In 1995, Douglas Durand was offered the position of vice president for sales at
ID: 430046 • Letter: I
Question
In 1995, Douglas Durand was offered the position of vice president for sales at TAP
Pharmaceuticals. TAP had been formed 25 years before by Takeda Chemical Indus-tries of Japan and Abbott Laboratories. Durand, 50 years old at the time, had married
his high school sweetheart and worked for Merck & Co. for 20 years, during which he
moved up in the sales organization to senior regional director. TAP offered him the
opportunity to earn 40 percent more per year (in addition to a $50,000 signing bonus)
and help the company move from niche player to mass-market purveyor of ulcer and
prostate cancer medicine. He took advantage of the opportunity and looked forward to
the challenge.
But only a few months after arriving at TAP, he was shocked to find a very
different culture from the one he had become accustomed to at Merck. Merck has long
had a reputation for ethics and social responsibility, and these qualities had been borne
out in Durand’s two decades of experience. For example, at Merck, every new
marketing campaign was evaluated by a legal and regulatory team before being
launched, and drugs were pulled back if necessary. But TAP turned out to be very
different. It quickly became clear that this was a culturewhere only numbers mattered.
On his very first day on the job, Durand learned that TAP had no in-house legal
counsel. The legal counsel was considered a “sales prevention department.” At one
point, Durand found himself listening in on a conference call where sales represen-tatives were openly discussing bribing urologists with an up-front “administration fee”
to doctors who prescribed Lupron, the company’s new drug for prostate cancer. TAP sales representatives also gave doctors Lupron samples at a discount or for free; then
they encouraged the doctors to charge Medicare full price and keep the difference.
Durand overheard doctors boasting about their Lupron purchases of boats and second
homes. TAP offered a big-screen TV to every urologist in the country (10,000!),
along with offers of office equipment and golf vacations. And reps weren’t accounting
for the free samples they gave away—as required by law. Durand knew that failure to
account for a single dose can lead to a fine of asmuch as $1million. Finally, rather than
selling drugs based on good science, TAP held parties for doctors. One such party for a
new ulcer drug featured “Tummy,” a giant fire-belching stomach.
Durand soon became frantic and worried about his own guilt by association.
Initially, he tried to change the culture. After all, he had been hired as a vice president.
But everything he tried was resisted. He was told that he just didn’t understand the
culture at TAP. When he talked about the importance of earning physicians’ trust, the
sales reps just rolled their eyes. He then tried to influence change “the TAP way” by
offering a bonus to reps who kept accurate records of their samples. The program
actually worked, but then senior management discontinued the bonus—and, of course,
the reps stopped keeping track. Over time, Durand began finding himself excluded
from meetings, and he felt trapped. What would happen to him if he left this new job in
less than a year? He wouldn’t collect his bonus, and hewondered if anyone else would
hire him. What would happen to his family? But he also worried about becoming the
corporate scapegoat.
In desperation, Durand turned to an old friend he knew from Merck—Glenna
Crooks, now president of Strategic Health Policy International. Appalled by what she
heard, Crooks encouraged him to document the abuses he had observed and share the
information with Elizabeth Ainslie, a Philadelphia attorney. Given the documented
fraud against the U.S. government, Ainslie encouraged Durand to sue TAP under the
federal whistleblower program. Armed with documents, he filed the suit and federal
prosecutors ran with it. Durand left TAP for Astra Merck in 1996. But under the
whistleblower program, investigations are conducted in secret. Neither TAP nor Astra
Merck was supposed to know about it. The investigation took years, and, when called
to testify, Durand had to make excuses to take time off from his new job. He was
uncomfortable living as a “double agent.” In the end, TAP pleaded guilty to conspiracy
to cheat the federal government and agreed to pay a record $875 million fine. In
October 2001, Durand collected $77million ($28millionwent to taxes), his 14 percent
share of the fine paid under the federal whistleblower statute. He retired to Florida to
be closer to his parents, but he had yet to face the unpleasant task of testifying against
six TAP executives, some of whom had worked for him
Case Questions
1. Analyze the ethical culture at TAP. Does the culture appear to be in alignment?
Misalignment?
2. Based on the facts in the case andwhat you have learned in this chapter, evaluate
the culture change effort that Douglas Durand undertook. What cultural systems did he target in the culture change effort?What systems were missing,
if any?
3. Why did his culture change effort fail? What would it take for it to succeed?
Explanation / Answer
1.
The ethical culture of TAP is in misalignment with what a company of this type shuld be. They are not interested onf the well-being of people, they just want their products to be sold and they will do anything to make doctors prescribe them.
They dont spend time doing analysis or checking for legal issues, in fact they offer gifts to the Dr so they can prescribe their medicines.
In other words theit culture is perfectly aligned but to support unethical conduct
2. Based on the facts in the case andwhat you have learned in this chapter, evaluatethe culture change effort that Douglas Durand undertook. What cultural systems did he target in the culture change effort?What systems were missing,
Firt, he tried the simple persuasion which failed, then he tried the reward system and for a short period of time it worked because sales reps responded to the system however senir management destroyed his efforts by removing that system. There was no support from senir management to change this kind of culture
All of the other systems were aligned to support unethical conduct.
3. Why did his culture change effort fail? What would it take for it to succeed?
He failed because he did not have the support of those who had the authority to make these changes (senior management) , he was isolated and was not invited to meetings any more.
To suceed he needed the support of senior management , because even if you have a high level of job like Durand which was VP but to make a cultural change you need the support from senior management.
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