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June 11, 2008

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Four years ago, Peter Rost was vice president of marketing at Pfizer, the world’s largest drug company, when he posted a book review on Amazon.com. The review was for Dr. Marcia Angell’s The Truth About the Drug Companies: How They Deceive Us and What To Do About It. Rost wrote: “Drug companies are their own worst enemies. They have antagonized grannies all over … with their work to stop reimportation of cheaper drugs into the US, a practice that has been in place for many years in Europe.”

The review changed Rost’s life. USA Today was the first to take notice. A slew of newspaper stories were followed by appearances on 60 Minutes and before Congress, where he attacked the drug industry’s claim that re-importation (buying less expensive pharmaceuticals from other countries) was unsafe. But it wasn’t just controversial practices like re-importation that Rost began speaking out against. He also spoke out about illegal practices, filing Qui-Tam suits (also known as False Claims or “whistleblower” suits) against Pfizer for the off-label marketing of Genotropin, a human growth hormone, and Wyeth, his previous employer, where he alleged tax fraud.

In just months, Rost went from anonymous corporate executive to Big Pharma’s number one whistleblower. But his speaking out proved to be an act of self-immolation, banishing him from an industry he had worked in for almost 20 years. According to Rost, Pfizer retaliated by removing all of his responsibilities and isolating him before finally cutting him loose six months after his 60 Minutes segment aired—which prompted Rost to file another suit, this one for wrongful termination. Jobless, Rost turned to writing.

In 2006, he published the first of two books critical of the pharmaceutical industry. The Whistleblower: Confessions of a Healthcare Hitman was an autobiographical expose that recounted Rost’s days at Pfizer and his attempts to speak out against the illegal and unethical behavior he says he witnessed there. In 2007, he released Killer Drug, a novel about a fictional drug company called Xenal, which develops a biological weapon for the military. He also keeps a blog and has done stints as a blogger/columnist for both The Huffington Post and Brandweek. And he recently launched another career as a litigation consultant on drug marketing issues. While Rost’s critics have attached selfish motives to his whistleblowing—he seeks to make a fortune through litigation, he’s a publicity hound—his allegations continue to be proven true. One industry insider summed him up this way: “Rost is a bit of a carnival act, but he’s not a liar.”

—Jake Whitney for Guernica

Guernica: Take us through your last days at Pfizer.

Peter Rost: Well, Pfizer kept me isolated—there were literally construction crews tearing down walls around me—and they told me that I didn’t have any formal responsibility. Nobody at all contacted me except an occasional lawyer or HR person who would tell me I had nothing to do. I was outside the country at a drug reimportation seminar in Costa Rica when the New York Times and other news organizations called and asked for a comment. I didn’t know what they were talking about. It turned out I had finally been fired but Pfizer hadn’t been able to find me. That happened November 30, 2005. When I got home there was an envelope from Pfizer taped to my front door. So somebody from Pfizer had been here. That’s when I started speaking out more and talking about what had been going in Pharmacia and Pfizer. Prior to that I had only spoken about reimportation in general. I hadn’t spoken about anything specific going on inside Pharmacia/Pfizer.

Guernica: By speaking out, you mean publicly? Because you had already filed a Qui Tam suit while you were with Pharmacia.

Peter Rost: Yeah. I had filed the suit after I had informed [Pfizer management] about different issues on several occasions and they were either not receptive or they ignored me. Pfizer managed to get the suit dismissed initially—a year and a half or two years ago. Then we appealed and won. I think we have a very good chance of prevailing and the suit proceeding ahead. We have already been partly proven right since Pfizer was forced to pay a $34 million fine in April 2007. They plead guilty to illegal marketing the way I had described it, which was quite nice because they had basically been telling the world that I was bullshitting. So they plead guilty to illegal marketing, but not that the government would have been fraudulently paying false claims. That’s the other part of this litigation and that’s what we’re moving forward with. We’re also moving forward with the wrongful termination suit.

Only an idiot would want to lose a base pay of $250,000-plus per year in order to maybe “win” a lawsuit that will almost always only pay dimes on the dollar…

Guernica: Your critics accuse you of being a publicity hound. They say these lawsuits—and your whistleblowing, in general—have been more about seeking fame and big financial settlements than helping people. What do you say to them?

