• AstraZeneca Opens Internal Probe Into Sales Tactics
  • May 17, 2007 | Authors: Jeffrey S. Edelstein; Linda A. Goldstein
  • Law Firm: Manatt, Phelps & Phillips, LLP - New York Office
  • AstraZeneca announced on April 13, 2007, that it had launched an internal investigation into allegations that one of its regional sales directors had broken “sales practices and compliance issues” in the marketing of its cancer drug, Arimidex.

    The allegations were raised by anonymous whistleblowers within the pharmaceutical firm who have been e-mailing bloggers and reporters with remarkably specific allegations about how staff were asked to promote Arimidex, which has sales of $1.5 billion a year.

    Michael Zubillaga, a regional sales director, published a corporate newsletter describing cancer doctors’ offices as being like “a big bucket of money.” The newsletter encouraged AZ’s drug reps to “reach your hand in the bucket and grab a handful. The more times you are in, the more money goes in your pocket.” Zubillaga was fired on April 6, ostensibly because of these comments. “The company acted immediately to dismiss the person responsible because his comments and the direction he gave to his team violated the core purpose of the company,” AZ said.

    In the same newsletter, however, Zubillaga said that one of his regrets from 2006 was that AZ had not been aggressive enough in selling Arimidex in comparison to a rival Novartis drug, Femara, which also has the chemical name letrozole. “I heard early in the year at the Miami Breast Conference what letrozole was doing with their strategy. We should have changed our strategy with our core messages earlier in regards to selling against letrozole,” Zubillaga’s newsletter said.

    That statement proved extremely controversial inside AZ because the company’s internal code of conduct strictly forbids selling its products in comparison to rival brands. While it may sound trivial, breaking the policy is potentially problematic for AZ because the company has signed a “corporate integrity agreement” with the U.S. Department of Health and Human Services requiring all AZ employees to follow the company’s code of conduct. The 2003 agreement was part of a $350 million settlement of a federal investigation into AZ’s marketing of Zoladex, a treatment for prostate cancer. The company had been accused of illegally allowing doctors to sell free samples of Zoladex, and falsely inflating the drug’s price in Medicare reimbursements. If AZ is found to have broken its agreement with the government, the government could levy more fines or refuse to allow Arimidex to be bought by various government healthcare programs.

    In e-mails, the anonymous whistleblowers, dubbed the “Group of 7,” said that they had alerted the Office of the Inspector General in March, asking for an investigation of the alleged Arimidex violations. They also said that they had alerted AZ management internally five months ago, but nothing had been done by either body. Senator Henry Waxman (D-CA), who is currently investigating off-label drug marketing in Congress, has also now been alerted, the Group of 7 claimed.

    Significance: It is difficult—but critically important—to ensure that sales forces comply with both federal and state marketing regulations, as well as internal codes of conduct. Salespeople work largely on a commission basis, which provides incentives to them to sell as much product as possible. They may be inclined to ignore or bend rules that restrict what they may do or say, if the rules are not reinforced on a regular basis. The anonymity of the Internet also makes it relatively easy for whistleblowers to air their grievances publicly, creating a public relations crisis for the targeted company, on top of any legal concerns it faces.