Novartis CEO scrambles 5,000 managers for damage control as Swiss prosecutors and U.S. lawmakers circle

Swiss flag by a lake
Swiss public prosecutors are looking at potential wrongdoings in Novartis' $1.2 million payments to Michael Cohen. (Andrew Bossi/Wikimedia Commons/CC BY-SA 2.5)

As Novartis' widely criticized $1.2 million contract with President Donald Trump's personal lawyer Michael Cohen draws scrutiny from top law enforcement officials in Switzerland and a growing number of lawmakers in the U.S., CEO Vas Narasimhan got on the phone with 5,000 top managers for a pep talk about following the rules.

The Office of the Attorney General of Switzerland said officials there are conferring with the Public Prosecutor's Office in Basel about launching their own investigation, having noticed media coverage of Novartis' payments to Cohen. But officials there haven't taken action yet.

"The OAG is not conducting any criminal proceedings in this context at present," the AG's office said in an emailed statement. "No additional information can be given for the time being."

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A Novartis spokesperson told FiercePharma the company hasn't yet been contacted by the Swiss prosecutor. The company's global headquarters is in Basel.

After the scandal erupted last week, Novartis said Special Counsel Robert Mueller’s office had inquired in November about its payments to Cohen. The company said it fully cooperated with Mueller's team and provided all the information requested, and it now considers the probe closed.

But the investigating has just begun. Sen. Ron Wyden, D-Ore., ranking member of the Senate Finance Committee, said last week that the panel had launched a probe. In a letter to Narasimhan on Friday, Wyden demanded detailed answers about the deal, including who at Novartis had approved it and what the company wanted for its $1.2 million. In a separate letter (PDF) to Narasimhan on Monday, senators Elizabeth Warren, D-Mass., and Richard Blumenthal, D-Conn., called the payments "stunningly irresponsible" and listed 15 questions of their own.

Novartis has said it paid Cohen for insight into Trump's stance on U.S. healthcare policy matters, but anonymous company insiders told media outlets it was actually buying access to the president.

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The latest Cohen scandal has drawn so much criticism that Narasimhan felt compelled to address 5,000 top Novartis managers, according to Bloomberg. On a conference call, Narasimhan said Novartis needs to regain public trust and change the way it interacts with outside consultants and lobbyists, Bloomberg reported, citing people familiar with the call.

In a previous letter to employees, Narasimhan said the firm "made a mistake" by signing that one-year contract with Cohen. Before that, the CEO had promoted a chief compliance officer to serve on its executive committee, shortly after taking office in February. But rehabbing its public image won't be an easy task for the drugmaker or Narasimhan, especially as Novartis has made similar "turn over a new leaf" promises before. That said, Narasimhan does have an opportunity to use his recent tenure to make a break with past scandals.

The Cohen payments are just the latest to draw scrutiny from investigators. Most recently, Greek prosecutors have taken over a high-profile investigation into Novartis’ alleged bribes paid to top politicians there. Those government officials call the investigation a political witch hunt; Novartis has pledged swift actions if any wrongdoing is found.

The company has also been accused of bribery, kickbacks and other misdeeds in Japan, China, South Korea, Turkey, Russia and elsewhere in Asia, according to its disclosures to securities regulators. In the U.S., it's facing a whistleblower lawsuit alleging widespread kickbacks to doctors, and its generics business Sandoz is under scrutiny in an industrywide price-fixing probe.