Peter Rost: My critics are idiots. Only an idiot would want to lose a base pay of $250,000-plus per year in order to maybe “win” a lawsuit that will almost always only pay dimes on the dollar versus real losses many, many years later. Pfizer can easily drag out the entire process for close to a decade even if, and when, I win. You gotta be real dumb if you get into that voluntarily. As for “fame” and being a “publicity hound,” I didn’t really have a choice when Pfizer called 60 Minutes, The New York Times, and the others to tell them that they’d fired me. Normally people in litigation stay mum, because that’s good legal strategy; in this case I was forced to respond. Before that I did speak out about reimportation, and the funny thing is perhaps it has had an impact. Pfizer’s CEO is now a die-hard democrat and the republican presidential candidate wants reimportation. It only took me four years to be right on that one!

Guernica: At the end of The Whistleblower, you offer an extensive list of recent drug company corruption. It’s a surprisingly large list. What do you think it is about this industry that makes companies break the law so often?

Peter Rost: I think, number one, because it is highly regulated, so there are lots of laws that can potentially be broken. And I think it’s an industry that… I’m not sure if it’s an industry that’s more corrupt than other industries, but there is more regulation and there is a higher price when something untoward happens. When somebody cheats in this industry, lots of people die. If somebody cheats in another industry, you’ll get a product malfunction or whatever; but you don’t normally have disastrous consequences. So that means there is probably more focus on these issues in this particular industry.

Guernica: As there should be…

Peter Rost: As there should be, absolutely. I think we’re still seeing just a tiny percentage of crimes being prosecuted. We’re seeing just the really easy cases. If you look at the statistics in terms of what really brings in the big bucks to the government—which is the False Claims Act, or Qui Tam cases—the government only intervenes in something like 10 or 15 percent of them. In the cases where the government doesn’t intervene, about 90 percent of them fade away. Whereas in 90 percent of the cases when the government intervenes they do recoup a penalty. But I think it’s clear that Congress is not all that interested in expanding the resources to fight this. Because, of course, you have the same companies giving campaign contributions to these politicians. So in a way, it’s like the old Russia; where the Russians used to say: “You pretend to pay us and we’ll pretend to work.” Here it’s like, “We pretend to chase you, and you pretend to follow the laws.” It’s the same thing; it’s a game. A significant part is for show.

Guernica: Also in The Whistleblower, you have a chapter called “Sexual Liasons.” In it you discuss rumors of sexual affairs among Pfizer management, which you say you heard about through colleagues and former Pfizer employees. Given the serious issues that you were trying to draw attention to by your speaking out—reimportation, illegal marketing, tax fraud—why did you include a chapter that some might consider petty or beside-the-point?

Peter Rost: These issues, if true, could be an indication of violations of company policy. Consider that the Boeing CEO was fired for the same alleged policy violations and that several other CEO’s have also been impacted or terminated, so this is not petty or beside-the-point; it is serious.

At a minimum, the fact that these issues were brought up repeatedly by Pfizer employees show a serious internal disrespect for management. Please also note that virtually no one from Pfizer management at the time these allegations were made remains with the company today, four years later.

It is scary how many similarities there are between this industry and the mob.

Guernica: You’ve described the pharmaceutical industry as mob-like. What did you mean by that?

Peter Rost: It is scary how many similarities there are between this industry and the mob. The mob makes obscene amounts of money, as does this industry. The side effects of organized crime are killings and deaths, and the side effects are the same in this industry. The mob bribes politicians and others, and so does the drug industry—which has been proven in different cases. You could go though a 10-point list discussing similarities between the two. The difference is, all these people in the drug industry look upon themselves—well, I’d say 99 percent, anyway—look upon themselves as law-abiding citizens, not as citizens who would ever rob a bank. Not as citizens who would ever go out and shoplift. And the individuals who run these companies would probably not do such things. However, when they get together as a group and manage these corporations, something seems to happen. Just look at all of these billion-dollar fines—Schering Plough, I think is in the lead now with $1.2 or $1.3 billion in fines; and number two is Bristol-Myers Squibb. It’s pretty scary that they’re committing crimes that cause [the government] to levy those enormous amounts of fines against them. So there’s something that happens to otherwise good citizens when they are part of a corporation. It’s almost like when you have war atrocities; people do things they don’t think they’re capable of. When you’re in a group, people can do things they otherwise wouldn’t, because the group can validate what you’re doing as okay.

Guernica: Do you think this kind of groupthink is more prevalent in the pharmaceutical industry?

