Lawyers for Victims of TGN 1412 Trial Criticize Parexel Chief's Bonus

We have previously posted, most recently here, here, and here, about the disastrous trial, implemented by Parexel International , of a new monoclonal antibody designated TGN 1412, manufactured by TeGenero AG, which is now bankrupt. After the bankruptcy, the focus has shifted to the role played by Parexel International. Here we noted additional concerns about how well the company protected its research subjects in this trial and whether a company with a"commitment to providing solutions that expedite time-to-market and peak market penetration" for pharmaceutical and biotechnology companies has the right set of priorities to be conducting clinical research on real human subjects.

The British Broadcasting Corporation (BBC) just reported that a lawyer for the victims of the TGN 1412 trial said "the cash and share bonus package awarded to Parexel chief executive Josef von Rickenbach had 'incensed and outraged' his clients. [Attorney Gene] ... Matthews said: 'The timing of this really couldn't have been worse.' According to accounts released by Parexel, Mr von Rickenbach - who founded the clinical research organisation and is also its chairman - got a cash bonus of $286,157 and share options worth $1,469,490 this year."

Also, "Mr Matthews said his clients were 'bitterly disappointed' at the payment made to Mr von Rickenbach. He said: 'This payout comes at a time that's very close to what happened to these men, in the same year. They haven't received any compensation apart from the £10,000 payment for immediate medical expenses. They are struggling with their finances and their health and that's made even more difficult when executives are getting bonuses of that size. It's very much insensitive.'"

Another of the lawyers for the trial victims, Martyn Day, said "It is astonishing that they are prepared to pay the chief executive this sort of money, at a time when they are refusing to sit round the table with the guys who have been injured."

In the US, where "pay for performance" plans for business executives have often been criticized as actually unrelated to their recipients financial peformance, and hence amount to "pay for pulse," it is not very surprising that a contract research organization failed to adjust its CEO's pay for the quality of the research trials it was carrying out.

However, this continuation of the tragic case of the TGN 1412 trial illustrates how misplaced are some of the incentives built into the US (and other developed nations') health care system. From a business standpoint, the long-term health of a company might be improved if its leaders were paid not only acording to the company's financial performance, but also according to the quality of the goods and services it provides, and its reputation in the marketplace. The long-term health of the people might be improved if leaders of health care organizations were paid not only according to their organizations' financial performance, but according to how well they treated the patients entrusted to them.