By Markus Pohlmann

The accused was a renowned figure in Bottrop, a town in North Rhine-Westfalia. He is a veteran pharmacist licensed to produce cancer drugs. The pharmacist is accused of having diluted and adulterated the cancer drugs, so that they lost their effectiveness. According to the investigations by the public prosecutor‘s office in Essen, at least 3,700 patients are affected nationwide. However, due to the limitation period, only cases of the last five years were evaluated. According to the prosecution, this pharmacist from Bottrop had supplied 37 medical practices and clinics with falsely dosed anti-cancer medicines over the past five years. Most of them are located in North Rhine-Westphalia, but also in Rhineland-Palatinate, Baden-Württemberg, Saarland, Saxony and Lower Saxony. According to the research of Panorama and Correctiv, the accused pharmacist had, through adulterated cancer drugs in 60,000 cases in 2005, supplied more than 7,300 people with the 49 active ingredients that are currently listed as manipulated active ingredient by the Public Health Bureau of Bottrop (Stadt Bottrop 2017). Many patients do not seem to have been informed of this at all or much too late. Next Monday, the 13th of November, marks the opening of the trial of the pharmacist, who has been detained at the Wuppertal prison for one year. He has kept silence so far on all allegations.

The whistleblower

It’s not the police department but rather the newly hired commercial director and a pharmaceutical technician of the pharmacy who put the investigation authorities on the track. Since no authority in Germany has any control on the pharmacist production of anti-cancer drugs – there are hygiene checks, but only every few years, usually pre-announced – one has to rely on insider hints. Prior to this, there were apparently already rumors and clues from employees who did resign (Correctiv). The commercial director had been looking for an opportunity to verify his suspicion that the basic substances purchased failed to correspond to the cancer drugs sold. Once he found one, he did a recalculation. And as a matter of fact: 16,000 milligrams of the cancer drug Opdivo was purchased, for example, but that was 36,000 milligrams short when measured against sales. Thanks to the diluted cancer drugs, the already huge profit margin was multiplied. It is estimated that €615,000 could be realized in profit per year from the sales of this cancer drug alone. After the commercial director verified his suspicion for several times, he finally turned to a lawyer he befriended. Together with his lawyer, the commercial director wrote a criminal complaint about commercial fraud. The public prosecutor’s office launched an investigation but more evidence was needed.

The pharmaceutical technician thereupon took along an infusion bag, which was a returner. It was analyzed and one month later, there was a raid. The pharmacist got arrested and signed the firm over to his mother. The new owner immediately dismissed both the commercial director and the pharmaceutical technician, pointing out that one could have resolved this issue internally. The commercial director has been unemployed so far but now, along with the pharmaceutical technician, he receives a whistleblower award from the lawyer initiative IALANA (International Association of Lawyers against Nuclear Arms).

From a sociological perspective, it is exciting to engage with Whistleblows for two reasons. On the one hand, companies are also called upon to expose deviations from rules, the detection of which harms them massively. Their incentive structure then lies in, for instance, to escape “draconian punishments” in the event of revelation of illegal practices through “self-reporting”. On the other hand, people who do the right thing risk their careers and reputation but are often stamped as traitors.

The effectiveness of whistleblower programs

In the case of organizational deviance, deviations from rules, such as what happened at the pharmacy in Bottrop, are up until their discovery for the benefit of the company or its owner. But often, no third parties suffer such massive damage as they did in the Bottrop case, and moral obligation to blow a whistle is not as strong as in this case. In the Bottrop case, it is rather astonishing that for how long this presumably criminal practice of the pharmacy, which is discernible for insiders and which has massive damage for the critically ill patients, had been established before it was brought to light. In many other cases, however, the benefits to businesses often relate to financial advantages that are realized at the expense of competitors or the states – with less moral appeal than that in the Bottrop case. Now the big companies in the world are for the first time redeeming this claim in form, if not in content. They establish whistleblower programs which document, for example, that one has met the expectations of the US judiciary and as a result, if the worst comes to the worst, can expect lower penalties through self-reporting and the fact that they’ve met the necessary formal requirements (f.e. of the US Department of Justice 2017). However, our research shows that in reality, these programs often replace only the organization’s suggestion box or are used by employees to address human resources issues. Almost never, according to our previous research, have serious violations of rules been reported, which if applicable may be forwarded to the public prosecutor’s office. The claim is therefore often only redeemed in form; in practice, the conflict of interest remains in place at the companies.

The consequences for whistleblower

The high sums paid to whistleblowers in the US should not blind us to the fact that their former social existence and career – as in the Bottrop case – is often destroyed. Admittedly, whistleblowers are much better protected today. In the US, the number of whistleblowers is increasing, and the programs are also successful because whistleblowers can expect to be rewarded, for instance, somewhere between 10% and 30% of the money recovered from the companies by the SEC. Nevertheless, in cases such as that of whistleblower Bradley Birkenfeld at UBS, who along with whistleblower Hervé Falciani (of HSBC’s Swiss subsidiary HSBC Private Bank, based in Geneva) played a part in contributing to the fact that the Swiss banking secrecy was tipped, it was displayed how hard life acctually is for whistleblowers. Birkenfeld, for instance, recounted how, in his view, the bank has tried to make its practices, which are illegal in the US, an individual problem by adopting formal prohibition rules, whereupon Birkenfeld turned to the American judicial authorities. There was a great deal of damage both to himself, who had to serve a prison sentence, but got the $75 million share later thanks to the whistleblower rules, and to the bank, which would have to pay penalty and reparation to the tune of $780 million in a deal (US Department of Justice 2009). He was stamped “traitor” within the bank and lost most of his “friends” and perks. And his career was over (Birkenfeld 2017: 143).

As long as people doing the right thing are labelled traitors or risking their careers, as in the Bottrop case, we need prizes, initiatives and programs to protect them. Even companies that do the right thing are supported by financial incentives. But we should not expect too much. Because the central issue still is that the unwritten rules at the companies are often justifying deviant behavior, and they are changing slowly, with their and our culture. Formal compliance and whistleblowing programs may be the symbolic forerunners of such cultural change, but they are not able to regulate informal practices at the companies.

 

Sources

Birkenfeld, Bradley (2016): Lucifer’s Banker. The Untold Story of How I Destroyed Swiss Bank Secrecy, Austin: Greenleaf Book Group.

Correctiv (2017): Wie zwei Menschen dafür sorgten, dass ein Apotheker keine Krebsmedikamente mehr panscht (german), written by Anna Mayr, accessed on 10.11.2017.

Deutsche Welle (2017): Diluted cancer medication scandal spreads through Germany, accessed on 10.11.2017.

Falciani, Hervé (2015): Séisme sur la planète finance. Au coeur du scandale HSBC, Paris: La Découverte.

Geistblog (2017): Invitation Award Ceremony (german), accessed on 10.11.2017.

Jones Day (2017): FCPA 2016 Year in Review. White Paper, accessed on 10.11.2017.

Stadt Bottrop (2017): List of medicaments (german), accessed on 10.11.2017.

US Department of Justice (2009): United States of America v UBS AG. Deferred Prosecution Agreement, filed in the United States Southern District Court for the Southern District of Florida, Miami Division, Case No 09-60033-CR-COHN, accessed on 10.11.2017.

US Department of Justice (2017): Evaluation of Corporate Compliance Programs, accessed on 10.11.2017.