- Novartis' top lawyer, Felix Ehrat, will retire at the beginning of next month, stepping down from his post on the pharma's executive committee over the controversial payment by Novartis of $1.2 million to a company controlled by President Donald Trump's personal lawyer Michael Cohen.
- "Although the contract was legally in order, it was an error," said Ehrat, 61, in a May 16 statement. "As a co-signatory with our former CEO, I take personal responsibility to bring the public debate on this matter to an end."
- Novartis has gone to great lengths to defend CEO Vas Narasimhan from scrutiny into the deal with Cohen, emphasizing the agreement predated the current chief. Blame, instead, has fallen more heavily on former CEO Joe Jimenez, who handed the job to Narasimhan in February.
Novartis appears hopeful that Ehrat's departure will help defuse the controversy that has engulfed the Swiss drugmaker.
While his exit offers some measure of accountability, though, the company still faces scrutiny into why it paid an unusually high amount for advice on healthcare policy that Cohen was unable to deliver. And while Novartis contends the deal was a mistaken attempt to gain insight into the policies of a new administration, it presents a reputational challenge for a company previously accused of improper payments elsewhere in its business dealings.
Last week, a top Senate Democrat opened an inquiry into the agreement between Novartis and Cohen, sending letters to Narasimhan and Cohen seeking financial information and a further accounting of the company's rationale for engaging the Trump insider.
Of particular concern for the lawmaker, Sen. Ron Wyden, D-Ore., is the coincidence of the arrangement with Cohen and Novartis' negotiations with the Centers for Medicare and Medicaid Services over how federal health programs would pay for the drugmaker's pricey cancer cell therapy Kymriah (tisagenlecleucel).
Across the Atlantic, the contract has attracted the attention of the Swiss Attorney General, according to a report from Bloomberg, although no criminal proceedings have been opened.
Novartis maintains its payments to Cohen were on market terms, and it considers closed a November 2017 inquiry from the office of Special Counsel Robert Mueller into the deal.
Since the controversy began, Narasimhan has worked behind the scenes to repair the damage, emailing a message to reassure the drugmaker's roughly 120,000 employees and calling up 5,000 of the company's managers, according to reports from The Wall Street Journal and Bloomberg.
Ehrat's departure comes as the company kicks off an annual investor event at its headquarters in Basel, Switzerland.
For all the furor over the deal, investors don't seem too perturbed. Novartis stock, which trades through American Depositary Receipts on the New York Stock Exchange, has moved less 1% since news of the payments broke.
Shannon Thyme Klinger, who is currently the chief ethics, risk and compliance officer at Novartis, will take Ehrat's place as Group General Counsel on June 1.