Amgen, a Thousand Oaks, California-based company, has been dealing with lawsuits and whistleblower claims for years over

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Amgen, a Thousand Oaks, California-based company, has been dealing with lawsuits and whistleblower claims for years over its marketing tactics. The following describes the lawsuits, language from the legal filings against Amgen, and a statement made by the company on October 24, 2012, about its settlements in its earnings announcement for the third quarter of 2012.

Whistleblower Shawn O'Brien

In 2009, the company was embroiled in lawsuits filed by 15 states alleging a Medicaid kickback scheme.106 Two additional whistleblowing lawsuits were filed against the company in Ventura County. The whistleblowing 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 that the company violated federal law by underreporting complaints and problems with the company’s drugs after they hit the market.

Former Amgen employee Shawn O’Brien sued Amgen for wrongful termination on October 9, 2009, alleging that 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 postmarket complaints about drugs as a potential problem. Federal law requires drug companies to track and report to the FDA 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 postmarket 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 postmarket problems wasn’t adequate.

In early September 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 workforce.

Whistleblower Kassie Westmoreland

On October 22, 2012, Amgen announced it had set aside $780 million to settle various federal and state investigations and whistleblower lawsuits accusing it of illegal sales and marketing tactics. Amgen said it had reached an agreement in principle to settle criminal and civil investigations that had been under way for several years by the U.S. Attorney’s offices in Brooklyn and Seattle. On December 18, 2012, the company pleaded guilty to a federal misdemeanor of misbranding its anemia drug Aranesp and has agreed to pay $762 million in fines and penalties. The information below describes the proceedings leading up to the legal action.

The federal investigations, according to Amgen, involved the marketing, pricing, and dosing of its anemia drugs, Aranesp and Epogen, and its dissemination of information about clinical trials on the safety and efficacy of those drugs. Numerous current and former executives had received civil and grand jury subpoenas.

One whistleblower lawsuit107 that was unsealed accused the company of overfilling vials of Aranesp, essentially providing doctors with free amounts of the drug to give patients and then charge to Medicare, Medicaid, or private insurers. The lawsuit, filed by Kassie Westmoreland, a former Amgen sales representative and Aranesp product manager fired from Amgen, said that Amgen tried to persuade doctors to use Aranesp rather than Procrit, a rival drug sold by Johnson & Johnson, by pointing to the extra profits the doctors could make by using the overfill and billing for it. The federal government declined to join the lawsuit, but more than a dozen states did, including New York and California. Westmoreland is entitled to part of any settlement under whistleblower statutes. The court has not released the amount of the whistleblower award.

Legal Filings

The filing in the Kassie Moreland case included the following statement by the court in response to how Amgen dealt with warnings of the FDA about the safety of its products:

In addition to causing damage to programs such as Medicare, Defendants’ actions have also put patient safety and health at risk. The population of patients for whom Aranesp is indicated is especially vulnerable. Though Amgen was aware of issues earlier, beginning on or about March 9, 2007, the FDA issued a series of black box warnings for Aranesp when used in kidney and cancer patients, the most serious warning available on a drug’s label. The black box warned of increased risk of death, of serious cardiovascular or thromboembolic events, and more rapid tumor progressions. The new warnings cautioned physicians to administer the lowest dose possible in order to bring red blood cell counts to the lowest level necessary to avoid blood transfusions. The FDA imposed a “Risk Evaluation and Mitigation Strategy” on Amgen for Aranesp in February 2010. This action resulted from concerns that, rather than helping patients, Aranesp can increase the risk of tumor growth and shorten survival in patients with cancer, and increase the risk of heart attack, heart failure, stroke, and blood clots in other patients.

One of Amgen’s responses to the black box warnings appears to have been to treat them as humorous. A script for a July 2007 meeting of Amgen’s Nephrology Business Unit from the files of Amgen Vice President of Sales Leslie Mirani included a joke about “black box warnings,” following up on the FDA’s February 2007 warning about potential harm from Aranesp.

Questions

1. The following is from Amgen’s values statement:

Our Values form a deeply held belief system that guides our behavior, helps us make the right decisions and builds the framework for our daily interactions with each other. We value people, integrity, and results. This combination is essential in accomplishing our primary purpose of using science to dramatically improve people’s lives. (www.amgen.com/about/compliance_summary.html).

What is the role of a “values statement” in creating an ethical organization environment? Comment on the lawsuits described above and whistleblowing with respect to Amgen’s values statement. What message do you get about what drives Amgen’s operations when compared to a company like Alcoa and its values statement discussed in this chapter?

2. Evaluate the actions of Amgen and the two whistleblowers from an ethical perspective including motivation for action and ethical reasoning.

3. The following statement appears in Amgen’s code of ethics with respect to “making ethical decisions” (http://www.ifpma.org/fileadmin/content/About%20us/2%20Members/Companies/Code-Amgen/Amgen-EN-Code.pdf):

No code of conduct can cover every situation. When you face ethical issues which are difficult to resolve, ask yourself these questions to help you: Is it legal and ethical?; Is it consistent with Amgen’s Code of Conduct and company policies?; Is it consistent with the Amgen Values?; Would I be comfortable explaining it to my family and friends, and if it appeared on television or in a newspaper?” The Code goes on to say if unsure about what to do, seek additional guidance about the ethics and legality of a matter before proceeding and “Do the Right Thing.”

What are the similarities between steps 8 and 10 of the Comprehensive Ethical Decision-Making Model and these statements in the Amgen Code? How does organizational dissonance relate to the actions taken by management of Amgen in light of these statements?