978-1285428710 Section 8 SECTION 8C

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SECTION 8C – PRODUCT SALES

CASE 8.13 – CARDINAL HEALTH, CVS, AND OXYCODONE SALES

Answers and Key Discussion Items

1. Because the companies are responsible for the actions of their agents, subsidiaries and employees.

2. These are all rationalizations that help employees avoid the concerns they may feel as they witness

3. They should have emphasized the need to speak up and call and let someone know. In addition,

CASE 8.14 – PFIZER, PHARMAS, FINES, AND SALES TACTICS

Answers and Key Discussion Items

1. Pfizer’s sales reps crossed another fine line between selling a drug for its approved purpose and

touting it for non-FDA-approved uses. This situation involves a tough close call because how does a

sales rep respond when a doctor asks about a study and a use? Daily vigilance through constant

examples of issues the sales force experiences is the stuff of prevention. The translation of the law,

2. A corporation that is convicted of a crime is not permitted to have federal contracts, is generally under

3. Have the students go back to Unit Four on culture and discuss the similar situations in financial

reporting in which employees were rebuffed or fired. Also, have them re-examine the options for

whistleblowers. As the students have studied in Unit Four, there are times when the culture is so far

4. This fine line is one that requires constant training and vigilance and correction. The safest route is

for the reps to simply state that they are only trained in use of the drug for FDA-approved use and any

other questions would have to be researched independently by the doctor. Citing the research can be

5. The pay and incentives are drivers and the “we will take it back” claw-back provisions are necessary.

CASE 8.15 – THE MESS AT MARSH MCLENNAN

Use PowerPoint Slide 318 for that terrific quote that shows brokers were aware of what was happening.

Answers and Key Discussion Items

1. MMC had a culture of bonuses and incentives that were, as the brokers described, addictive. Once

they experienced the commission and bonus checks from the rigged deals, it was tough to go back to

anything else. This was a classic numbers culture as well – meeting the numbers was paramount

2. No one’s interests were served by the pay-to-play cartel. The set-up was discovered, the company

required to pay a $1 billion fine, with the result of a period of off-performance that has still not seen a

3. There is the basic principle of not violating the law to ensure success. Here there was price-fixing

Compare & Contrast

Be sure to mention that the broker is confusing “absolute truth” with virtue standards – the two are quite

different concepts and what he is trying to say is that he does not believe in absolute rules and judging

CASE 8.16 – SELLING YOUR OWN PRODUCTS FOR HIGHER COMMISSIONS

Answers and Key Discussion Items

1. There is a conflict of interest.

2. The following would be the suggestions for managing this conflict: Full disclosure – let customers

know about the funds, your commissions, and the total fees; discuss the performance and ROIs in all

funds offered to the client; outline the risks in all of the funds; full disclosure is key, including what the

CASE 8.17 – FROZEN COKE AND BURGER KING AND THE RICHMOND RIGGING

Use PowerPoint Slides 319 and 320.

Answers and Key Discussion Items

1. The executives felt pressure to succeed. They wanted the marketing studies to produce the boost

they needed in fountain sales. The questions they could have asked:

a. What is my intention?

b. Are the results likely to accomplish that goal?

c. How would I feel if I were Burger King?

2. Burger King customers

Burger King executives

Burger King shareholders

3. Loss of trust by retail customers

Will need to supply additional data in the future

4. There are the costs listed in response to #3, but there are also the reputational costs that will continue

to affect the company for years.

5. Listen to employees’ concerns.

Respond to employees’ concerns.

Use the following discussion memo to highlight key points:

Pressure

Underestimated risk

Overestimated their ability

Kids

Fast foods for homework

False impression

Withholding information

Team player issue

Fired the whistleblower

Half-hearted punishment for those responsible

Everyone not responsible – not my decision

I was just following orders

Short term vs. long term

CASE 8.18 – SLOTTING: FACILITATION, COSTS, OR BRIBERY?

Use PowerPoint Slide 321 to show levels of slotting fees.

Answers and Key Discussion Items

1. Some see slotting fees as a means of shifting the risk of product failure back to the manufacturer.

2. Because slotting fees are not set by any rates and vary from product to product and store to store, the

3. Exposing the fees and the payment schedule to the light of day could return the concept to one of risk

4. The issues in ethics are taking unfair advantage, hiding information, some half-truths about the nature

of the fees, and, in general the creation of a market not based on full information. Slotting has one

The silence, the fear, and presence of a type of guilty questioning reflect their uncertainty about the

ethical culture.

5. Yes, it is likely that because it was so difficult to find real numbers that executives felt comfortable

Compare & Contrast

The students have another chance to see that a company that was not involved in the “herd mentality” of

“everybody’s doing it” managed to be successful and emerge, over the long term, as the industry leader