1. Faculty Business and Finance
MBA : Ethics and Social Responsibility
BMA A6003
By : Amira Nadia Raup
Lecturer : Assoc. Prof Dr Azahari Jamaludin
Amira Nadia Raup / MBA BMA A6003

2.  This case is about how aWhistle-blower
named Douglas Durand, who in 1995 work at
Merck & Co, was offered vice president
position atTap pharmaceuticals. During his
time there, he uncovered unethical practices,
Illegal sales, and the company defrauding the
government.
Amira Nadia Raup / MBA BMA A6003

3. Douglas Durand,
left Merck forTAP
an 40% increase in
pay and $50,000
signing bonus.
Amira Nadia Raup / MBA BMA A6003

4.  Lack of in-house legal counsel (sales prevention department) ,
pushed their products by any means necessary.
 Physicians were bribed with an administration fee for prescribing
TAP’s new drug Lupron, were given samples at a discounted price
or for free, and even told to charge Medicare full price ( US govern
programme) , even thought they get the discounted price.
 Give incentives to the urologists who administering Lupron, big
screen televisions, boats, and second homes, office equipment
and golf vacations.
 Sales Rep were not keeping track of the free samples given away
which is required by law.
Merck evaluates every product, and pulls back
products if necessary
Amira Nadia Raup / MBA BMA A6003

5.  Lupron,TAP’s new drug for prostate cancer
Amira Nadia Raup / MBA BMA A6003

6. Durand
Discovered
Unethical and
illegal sales
practices
Tried to change the culture
but he was told not
understand the culture,
talk about the importance
of earning the physician’s
trust (Sales rep – roll eyes)
(FAILED) – nobody aware
the ethics.
Tried to give
rewards /bonus
to sales rep who
kept the records
of samples and it
works
Senior Manager
discontinue bonus
, Sales Rep
stopped keeping
track
Durand – excluded from
meeting, and worried
about his bonus, work,
family, becoming
corporate scapegoat
Meet Glenna (Strategic
Health Policy
International), Encouraged
him to report and
document the abuse, share
to Ainsley ( philadelphia
atttorney) – documented
under fraud againts the US
Government
Ainsley encourage
him to sueTap
under whistle
blower program
Durand Left
Tap for Astra
Merck 1996
TAP Pleaded guilty, agreed to
pay $875 million.
Amira Nadia Raup / MBA BMA A6003

7.  Analyze the ethical culture atTAP. Does the
culture appear to be in alignment ?
Misalignment?
Amira Nadia Raup / MBA BMA A6003

8. FORMAL SYSTEMS INFORMAL SYSTEMS
Executive Leadership Role Models/Heroes
Selection Systems
Policies/Codes Norms
Orientation/Training Ethical and Rituals
Performance Mgmt. Unethical Myths/Stories
Authority Structure Behavior Language
Decision Processes
Amira Nadia Raup / MBA BMA A6003

9.  From the case, absolutely TAP Pharmaceutical do the unethical practise in their
organisation such as sales representatives bribed doctors, did not account
appropriately for free samples, and engaged in Medicare fraud.
 In terms of formal system, No legal counsel. The legal counsel is thought of as the
“sales prevention” department, rather than as a source to help everyone keep
their conduct within the law. The rewards system only focused on a bottom line
and leadership did not support attempts to change the reward system. No
systems in place to encourage ethical conduct (selection systems, rules/policies
or codes, etc.)
 Informal norms supported illegal conduct, such as bribing physicians. There is no
language, even sales rep only rolled eyes after Durand told about the important
to get trust from doctor.
 The all system of TAP Pharmaceutical is strongly aligned to support unethical
culture.
Amira Nadia Raup / MBA BMA A6003

10.  Based on the facts in the case and what you
have learned in this chapter, evaluate the
culture change effort that Douglas Durand
undertook. What cultural systems did he
target in the cultural change effort ?What
systems were missing if any?
Amira Nadia Raup / MBA BMA A6003

11.  After attempts at simple persuasion to the top management failed,
Durand tried to change the culture first by appealing to the sales
representatives’ ethics and by using the reward system (Performance
Management), to reinforce ethical Conduct, but argued by the
management. So, he did the right thing. And for a short time, the
change had the intended effect, because people do respond to rewards.
 Ironically, senior management overturned his efforts. So, senior
leadership support, (essential to any culture change effort), was clearly
missing ( Executive Leadership).
 All other systems that we know about were aligned to support unethical
conduct ( No policies/ Code ). So, his attempts were probably failed from
the start. He also attempted to change the informal norms, by appealing
to concerns about physicians’ trust, but was met with “rolled eyes.”
Amira Nadia Raup / MBA BMA A6003

12.  Why did his culture change effort fail?What
would it take for it succeed ?
Amira Nadia Raup / MBA BMA A6003

13.  His culture change effort failed, because he did not
have the authority, or the support from those who
did, for the change effort. As a result, he was able to
target change in isolated cultural systems, but not
throughout the culture as a whole.
 An important message from this case is that culture
change is very difficult. Even someone at a relatively
inVP level, will not be able to change culture without
substantial support from senior management for a
company.They need wide change effort to change
the culture.
Amira Nadia Raup / MBA BMA A6003

14.  In this case of Douglas Durand formerVP of sales forTAP, it
was his good ethics and intuition to correct the wrongdoing
of the organization while using the precise process of
decision-making and chose to go through the court system
to punish the company for what they have doing illegally.
 The reasoning is that having informants report on company
wrongdoings is the best way to prevent illegal activity.
Amira Nadia Raup / MBA BMA A6003

15.  To create the ethical culture, the formal and informal system must be
aligned to support ethical behaviour.
 Lack of attention to the ethical behaviour will promote the unethical
practice in the organisation.TAP leader must create a strong align ethical
culture , important to retain the good employee.
 The Sales Prevention Department must be a legal counsel
 TAP SM – must create, maintain, change formal ( communication) and
informal ( ,role model, action, norms) cultural system by what they say,
do or support.Visibility reward to ethical act, and punish to unethical act.
Amira Nadia Raup / MBA BMA A6003

16.  The employee must trained in the specific kinds of ethical issue
they could face in job and how to handle the unethical or
misalignment .
 Employers or company must have the code of conduct, and follow
the government policy to avoid the abuse (bribe and etc).
 To become more ethical culture and changing the organization to
positive direction , it require the major commitment from the
senior level, focus about ethic , align all formal and informal
organization system, strictly must have support from and modeled
by senior management.
Amira Nadia Raup / MBA BMA A6003

17. Thank you !
Amira Nadia Raup / MBA BMA A6003
President & CEOTAP
Yasuchika Hasegawa