Mistakes were made.
Joseph Jimenez, who served as chief executive of the Basel, Switzerland-based drug giant Novartis for eight years, says that he takes full responsibility for the company’s decision to hire Michael Cohen, President Donald Trump’s former lawyer, through a $1.2 million consulting agreement. But during a 15-minute interview, Jimenez grappled with exactly what went wrong and what he could have done differently.
“I brought him into the company, so I would … we as a company were looking for people who could help us on policy,” Jimenez says when asked if the decision to hire Cohen was his. “I’m accountable for everything that happened so, yes. I’m accountable for everything that happened at Novartis over my eight years.”
Jimenez emphasizes that his successor, current Novartis chief executive Vas Narasimhan, was not involved in the decision to hire Cohen, and that Cohen never provided lobbying services or made introductions to other people in the Trump administration. Instead, he says, Cohen’s contracting was handled by Novartis’ legal team without the involvement of anyone who could have second-guessed the chief executive’s decision to bring the former Trump Organization lawyer on board.
I ask: Was there anyone in the process who should have told you no, or at least say, Look, Joe, do you know who this guy is? “You can imagine I wish that happened,” Jimenez says. I reply that I definitely can imagine he wishes that, but did a person who could have put the brakes on the process exist?
“I would say no,” Jimenez replied, “because of the speed with which we were moving, and that was a mistake. We should have done more due diligence. We should have slowed down. We should have thought it through. We were moving too fast.
“You remember what it was like back then,” he adds. “This was right after the election. Things were moving fast. The rhetoric around the Affordable Care Act was huge and we moved too fast without doing our due diligence.”
‘I didn’t know who Michael Cohen was’
Jimenez returns again and again to the chaotic environment that followed Trump’s election, when it seemed that the Affordable Care Act could be rapidly replaced, changing the U.S. healthcare landscape dramatically. “Pharma’s always a target,” he says. “If we’re not proactive and we wait for things to happen to us, whether it’s legislative or policy, it tends not to be good.”
That’s why Jimenez was initially interested when a third party (he won’t say who) recommended he talk to Cohen. “I didn’t know who Michael Cohen was,” says Jimenez, who is American but who was based in Basel as Novartis’ CEO. “Being a European-headquartered company, we did not know much about him or much about his background.”
Jimenez says he never met Cohen but did have a long phone conversation in which he asked Cohen about his background. Cohen told him he had left the Trump Organization and was setting up a consulting company. The selling point was that he knew the players in the Trump administration, which Novartis’ existing consultants did not. Essentially, Jimenez says, his team needed someone who could predict how the Trump team would react to policy ideas.
“If we were the experts on policy, he was the expert on the way that they think. Together as a team it could be a way for us to better navigate what was going to be a pretty sticky Affordable Care Act repeal-and-replace,” Jimenez says.
What about that $1.2 million contract, which guaranteed Cohen $100,000 a month for a year? It’s more than a lobbyist would be paid, but maybe in line with what a consultant (think McKinsey) would make, I note. How did Novartis and Cohen arrive at this sum?
“Obviously, he started higher and we started lower and where we ended up was, I wouldn’t call it a benchmark, but there was precedent for what we had paid other consultants in that area,” Jimenez says. “And you’re right in terms of the difference between what you might pay a lobbyist versus what you would pay a consultant. And that’s where it’s been misreported in the press I think.”
A million dollars
A million dollars, Jimenez says, is a lot of money, even to a Novartis chief executive. But it was not a lot for a corporation of Novartis’ size, given what he feared was at stake if the Trump administration was going to rebuild the Affordable Care Act. And there was urgency to reach a deal, because Cohen said he was only going to take on a small number of clients.
The legal team formalized the contract, putting in certain protections for Novartis, Jimenez says. Then, he says, a team in Washington, D.C., met with Cohen once. As the team started to get into actual health policy matters, Jimenez says, it became clear that Cohen had oversold his ability to predict what Trump administration players would do. “When I heard that from my guys I said, ‘Okay, let’s terminate the contract.’”
Of course, Novartis didn’t terminate the contract. The contract only allowed Cohen to be terminated for cause, which could have cost “substantially” more in legal bills than just letting the contract lapse, Jimenez says.
“And this was really, Matt, this was really the mistake,” Jimenez says. “We should have just terminated the contract, lived with the financial consequences and put the potential reputational risk over financial risk. But I have to tell you, back then there was no hint of what would become a potential reputational issue.” Novartis’ general counsel, who co-signed the contract, announced today he would retire on June 1.
Jimenez says Novartis didn’t ever call Cohen after that first meeting but that Cohen did call Novartis. Cohen suggested that the company build a manufacturing plant in the U.S. and that it get more involved in trying to stop the opioid epidemic. Novartis didn’t do anything with the advice. “When I sit back and I think about it, we really should have definitively parted ways with him regardless of the financial costs,” Jimenez says.
Why, I ask? If Jimenez didn’t know there was a problem with Cohen, why should he have acted differently?
“Well,” he says, “because I look at what’s happened now. I mean, I try to think through what would have made us think that, had we done more due diligence up front, but remember this was at a time when traditional consultants in Washington didn’t know. … He was one of the very few number of people who knew people in the administration.”
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