mid the fallout over the $1.2 million payments to President Trump’s personal attorney, Novartis is trying to move quickly to contain the damage.

In the past 24 hours, the drug maker’s former chief executive publicly accepted responsibility for faulty judgment in trying to gain access to the Trump administration. And the chief lawyer has resigned for being a party to the contract signed with Michael Cohen.

However, during a previously scheduled presentation to analysts and investors today, the company also made a point of flashing a slide entitled “Beginning our journey to rebuild trust with society,” which listed a half-dozen steps being taken to restore confidence in management (see page 13).


These include promoting people to various positions overseeing ethics, compliance, and internal auditing; a new global policy for professional practices; an independent ethics board; and what was called a “new integrated risk function.”

Alongside those bullet points were hot spots where Novartis has been embroiled in scandal over inappropriate payments to boost prescriptions, such as South Korea and Greece, as well as an upcoming trial in a federal court in New York for paying kickbacks to doctors.

At least three of these initiatives were introduced over the past few months, according to a spokesman, indicating the company was not merely reacting to the controversy over the Cohen payments, but was already attempting to recover from the past mistakes.

“Let me be absolutely clear,” Vas Narasimhan, the former Novartis R&D head who last February succeeded Joe Jimenez as chief executive, said at the bottom of the slide. “I never want Novartis to achieve our financial performance or objectives because we compromised on our ethical standards or our values — we must always choose our values.”

One ethics expert, however, was dubious.

“It appears to me that from examining these slides, Novartis leadership may have failed to fully recognize where the company stands in terms of its reputation,” said Eric Campbell, director of research at the Center for Bioethics at the University of Colorado School of Medicine.

He noted that a Gallup poll last year found the pharmaceutical industry ranked last among 24 industries in the eyes of Americans who were surveyed. Just one-third viewed drug makers positively and only the U.S. federal government fared worse.

Then there was an analysis published last year showing Novartis ranked 14th among 17 large drug makers in terms of public perception, according to the Reputation Institute, a consulting firm that examined seven key areas. Novartis finished 12th among 14 drug companies that were measured in 2016 by the same firm.

Yet in another slide in the investor presentation, Novaritis executives referred to their reputation for trust as mixed (see page 12).

“Perhaps this is an indication of a failure of the leadership to fully appreciate or care just how bad their reputation appears to be,” said Campbell. “For the leadership to describe the reputation as mixed means one of two things — either they failed to fully appreciate the way the companies are seen or they’re trying spin it.”

“Firms often respond in predictable ways,” he continued. “They do such things as create a new office or give some new title to an executive to demonstrate to the outside world they’ve hearing concerns. The next thing they do is put in new policies and finally, they make public statements about change.

“We don’t know how well these things work on a global scale or for individual companies, but the true measure of how they work is the extent to which violations that repeatedly happened in the past continue to happen in the future.”

We asked Novartis for a reaction to his thoughts and will update you accordingly.

Of course, Narasimhan has only been running Novartis for less than four months and now has the opportunity to set a new course. As one person told us, he is the “straightest arrow I’ve ever seen” and will find it difficult to work with others who deviate.

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  • May I observe that patience is needed following the links? The pdf file is large (47 pages) and, I suspect, a bit popular so “just wait.” Your time spent will be rewarded. and “Well done” to our scribe!

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