Peter Rost: It’s hard to tell. I’ve only worked in the drug industry so I don’t know about the others. But it’s been the drug industry and the defense industry that have been getting hit with the most fines. But it is mainly the drug industry today. I think there are so many things one could do wrong—opportunities for one to cheat—in the drug industry. You know, if you build a car and you cut corners, you’re going to have a bad-quality car and the Japanese are going to take away your market. But in the drug industry, that’s not how it works. You get a situation like the ENHANCE trial with Schering Plough [The ENHANCE trial was supposed to show that Schering Plough’s cholesterol-lowering drug Vytorin, which is made up of both Zocor and Zetia, was better at reducing plaque in the arteries than Zetia alone. But, after an infamous two-year delay, the results ended up showing just the opposite]. The only thing that happened there was that Fred Hassan [CEO of Schering Plough] made a $13 million bonus that he wouldn’t have received if he released the data earlier. So, for the individual managers, there is very little downside to cheating.

Guernica: You said one similarity between the drug industry and the mob was that in both the side effects are “killings and deaths.” As that pertains to the drug industry, I’m assuming you mean in unintentional deaths resulting from unforeseen side effects—unlike the mob, which intentionally kills people.

Peter Rost: Clearly, the drug industry doesn’t want to kill people. But at the same time, I’m not sure if it’s always completely unintentional. Yeah, they don’t want to kill people because it’s bad for business, right. But if you look at a number of these cases where people inside the company knew they had problems. If you look at Merck with Vioxx, for example; if you look at Bayer and the lipid-lowering drug they had that caused liver failure, Baycol. Those guys knew that these drugs were causing major problems. And they knew these problems resulted in serious side effects, including death. Yet they kept on selling the drugs. So is that intentional or not?

Guernica: In your 2007 book, Killer Drug, you have a character named Torrance who’s the head of security at a fictional drug company called Xenal. Torrance is an extremely shady character who won’t hesitate to murder enemies of the company. The book is a novel, of course, but did you come across anyone in your career who gave you the feeling that he could possibly act like Torrance?

Peter Rost: The book is fiction. But it is using some of what I’ve seen and experienced, and taking some of the different people and putting them in a thriller environment. I’m not aware of individuals conducting themselves the way Torrance does. At the same time, I am aware that the kind of background he has is very common in the drug industry for someone who is heading up security. Pfizer has a former FBI agent, John Theriault, heading up its security department. And he has lots of law enforcement officers working under him. We have to recognize that these big companies are all building small paramilitary organizations inside the companies that answer to no one except the company itself. Look at Hewlett Packard, how they abused security consultants by getting phone records and information about journalists… and you know we only know a tiny fraction about what really happens—we only find out when these companies happen to get caught. It shows that there aren’t really any limits to what big companies—in the drug industry and others—will do.

Guernica: You look at movies like The Constant Gardener and The Fugitive, which have drug companies as villains, and then there’s Killer Drug. Why does this industry have such a bad reputation?

Peter Rost: It is unnerving, especially considering how important the industry is. You look at how these companies have behaved. Usually they transform to do whatever is best for the company. The chemical company that made the poison gas used in the concentration chambers, Zyklon B, became a drug company. They are now trying to disavow that as part of their heritage. IG Farben was the company. And one of their subsidiaries became a couple of the German drug companies—Bayer and some others. They now claim that they weren’t actually the legal entity, so there is debate over it, but I believe they paid some money to the victims. So most of these companies are going to do whatever it takes to survive under their current political management: If it’s democracy fine; if it’s not democracy, they’re going to play along. It’s very amoral.

Guernica: What specific industry changes would you like to see? Should anything be done about the way drugs in this country are tested? For instance, I understand new drugs only have to be proven more effective than placebos, not more effective than existing drugs. Should that be changed? And how do you feel about TV drug ads?

Peter Rost: In Europe, new drugs are generally tested against existing drugs. TV drug ads, the direct-to-consumer ads, I was originally in favor of, but now I think the reality is that they’re a disservice to consumers. As far as changing the industry, quite frankly I’m pretty cynical. You get new regulations, you get new rules, but then you get the same type of behavior again and again. Yes, fines and deterrents work because companies don’t want to be embarrassed. But I’m not sure how much will really change. I read a book by a whistle-blower at Roche, Roche Versus Adams by Stanley Adams. It was chilling, because many of the same things that I have revealed about fraud within these companies, and other ways they operate: it was the same stuff, the same things, and the book was written 25 years ago. When I read the book, I was like, “You know what; nothing much really changes.” Thirty years from now people will be having the same discussions you and I are having today. I do think the press can change things, to an extent. That’s pretty much the only way. But then again, I read this book and I thought, “Things aren’t changing very much.”

