I am attending the Global Ethics Summit 2010, hosted by Dow Jones and Ethisphere. Here are my notes, live from the session:
There are a number of challenges associated with maintaining integrity as a top priority in a highly competitive global business. But sometimes, despite company’s most earnest efforts to effectively implement compliance metrics and an ethical culture, things can go wrong and subject a company to governmental scrutiny and penalties. Join us as Pfizer’s ehief compliance officer Douglas Lankler candidly discusses this reality and how corporate leaders handle the challenge of compliance in a global setting—and how to effectively address and rebound from cases on noncompliance. Douglas M. Lankler, Senior Vice President & Chief Compliance Officer, Pfizer was interviewed by Timothy P. Erblich, Executive Vice President, Ethisphere Institute, Ethisphere.
Lankler started with Pfizer in 1999 at the start of the compliance program at Pfizer (and at the start of the compliance field). He told some of the background on the Pfizer investigation on Bextra. (see: Pfizer and Compliance.) It was a very difficult outcome for the company. It had a tremendous impact internally. Everyone talks about it and everyone wants to make sure it does not happen again.
The result was a very rapid evolution of the compliance program. As a big company, they already had a robust program. This made it better. When you have 100,000 employees and 99.99% of them are doing the right thing, that still leaves some bad employees.
Pfizer is very acquisitive so it is key to integrate the acquired companies into the Pfizer culture. Systems can keep an eye on employees. But culture helps them to make sure they make the right decision when no one is looking. They have taken the extra-ordinary measure having employees wear integrity pins. (Lankler had one on his lapel.)
The audit committee and the entire board of Pfizer are very focused on compliance issues. Of course there are more than financial issues for compliance failure at a healthcare/pharma company. Compliance failures can kill people.
For Pfizer the key is monitoring at a very granular level. The compliance program needs to dive deep into the transactions, sales levels and questions from customers. An increase is sales is great, but can also be a red flag for something bad happening.
Part of the problem with changing standards and regulations will be used to look back at prior actions. Something you did in 2004 will be evaluated with a 2010 perspective. (This is one of the reasons to stay ahead of the regulatory landscape.)
In dealing with a government investigation, it is very important to put yourself in the shoes of the prosecutor. When listening to the strategy of your outside counsel you need to listen to it from the prosecutor’s perspective. The prosecutor found a problem. You need to help them understand the company operations. They see the problem (and the jury will see the problem) in isolation. You need to show them that the company is as upset about the problem as the prosecutor.
As part of their settlement with the government, Pfizer’s CCO reports directly to the CEO. Previously Lankler reported to the general counsel. This was a big change for Pfizer. The company is highly regulated so there is a tight connection between the legal division and the compliance division. Outside of the legal division, he does not have the legal spending power of the legal department behind him. (He was No.2 in legal.) There was tension between the importance of compliance having a seat at the head table and the importance of support from the legal group.
