Biovail VP: If Cardizem Reps Don't Deliver, "My Net Worth Will Shrink Dramatically"

Last Updated Sep 16, 2009 11:44 AM EDT

The news that Biovail will pay $25 million in fines for bribing doctors into prescribing the blood pressure drug Cardizem turns out to be just the tip of the iceberg.

Biovail is paying the fines to end allegations by federal prosecutors that it paid doctors $1,000 to enroll patients in Cardizem "trials," $250 to fill in a form, another $250 to return the form, and $50 to their office assistants for putting the forms in an envelope and sending them back to Biovail.

Why was Biovail doing all this? Because a vp at Biovail's parent company sent an email to its pharmaceutical sales reps saying, "My net worth will shrink dramatically" if Cardizem was not a success:

(Click to enlarge.) An obsession with stock is part of the corporate culture at Biovail. Former Biovail CEO Eugene Melnyk was fined $1 million for hiding Biovail stock in offshore accounts and not telling the SEC about it:

Melnyk violated the stock accumulation disclosure provisions by failing to include in his Schedule 13D filings Biovail shares held in several off-shore trusts that Melnyk controlled.
Separately, in a failed attempt to prove that a hedge fund was driving down the price of Biovail stock, a judge threw out the company's case after finding it had been "ghostwritten" and was "tainted" by the Cardizem allegations. The NY Times:
Biovail had violated numerous ethics rules including by ghostwriting the shareholder lawsuit in order to obtain documents and other materials that could be used in the racketeering case.
The factual allegations of the suit had "a tainted origin" and were incompatible with admissions by Biovail that it was involved in a kickback scheme and made false statements that inflated its stock price, Judge Chesler wrote.
And, in the same story, the Times noted that Biovail has had to refund its shareholders for making false statements in its disclosures:
This year, Biovail paid $128 million in damages to settle a class-action lawsuit accusing the company of making material misrepresentations and omissions in its financial and public statements.
Melnyk is no longer the CEO of Biovail. But he admitted in this recent press release that he had also been cited for failing to file disclosures properly with the Ontario Securities Commission in Canada.
It is well documented that I was required to pay fines to the OSC over civil administrative oversights like filing paperwork on time.
In that same admission, Melnyk described his business ethos:
As a businessman, I know about playing tough and getting your elbows up.
I also know lessons that most of us learned early in our childhoods - you play fair; you play by the rules and you help others when you can.
Melnyk -- who is also the owner of the Ottawa Senators hockey team -- lives in Barbados where he doesn't pay Canadian taxes.