‘Fessing Up to Our Pepper Hamilton Error
Update: Alex Berenson admits some truth on NPR and The New York Times‘ comments had an element of spin.
When we launched this blog, there was unanimous internal agreement that we would adhere to the highest standards of fairness and accuracy. We demand nothing less from ourselves, clients, and the media with regard to the work we do every day, and the content of this blog is no exception.
With that in mind, we naturally became concerned yesterday to read a post on the Drug and Device Law blog that the Portfolio.com story upon which we based our own post Tuesday may have been inaccurate. The item in question reported that The New York Times reporter Alex Berenson was able to break the recent page-one story about a possible $1 billion Eli Lilly Zyprexa settlement because he had mistakenly received a confidential email about the talks from an attorney at Eli Lilly’s outside law firm Pepper Hamilton that was intended for a co-counsel colleague at Sidley Austin also named Berenson.
The D&DL post said that Mr. Berenson had denied that the errant email was the initial source of his scoop (Portfolio.com said he had declined to comment). Above the Law, a well-regarded and extremely popular website, also wrote about the wrong-Berenson email mistake, linking to our post and to the original piece on Portfolio.com. They, too, issued a subsequent clarification once Mr. Berenson’s denial was on the record.
And now it is our turn.
We contacted The New York Times spokespeople directly yesterday to determine if a correction or clarification was indeed warranted. We received the following statement from Catherine J. Mathis, a spokeswoman for the newspaper:
Mr. Berenson did receive a misdirected e-mail from Pepper, but that e-mail did not contain a detailed description of the status of the settlement talks. Mr. Berenson had known independently about the settlement talks for some time, and he obtained the details he published in the Times from sources other than Pepper.
The Portfolio version was incorrect.
When a newspaper the stature of The New York Times publicly discredits the reporting of another publication, we clearly take it seriously. It now appears that we inadvertently republished erroneous reporting in our blog yesterday, and for that we apologize to both the Times and Mr. Berenson.
Yet…
If Mr. Berenson knew about the settlement talks for “some time” and had received details of the settlement talks from “sources” (plural) other than Pepper, we can’t help but wonder why he then sat on the story. Doing so meant taking a huge risk of getting scooped by a rival on a story that he has pretty much owned. After all, as the Times itself reported, if the $1 billion figure was right, it would be the biggest penalty ever paid by a drugmaker for inappropriate drug marketing activities. Major newspapers typically require only two independent sources to confirm an unattributed story, which Ms. Mathis suggests he had in hand.
And therein lays a very big question. So who were these non-Pepper sources?
We can appreciate why someone on the government side might leak that settlement negotiations were underway. But we would expect that Mr. Berenson’s editors would insist that he get confirmation from someone at, or very close to, Lilly with first-hand knowledge of the talks. It’s fairly safe to assume that Lilly didn’t offer any confirmation, officially or on background, given their reported statement to the Times saying in part, “…we regularly have discussions with the government. However, we have no intention of sharing those discussions with the news media and it would be speculative and irresponsible for anyone to do so.”
Mr. Berenson’s scoop is extremely damaging to Eli Lilly. If the company does indeed settle for $1 billion, the Times will again undoubtedly give the story some pretty prime real estate and repeat all the damaging allegations regarding Zyprexa. And with the figure now public knowledge, it would seem difficult for prosecutors to accept a settlement for less than $1 billion without it appearing that they had blinked.
It will certainly be interesting to see how this fascinating story plays out.