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Merck and Novartis gender bias suits draw renewed attention, and New York is taking action

July 02, 2018 By fiercepharma

As the #MeToo movement puts workplace sexual harassment at the front, Merck & Co. and Novartis, two of the largest pharma companies, find themselves entangled in a different kind of gender problem: alleged pregnancy discrimination.

Merck and Novartis gender bias suits draw renewed attention, and New York is taking action

Merck for years has been embroiled in a lawsuit that accused it of discriminating against female sales reps in promotions and pay. Though the plaintiffs have decided not to pursue some pregnancy-specific allegations as a class, a recent New York Times article revived attention to the issue and another lawsuit Novartis settled for $175 million back in 2010. The article moved the New York state government to launch an investigation.

The Merck suit, first brought at a New Jersey court in May 2013 by Kelli Smith, a former Merck saleswoman, alleged that Merck discriminated against female sales reps and against pregnant women in its decision on promotions and pay.

A Merck spokeswoman said that the plaintiffs abandoned the class pregnancy discrimination case after years of discovery found “no evidence” of those specific allegations. Deborah Marcuse, a partner with law firm Sanford Heisler Sharp and lead counsel for the plaintiffs in the Merck case, told FiercePharma that all four named plaintiffs continue to pursue their individual pregnancy-specific claims, while the broader gender pay discrimination claims await court decision on a class basis.

“We remain confident that this case lacks merit, and the company will continue to vigorously defend itself,” the Merck representative said in a statement. “Merck is fully committed to providing equal employment opportunities and has a strong anti-discrimination policy that prohibits discrimination on the basis of characteristics, such as gender, pregnancy, race, age, disability and sexual orientation.”

Smith joined Merck in June 2004, and later earned several company awards, including the Customer Trust and Value Award in 2009, which Merck awarded to about 1 out of 100 sales reps, according to the complaint. But amid a large-scale restructuring Merck initiated after its merger with Scherling-Plough, Smith was demoted in March 2011, after she returned from maternity leave, and was put in the lowest-paid sales rep tier, the suit says.

The complaint also alleged that one commercial operations leader told Smith that her tier assignment was due to “the timing of [her] baby.” The director has also allegedly referred to a female employee as “the [expletive] hottest one in here” and asked her what it would take for her to accompany him to his hotel room, the suit file shows.

Smith isn’t the only plaintiff on the lawsuit. Rachel Mountis, another former Merck saleswoman, had been promoted and given company awards since joining the drugmaker in 2005. Merck also paid for her master’s degree study at New York University. But in December 2010, just three weeks before she was due to deliver, she was told that Merck had decided to lay her off. Though she did get another job within Merck, it was at a lower-paying position with fewer leadership opportunities. She was demoted again in December 2012 while on her second maternity leave, the complaint says.

Sanford Heisler Sharp’s Marcuse said 700 people have opted in the ongoing case on pay discrimination, adding that the suit has a potential to include up to 3,500 current and former female sales reps.  A trial date has not been set. Merck had eliminated about 40,900 positions by the end of 2016 through two major restructuring rounds since the Scherling-Plough megamerger.

Merck isn’t the only pharma company that has been under fire with gender-bias complaints. Novartis in 2010 agreed to pay $175 million to settle a similar suit. Christine Macarelli, a former Novartis saleswoman, said in that case that her supervisor told her “women who find themselves in my position—single, unmarried—should consider an abortion,” the NYT reported.

Now both Merck and Novartis are under scrutiny from the New York state government’s Division of Human Rights. The agency just sent the companies letters requesting information about the discrimination claims. Because New York has a law requiring employers to accommodate pregnant workers, the state could seek damages though administrative complaints, according to the NYT.

A Novartis spokesperson told FiercePharma that the 2010 settlement agreement came with a post-trial monitoring program “which concluded there were no disparities in pay or promotion for women in our sales organization.”

“Following the settlement, Novartis enhanced many of these ongoing commitments and added programs and initiatives to further strengthen its commitment to a diverse and inclusive environment,” the spokesperson said. He pointed to several external gender-equality awards the company has won, including being inducted into Diversity’s Hall of Fame this year and recognized as “100 Best Companies” by Working Mother Magazine. Merck's representative mentioned that the company earned the same title for the past 26 consecutive years. 

Other companies have been sued for similar allegations. Late 2015, Novartis’ eye care unit Alcon settled a gender bias suit for $8 million. Last year, Allergan’s Forest Laboratories agreed to pay $4 million to settle a similar suit. Sanofi paid female sales reps $15.4 million in a settlement in 2010. After a suit filed in 2011 from five female employees alleging gender discrimination, Bayer was sued in 2016 by a former vice president, who alleged she faced “increasing retaliation” by the firm after she defended a pregnant colleague pulled from a big project.

Editor's note: This story was corrected to reflect that the named plaintiffs have chosen not to pursue the pregnancy-specific discrimination claims against Merck as a class, but are still pursuing them individually, and that the court is yet to finally decide on the gender pay discrimination class.

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