Amgen, a Thousand Oaks, California-based company, had the unenviable task of dealing with lawsuits filed by 15 states in 2009 alleging a Medicaid kickback scheme.1 To make matters worse, two additional whistleblowing lawsuits were filed against the company in Ventura County. The complaints, which don't appear related to the fraud alleged by the group of states, were brought by former employees who said they had uncovered wrongdoing at the biotech giant and were terminated after they raised red flags to superiors. One employee alleged the company violated federal law by under-reporting complaints and problems with the company's drugs after they hit the market. The facts of that lawsuit are described below.
Former Amgen employee Shawn O'Brien sued Amgen for wrongful termination on October 9, 2009, alleging he was laid off in October 2007 in retaliation for raising concerns about how the company reported complaints and problems with drugs already on the market. O'Brien worked as a senior project manager for Amgen's Ongoing Change Program, according to the lawsuit filed in Ventura County Superior Court. His job was to improve Amgen's compliance processes with high inherent risk to public safety, major criminal and civil liability, or both, according to the lawsuit.
The lawsuit alleged that in April 2007, Amgen's board of directors flagged the company's process for dealing with post-market complaints about drugs as a potential problem. Federal law requires drug companies to track and report to the Food and Drug Administration any problems with their drugs after they hit the market. In June 2007, O'Brien was put on the case. He soon uncovered facts that Amgen was not adequately and consistently identifying phone calls or mail related to post-marketing adverse events of product complaints. That year, O'Brien warned the company about the seriousness of the issues but, he claims, the company would not take any action or offer any support. In August 2007, O'Brien took his complaint to a senior executive/corporate officer (unnamed) and warned that Amgen's process for dealing with post-market problems wasn't adequate.
In early September of 2007, O'Brien's managers instructed him to stop all work and not discuss the issues any further with anyone. Approximately four weeks later he was informed that he was being terminated as part of Amgen's October 12, 2007, reduction in the work force.
To help you answer the following questions, refer to the Amgen Web site on corporate compliance at: www.amgen.com/corporatecompliance.html.
1. How did Amgen's unethical behavior contribute to the problems with Medicaid kickbacks?
2. Why does the public consider this scandal to have an unethical dilemma?
3. Explain what is meant by whistleblowing?
Include your opinions and identify any gaps between public expectations of ethical standards and universal professional codes of ethical standards
How did Amgen's unethical behavior contribute to the problems with Medicaid kickbacks?
According to the Anna Richo, Amgen's Chief Compliance Officer, Amgen strive to conduct business in the "highest ethical manner". According to the site, Amgen each employee will be held accountable for any unethical practices. The code of conduct clearly states that all staff members are required to adhere to the laws, and act on good judgment. Kickbacks are illegal and deemed unethical in the United States. Kickbacks, sometimes referred to as bribery, are payments given or received with the intention of influencing another to gain from a situation and/or transaction. In the medical industry, doctors are often given samples from pharmaceutical companies to give to patients. This practice is common and is not illegal. However, when the doctor agrees to prescribe a particular medication or refer a particular specialist doctor and in exchange for a return, this is where the illegal process begins. In the Amgen 2009 case, the biotech company ...
This solution discusses a scenario where whistleblowing occurred in Amgen.
Whistleblowing and Sarbanes-Oxley
Identify instances of whistleblowing in publicly traded companies within the last 12 months.
1. Describe the key characteristics of a whistleblower, and briefly summarize one (1) researched instance of whistleblowing in one (1) publicly traded company within the last 12 months. Include the details of the issue that the whistleblower reported and the effect of the whistleblower's actions on both the whistleblower himself and the company.
2. Decide whether or not the whistleblower was justified in reporting the company's actions. Provide a rationale for your response.
3. Examine the extent to which the whistleblower would be protected under the Sarbanes-Oxley Act. Justify your response.