has cracked down on side effects reporting in that way.

The company cracked down hard on its employees in that unit as the allegations unfolded. The Swiss drugmaker cut executive pay, dismissed two of its Japanese unit's top employees, and launched its own internal probe. The company also apologized publicly for its role in the data scandals.

More recently, a number of Novartis employees in South Korea were indicted on rebate-related charges. The company had already suspended its top local executive based on an internal investigation, and when the arrests hit the news, said it had started implementing a "remediation plan." That, presumably, falls under Jimenez's "wipe it out as soon as you see it" advice.

Novartis isn’t the only drugmaker that’s found itself embroiled in scandal, of course. On the corruption front alone, Big Pharma peers AstraZeneca and GlaxoSmithKline have also coughed up payments to the SEC this year of $5.5 million and $20 million, respectively.

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