Green Ketchup for Novartis?

We recently commented on the challenges facing the large, Swiss based multinational pharmaceutical company Novartis.  From Business Week came an interview with the new CEO of Novartis, in which he revealed why he thinks he is especially qualified for the job:

Joe Jimenez says that more than 20 years selling Clorox (CLX) bleach and Heinz ketchup taught him to make decisions quickly. Now, as CEO of Novartis (NVS), Europe's second-largest drugmaker, he'll try to prove that speed can also make a difference in the pharmaceutical business.

Jimenez, an American with degrees from Stanford and the University of California at Berkeley, believes his consumer-products background will help. He started his career at Clorox, the world's largest maker of bleach, ran two divisions of ConAgra Foods (CAG), and oversaw H.J. Heinz' (HNZ) European operations. With consumer packaged goods, 'Decisions have to be made quickly because the market moves quickly,' he says. But pharmaceutical businesses have long development lead times, which 'tends to slow decision-making in areas where it doesn't need to.'

Jimenez oversaw the introduction of kid-friendly green ketchup when he was Heinz' North America chief executive,....

Further explanation of why supervising the selling of cleaning or food products would be good experience for the chief executive of a pharmaceutical company, which faces technical, regulatory, and clinical issues very different from the challenges of selling bleach or ketchup, was not forthcoming.

The reason for citing Jiminez's responsibility for green ketchup was more obscure.  According to the authoritative medical journal, Woman's Day magazine, Heinz's green ketchup was one of the "7 Biggest Food Product Duds," in the US, and was discontinued in 2006.

As we have discussed before, the current culture of US and global business includes the belief that someone trained in finance or marketing is the most suitable leader of every type of organization.  Such leadership has lead the US biggest automobile manufacturer into bankruptcy.  We have discussed numerous examples of leaders of health care organizations with no health background or experience who seem to be most expert at making sure their compensation is hugely larger than that of most of their employees.

We hope Novartis does not end up trying to sell the pharmaceutical equivalent of green ketchup. 

I say again, to really reform health care, we need to have leaders of health care organizations who actually understand health care and share its values.

Drowning our Sorrows in Ketchup: Novartis Settles, Appoints Former Heinz Executive CEO

Here's the latest corporate health care marcher in the legal settlement parade, as reported in the Wall Street Journal.

Swiss drug giant Novartis AG said its U.S. subsidiary struck a plea agreement with U.S. investigators to resolve criminal allegations regarding the company's promotion of the epilepsy drug Trileptal, and agreed to pay a $185 million fine.

Federal investigators have been carrying out civil and criminal investigations of Novartis' marketing of the drug, including allegations that it promoted the drug for uses for which it is not approved by the Food and Drug Administration, an illegal practice known as 'off-label' marketing, Novartis said in a statement Tuesday as it announced fourth-quarter results.

To resolve criminal allegations, Novartis said it agreed to plead guilty to a violation of the U.S. Food, Drug and Cosmetic Act, and to pay a fine of $185 million.

It has become a drearily familiar ritual. We have now discussed numerous instances of large health care corporations pleading guilty to criminal charges and/or settling civil allegations of unethical behavior.  In the current case, like nearly all the others, the corporation will pay what seems to be a huge fine.  However, the amount is a pittance compared to the corporation's revenue, and is likely to be viewed as only a small cost of doing a very lucrative business by corporate executives.  In very few cases does any individual suffer any negative consequence for approving, ordering or implementing the unethical behavior. 

Thus, I would argue that these cases remind us how unethical the health care "business" has become, but the way they have been resolved will fail to deter future bad behavior.  A large fine's impact can be spread among share-holders, employees, and clients/ customers/ patients, and hence poses no threat to executives planning the next bit of unethical behavior. 

In fact, the most notable aspect of the current case is that the corporation involved in not run out of the US, but rather out of Switzerland, showing that this pattern is not exclusively an American one.

There is an interesting juxtaposition to this case, however.  At the same time this settlement was announced, Novartis disclosed its new CEO.  A Wall Street Journal commentary opined, that the " New Novartis Chief Needs Surgery Skills."  Ironically, the new CEO is hardly a surgeon.  Here is a summary of his background.

Mr. Jimenez began his career in the United States at The Clorox Company, and later served as president of two operating divisions at ConAgra. In 1998, he joined the H.J. Heinz Company, and was named President and Chief Executive Officer of the North America business. From 2002 to 2006, he served as President and Chief Executive Officer of Heinz in Europe.

Before joining Novartis, he was a NonExecutive Director of Astra-Zeneca plc, United Kingdom, from 2002 to 2007; and was an advisor for the private equity organization Blackstone Group, United States. Mr. Jimenez joined Novartis in April 2007 as Head of the Consumer Health Division and was appointed to his present position in October 2007.

Mr. Jimenez graduated with a bachelor’s degree from Stanford University in 1982 and with an M.B.A. from the University of California, Berkeley, in 1984.

I would guess that all that expertise marketing ketchup will come in handly preventing the need for more settlements of illegal marketing practices.  Seriously, we have discussed the logic and evidence behind the assertion that health care corporations ought to be run by people with relevant experience and values.  We wish Mr Jimenez well, but hope that he realizes that if he is to prevent future events that could throw his company into disrepute, he ought to lean heavily on people who understand medicine and biomedical science, and who support physicians' core values.

More broadly, I again suggest that real US health care reform would need to deal with both these issues.  We need to have rigorous regulation of health care organizations that has the power to deter unethical behavior that may risk patients' health.  We need to have leaders of health care organizations who actually understand health care and share its values. 

Two hat tips to the PharmaGossip blog (here and here).