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"Usually by the time someone becomes a senior executive they are very aware of the pitfalls in the organization, and they have become masters at not doing something wrong or not getting caught doing something wrong," explains Peter Rost, a former senior Pfizer executive turned industry gadfly.
Incentive-based compensation systems -- typically 40% to 50% of salespeople's income comes from hitting their numbers -- are one weak point. "They are going to work real hard to increase those numbers and do whatever it takes, and if they think somebody gave them a wink about doing this or that, they are going to run with it." says Rost.
Booting senior executives out for any fraud under their watch might end the wink-and-nod system, giving hope to critics.
"I love this idea. It's a sign that there is a creative mind in government," says Patrick Burns of the Taxpayers Against Fraud Education Fund. "Bring the pain, you bring the change. The pain can't only be felt by a nameless, faceless corporation, it has to sit in the living room of somebody who is in charge of designing a fraud, green-lighting a fraud or ignoring a fraud; I don't think you need to hang too many people from the gibbet for that message to be transmitted."
Read full article in Fortune/CNN Money.
Posted by Peter Rost at 3:50 PM
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"The government pretends to go after these guys, the companies pretend to follow the law, but it's just a game for the consumption of the masses; so people will think that the wheels of justice are actually moving," says Peter Rost, a former senior Pfizer marketing executive.
If the government were more serious, Rost contends, it would double the funding for prosecutions so that Justice could go after more than a fraction of the cases and bring more companies to trial. "I think until that happens this game will go on," says Rost. "It's obviously great for drug companies, its great for the lawyers, it's great for the Justice Department to bring in a token scalp every now and then, so everybody involved wins, and that is why it continues."
The government is beginning to share the critics’ view. "These are legitimate concerns," concedes Lewis Morris, chief counsel for the Department of Health and Human Services’ unusually powerful Inspector General’s office, which is a key player in the search for ways to combat recidivism among pharmaceutical companies. He says the government is stepping up its enforcement and beginning to flex its considerable regulatory authority more robustly. This includes plans to target responsible executives — not just companies — by toughening the CIAs to require management and a board committee to certify company compliance.
Read more in Time Magazine.
Posted by Peter Rost at 9:41 AM