It’s all about bending the rules. The Authors Collection.
January 25, 2014
When I was a young reporter working in Arizona, my editors assigned me to look into the local university’s football program. At the time, scandals were erupting at many of the other schools in the West. Players were accusing one coach of whacking them with a metal rod in his over-the-top quest to turn 18-year-old boys into a smoothly operating sports machine. Certain summer correspondent courses were the perfect fix for academically troubled players, offering credits without work. Class lists read like the reverse of an academic All-American honor roll – flunking players from schools throughout the conference.
What I found was a system governed by make-believe rules, trying somewhat hopelessly to adhere to old fantasies of amateurism. These illusions might have had a place 50 years earlier but seemed almost idiotic in the context that existed by then – and even more so today.
It was a system ruled by money. Successful football programs attracted millions of dollars in television deals, alumni donations and ticket sales from bowl games. Winning brought coaches huge employment and endorsement contracts and paved the way for promotion for ambitious assistants. Yet, top athletes who could ensure this success were barred from receiving benefits beyond tuition, room and board. Even an outside restaurant meal, a ticket to see the local pro team or a plane ticket for Mom to fly out for a game were forbidden. Athletes and coaches could be severely punished for infractions if they were discovered.
Was it really a surprise that coaches constantly toed the line and often crossed over? Was it truly a shock that athletes, who understood that their talents benefitted the coaches recruiting them, bargained for and often received more than what was legal? A little spending money. Easy summer jobs. A few extra game-day tickets for friends and relatives back home.
The pharmaceutical industry reminds me quite a bit of the college sports paradigm.
Imagine someone – let’s call him ‘Top Sales Guy’ – recruited from a computer hardware company like Intel to take over sales at a major drug company.
Top Sales Guy has logged his two years at a prestigious MBA program. He spent an entire week reading about secondary uses – the way that products get a new life when someone figures out an entirely new market for them. His favorite example was duct tape. From the silver-gray original used to hold together ventilation systems, it became a craft material used to make wallets, purses, briefcases and dresses. Now hardware stores carry dozens of variations. There is duct tape with tiger and zebra stripes, rainbow colors or your favorite baseball team logo. Every spring, the maker of the best duct-tape prom outfit – dress or suit – wins a $5,000 prize.
While at Intel, his greatest achievement was convincing mobile phone manufacturers that a chip designed for computer tablets could power smart phones as well. This second product life quadrupled sales. When the phone companies discovered belatedly that the Intel chip sucked more battery power than the alternatives – well…that was their problem. They should have tested for that.
Now, Top Sales Guy sees a chance to apply the “second life” strategy to the products at his new company. Specifically, he sees that the company’s most successful product is an anti-depression drug. So far, it’s been used only on adults. But the under-18 market is huge. Better yet, once the teenagers start using the medicine, they’re likely to continue using it in adulthood. These aren’t one-time sales. This is creating a customer base that will return again and again over the next decade.
Only belatedly does Top Sales Guy realize the “second life” plan – such a winner in every other industry – carries high risk in the drug industry. The FDA forbids marketing drugs for “off-label” uses – ones that haven’t been specifically approved by regulators. Furthermore, the drug company must disclose the results of its internal testing which indicates the medicine doesn’t help teenagers and, worse yet, may lead to more to have suicidal thoughts.
“Whatever happened to caveat emptor?” thinks Top Sales Guy.
The next idea that Top Sales Guy has is another one he employed successfully at Intel. That is to create incentives for the sales channel. Specifically, when he sold computer chips, he discounted the price to his resellers so when they pushed more of his product down the chain, they got higher sales margins. It’s basic – standard practice in all industries. Of course those same resellers attended lavish sales meetings sponsored by Intel. They learned about new products and marketing strategies. But they also played golf on $500-a-round courses, drank Dom Perignon every night, were serenaded by celebrity performers and received Gucci briefcases as presents.
To his dismay, Top Sales Guy learns that all these activities are problematic. Compensating doctors who prescribe more of his company’s medicine is not allowed. The same goes for all the entertainment and gifts that were standard industry practice back at Intel. Worse yet, he’ll probably have to itemize all the gifts and entertainment provided the doctors and make it public.
“Is this America?” Top Sales Guy wonders. Suddenly, the sweet performance bonuses that he thought were his for the taking look beyond his reach. There goes the new house he planned to build for his wife and kids. He is being restrained by a system of rules that singles out drug companies for special treatment. For Top Sales Guy, he feels like he’s a pit bull being told to behave like a toy poodle. He hates it. And it runs counter to all his instincts. How can he do his job when half his tools have been stolen?
Is it really a surprise when he decides to bend the rules – just a little?
Please click the book cover image to read more about Robert B. Lowe’s novel. it digs deep into life’s scandals where rules are bent and broken.