November 21, 2016
“Our most valuable commodity is our time:” GSK’s Dan Troy on Running a Global Legal Department
Dan Troy is senior vice president and general counsel of GSK, a science-led global healthcare company that researches and develops a broad range of innovative pharmaceuticals, vaccines and consumer healthcare products. The company employs 100,000 people in 150 countries. Troy has been with the company since 2008. Prior to joining GSK, he was in private practice at the Washington, DC, firm of Sidley Austin. He has served as chief counsel for the U.S. Food & Drug Administration, where he served as a primary liaison to the White House and the U.S. Department of Health and Human Services.
Troy heads up a global legal organization at GSK that aligns lawyers with lines of business and practice areas, locates them in or close to GSK's major operations in Philadelphia, Belgium, and New Jersey, in addition to the company's commercial headquarters in Research Triangle Park, North Carolina and at head office in London. The legal department numbers 630, of whom 400 are lawyers. There are general counsels for the Vaccine and Consumer Healthcare businesses, research and development (R&D), and manufacturing and supply; there are three regional general counsels for the pharmaceutical business given its scale. Then there are also centralized pools of lawyers who specialize in litigation, patent, trademark, and general commercial work, all vital to GSK's success.
In order to work closely with his team and meet the needs of the business, Troy travels frequently, using his time in the air to work through his very large black bag of reading or occasionally enjoy an action movie. He says that communication, trust, and careful planning are key to making an organization of this scale work cohesively: "The most valuable commodity any of us have is our time. I try to be very thoughtful about how and where I spend my time. I know where I will be sleeping every night in 2017 to ensure the business runs smoothly."
"I'm based in GSK's office in Washington, DC, which means I don't sit in the same place as any of my direct reports; the relationships require lots of trust. My team operates with an enormous degree of autonomy, so I have to know we have the best possible people at all levels in our business, all aligned to our overall goal," he says. While the legal team is fully embedded within GSK and aligned to the business, Troy notes it is vitally important the function also maintains a distance: "We are independent but aligned." Troy sees Legal's role as helping the business solve problems, achieve what it wants and needs to achieve, providing guidance on staying safely within the limits of the law while also operating within the guardrails of GSK policy. "The more we know the business and the more we know about the business, the more we can help," he says.
Troy works closely with the other members of the corporate executive team in a similar, "very embedded, fully immersed" model. The group has monthly roundtable discussions during which they look both internally and externally for potential problems and risks. Troy says his role in this meeting is to bring issues to the table that the executives might not always see or want to confront. He says he need to "be both an advocate for the business but also to be a guardian, raising cautions about how society might react to various business decisions," while also clarifying what the law requires.
During Troy's eight-year tenure at GSK, the external environment for the pharmaceutical sector has changed significantly. For example, product liability risk used to be one of the main issues requiring GSK legal time, for now represents a much smaller business risk. Troy says his team is also currently thinking through some of the opportunities and challenges presented by the FDA's – and the court's – increased focus on the implications of the First Amendment for pharmaceutical regulation.
While the external environment has shifted during Troy's time at GSK, so too has the shape of the company itself. In March 2015, GSK completed an innovative three-part transaction with fellow pharmaceutical company Novartis, swapping GSK's marketed oncology portfolio for Novartis's vaccines business, with the two companies forming a joint venture in consumer healthcare. "Working on the Novartis transaction was an incredible opportunity to be involved in a transaction that would, could and did transform our company," Troy says. "To ensure confidentiality, we kept it very tight; not even ten lawyers in Legal knew about it, so senior people needed to roll up their sleeves and do some of the things that we hadn't done in years. It was very exciting."
In 2013, China's Ministry of Public Security began an investigation into working practices at GSK in China. During the subsequent investigation, Troy played an active role in advising the company's management team on how best to engage with the authorities during this investigation. Alongside the official investigation, Troy hired an external legal firm, Ropes and Gray, to conduct an independent investigation into what had happened in China. "This was an attorney–client-privileged investigation reporting to me, with my reporting to the Board and GSK's executive management team on their findings."
Since the conclusion of the investigation with the Chinese government, GSK has made significant changes to its business model globally, and was the first major pharmaceutical company to do so: GSK stopped paying sales representatives on the basis of prescription drug sales; and it stopped paying healthcare providers to speak on the company's behalf. "These not only reduced risk but were the right thing to do," Troy says. "The way the business embraced the business model changes helped the legal team persuade regulators that the business 'got it.'" While Legal played a valuable role, Troy notes these changes really came from within the business itself.
During his time at GSK, Troy has identified some significant differences between private practice and in-house practice. "In private practice, you only know what the internal counsel tells you. As that internal counsel, you get to see the whole context of the business, beginning, middle, and end," he says. He finds in-house practice extremely rewarding. "We are part of an organization that has as its mission to help people 'do more, feel better, live longer.' Every day, we interact with people who are discovering new medicines, making medicines, or helping to ensure that the appropriate medication is available to a patient who needs it, when they need it. I find this a more motivating environment than a law firm."
A major innovation of which Troy—a sworn enemy of the billable hour—is proud is GSK's Outside Counsel Selection Initiative (OCSI). Having brought 50 percent of GSK's external legal spend under alternative fee arrangements by the end of his first year at the company, he then rolled out OCSI, a reverse online auction in which firms bid their best price for matters or portfolios of work.
"This work has been a major focus of my tenure. We use OCSI for every matter over $250,000, and we have used it outside the United States," he says. "OCSI enables us to hire lawyers on a fairer, more data-driven, more objective basis. We take diversity into consideration when we hire outside firms. We track their progress and performance. It enables us to bring a variety of metrics and measures to bear to ensure that we are making our hiring decisions as transparently as possible, with respect for people and with integrity." Troy notes the selected firm is not always the lowest bidder, and GSK does negotiate frequently to ensure incentives are aligned between the company and outside counsel. He also emphasizes that the platform is open-source, and he is happy to share.
—Jennifer J. Salopek is a freelance writer based in McLean, Virginia. She can be reached at email@example.com.