Enron/Andersen: Slamming Into
the Political Reality Wall

Evan M. Dudik

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But Big Pharma seems to ignore the political hurricane that's brewing over pricing. Or it believes boarding up its house with white papers about the horrendous costs of drug development and clinical trials are enough to keep out the storm. In any event, Big Pharma seems so caught up with getting new drugs into the patent pipeline that it displays attention deficit disorder when it comes to political realities.

There is no good excuse for an industry failing recognize that is spinning into the political reality wall. There is usually plenty of notice. For years accountantss have been warned about the appearance of conflicts of interest in their consulting. For years stories have appeared about pharmaceutical pricing. For years the media have talked up the problems of HMOs and the astronomical number of uninsured. But competitive dynamics are so strong that far too little attention gets paid and far too little action gets taken.

At the beginning of this piece I mentioned the snowmobile industry. When articles appear in the New York Times or the Wall Street Journal about crowds of earsplitting snowmobiles sending yellow-brown exhaust into the air as they await permission to storm Yellowstone Park, the snowmobile industry could turn this into a golden opportunity to show how politically and environmentally responsible they are.

Perhaps their executives would do well to suspend for a moment thinking about next year's models or how to persuade dealers to stock more vehicles. They need to even suspend their thoughts about how to influence the National Park Service. They need to think about whether the public will perceive them as cheating and whether they are destroying value-and how far along to being perceived to be cheating or destroying value they are. Homework exercise: what are the signs your industry may be hitting the political reality wall? And it is what is your game plan? In the next article, I'll describe what possibilities exist for industries that are about to smash into the political reality wall of managing a soft landing.