We have to recognize that these big companies are all building small paramilitary organizations inside the companies that answer to no one except the company itself.

Guernica: You mentioned the direct-to-consumer ads—the TV drug ads—and you said you once were in favor of them but not anymore. Why?

Peter Rost: Basically I’m in favor of the free market, free information, letting people make their own decisions while minimizing any cumbersome regulations. But I think there is a reason doctors are the ones deciding treatments. And that is because they’ve had years of schooling. It certainly doesn’t help anyone to dump 30-second commercials on people who have no idea about anything they see in them and then they go to their doctors, who often give them any drug they want. That’s how we got the Vioxx debacle. In other countries it wasn’t as bad. [Only the U.S. and New Zealand allow direct advertising of pharmaceuticals to consumers.] So these ads don’t really help patients. There was a study done that was published in the Washington Post a few years ago where they had actors going into doctors’ offices pretending to have depression. Most of the actors who pretended to have depression and asked for Paxil got it. But the scary part is that a lot of the actors who did not exhibit signs of depression but asked for Paxil also got it. The numbers were pretty scary.

Guernica: As a native of Sweden, you’ve had firsthand experience with two very different kinds of healthcare systems. Which works better?

Peter Rost: When I was a doctor in Sweden, I didn’t like socialized medicine. I thought it was terrible. I really did. Because of the big bureaucracy, the long lines for certain procedures; it’s not really service-oriented. I just didn’t think it worked very well. And then I came over here and saw how things worked—or didn’t work. (Laughter.) And I saw it was even worse. So it’s really like choosing between two evils. But in the end, you just have to be a smart buyer. If you look at the costs of the US healthcare system—it’s two to three times as high per person as any other place in the Western world. It’s a complete waste of money. The US can have shoddy care and the US can have the best care in the world. It depends on things like where you go, whether you’re lucky or not, if you know what you’re doing, if you’re on the right HMO, and so on. The bureaucracy here is even worse than it is in the socialized systems, which are really unbureaucratic, comparatively speaking, when you try to deal with an HMO and getting claims approved and hospital billing systems; it’s just a mess. The movie Sicko describes it pretty accurately. Although I would add that Michael Moore sees things through rose-colored glasses when it comes to the British, French and Canadian systems. But yes, overall, we would be better off with universal healthcare.

Guernica: Do you think the US will ever move to a universal system?

Peter Rost: Not in the next 30 years. But you never know. Perhaps fifty years from now this system will simply come crashing down under its own weight. But considering the money that people can make here—from doctors to insurance companies to HMOs to hospitals—the way the political system works here, these groups have so much power, it’s going to be a very hard system to change.

Guernica: Does that mean you’d consider a move back to Europe, or do you plan to stay in the U.S. for the rest of your life?

Peter Rost: I will go wherever somebody gives me a decent job to do. I’m flexible.

Guernica: On that note, how has your transition to author/blogger/journalist/legal consultant worked out?

Peter Rost: Things have worked out relatively well. Basically, I’m trying to be as smart as I can about it. So far, the book sales have helped create some attention around what I’ve been trying to do lately [writing expert reports for law firms on pharmaceutical marketing issues]. And that has really generated interest from these law firms. There’s no question that in the U.S. working on the legal side of things offers a lot more money than book sales do. But books are a good promotional vehicle. So it all works together.

Guernica: Do you have any regrets about speaking out?

Peter Rost: Not really. It’s been quite entertaining to do this. You know, I could have simply blown the whistle internally and stayed quiet otherwise. But since I spoke up, I think more people may have learned about the issues involved. I guess you’ll have to ask me ten years from now if it was the right thing to do. (Laughter.) As far as the attention goes, the media is so fragmented now… quite frankly, the only time people ever recognized me on the street was for a few weeks after my 60 Minutes segment. Another reason I’m not very well known is because people in the US don’t read newspapers. I don’t think any of my neighbors get newspapers. People don’t read anything. They don’t even watch news these days. They watch football. Yes, everybody in the drug industry knows about me and the issues I’ve spoken about. But the general population, they have no idea what’s going on. So generally speaking, the attention has been fine. I was trying to get people to wake up about these issues. I figured I didn’t really have anything to lose. I had hoped to affect things internally and eventually move up into a position where I could create change and have an impact. I realized this was my last shot to do something. I can’t complain.

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