July 29, 2003

Page F1  

From Eli Lilly to Front Line

By DONALD G. McNEIL Jr.  

In Indianapolis, Randall L. Tobias is a household name.

But elsewhere, Mr. Tobias, the retired pharmaceutical executive President Bush has nominated to oversee the spending of $15 billion to help people with AIDS in Africa and the Caribbean is a bit of a mystery man.  

Activists for cheaper AIDS drugs profess themselves stumped by him. Several said they feared that he would be "the fox in charge of the henhouse," as Kate Krauss of the AIDS Policy Project put it. But they added that they knew so little about him that none have announced plans to oppose his Senate confirmation.  

"We're up on a lot of people and we don't know anything about him, and that's not good," Ms. Krauss said. "But I'm interested in his performance, not his personality."  

James P. Love, director of the Consumer Project on Technology, a Nader-linked group pushing for cheaper drugs, said, "It's amazing, the lack of info on this guy."  

What has come out has surprised those who have looked. Perhaps predictably, Mr. Tobias is a major donor to the Republican Party in Indiana, where he once talked of running for governor, and he was a longtime executive at Indiana Bell and AT&T who took over Eli Lilly in the middle of a boardroom crisis.  

But he also can come across as a blithe spirit who encouraged Lilly mothers to nurse at the office, was named C.E.O. of the Year by Working Mother magazine, speaks movingly about his first wife's suicide and makes speeches reminding college graduates that life is about more than work.  

After pushing up Lilly market value 440 percent in five years, Mr. Tobias retired at 56, remarking, "Nobody ever said on his deathbed, `I wish I'd spent more time at the office.' "  

Since then, he has devoted himself to running the foundation he created, donating mostly to childhood literacy, but also supporting the largest AIDS advocacy group in Indiana.  

His admirers say he will handle the job with the same talent for consensus building that he has shown on the boards of Duke University, Phillips Petroleum and Colonial Williamsburg. His critics, though, fear that he knows little about AIDS in Africa, where it is killing 8,500 people a day.  

Three board colleagues whom Mr. Tobias chose to speak to a reporter about his background were unsure whether he had been to Africa. His office said he went twice, once with Vice President Dan Quayle, in 1991, and in 1999. On both, his secretary said, he visited black townships and rural areas.  

Because he faces Senate hearings, Mr. Tobias declined to be interviewed about the post, which would carry the rank of ambassador. He did discuss other matters in a telephone interview, including the failure of Prozac, Lilly's wonder drug, to save his first wife from depression.  

Because one must point out the moose whenever it raises its head, it must be noted that he has just published a memoir and business advice book, "Put the Moose on the Table." "The moose" is a business buzzword for a sound-management principle, that if there is a problem that everyone in the room knows about — the moose at the table — it must be discussed, not ignored.  

Some prominent executives, have been known to plop down a stuffed moose at meetings to encourage lively debate.  

In Mr. Tobias's case, the moose is the fears of AIDS activists that he will be a tool of the pharmaceutical industry or the religious right, which has already expressed doubts that he will back its abstinence-first agenda.  

The activists worry that he will spend tax dollars on patented American AIDS drugs at up to $15,000 a year instead of generic copies from India or Thailand for, say, $300. Or that he will let drug companies fill the need through donations, which cost nothing but give the companies huge tax write-offs while shutting out generic competitors so they can control prices elsewhere. The critics also worry that he will adopt the religious right stand that condoms do not work and abstinence does.  

Friends who have worked with Mr. Tobias on boards said they believed that such fears were misplaced.  

"As the activists come to know him, a year from now, they'll say `We were wrong to be concerned,' " David L. Boren, president of the University of Oklahoma, said. "I think he'll make judgments based on getting the greatest good for the dollar."  

Nannerl O. Keohane, president of Duke, where Mr. Tobias was chairman of the board, said: "You might see this as a Nixon-in-China scenario," meaning that Mr. Tobias might be able to take low-cost drugs to the third world in the same way that President Richard M. Nixon, even though he was a longtime anti-Communist hard-liner, opened diplomatic relations with China when liberal Democrats could not.  

"I think he'll be a refreshing surprise," said Dr. Ralph Snyderman, chancellor for health affairs at Duke. Dr. Snyderman said Mr. Tobias greeted his radical proposal that Duke incorporate its medical services with "shock and dismay." But after Mr. Tobias demanded supporting data, he backed the plan.  

Asked whether Mr. Tobias would represent the abstinence-only viewpoint, Dr. Keohane said: "Oh, no. No. That doesn't sound like Randy. He's not from the religious right."  

Tracy Elliott, executive director of the Damien Center, an AIDS-support group in Indianapolis, agreed. "He's too practical for that, Mr. Elliott said. "He's a can-do businessman, the kind that kicks the thing until it gets done. I hope he'll learn that you can't do things in Africa the way you do things in the Midwest, not that `abstinence-only' works here, either."  

His boardroom colleagues all described the same trait: that he has a knack for sitting quietly through a heated debate, then interrupting to sum up the differing views in a way that pleases all sides and quietly bending the board to his will.  

Mr. Tobias grew up in Remington, Ind., and in his autobiography describes lessons learned. Steam put his family's 1849 mill on the Muscatatuck River out of business, showing the need to adopt new technology. He learned work ethics as a chicken catcher at a poultry operation, corn-detasseler and clerk in Doc Peck's grocery. After serving as an Army artillery instructor at Fort Sill, Okla., he joined Indiana Bell and became, at 39, its youngest vice president.

  In June 1993, after 29 years there, the last as vice chairman in the once-unthinkable breakup of the Bell System, he was asked to take over Lilly after a boardroom coup. On his second day, he faced an extraordinary crisis. Lilly's new experimental hepatitis drug, fialuridine, was killing 5 of the 15 patients in its clinical trial.  

The speech that he made instructing Lilly executives and scientists that they were to concentrate on saving lives and comforting the families rather than on limiting the company's liability is now part of in-house lore in a corporation that, under the Lilly family, had been obsessed with secrecy. Two years later, the Institute of Medicine exonerated Lilly, calling the deaths "totally unpredictably unavoidable."  

Lilly stock soared during his tenure, gaining 91 percent in his last year, despite some mistakes like a $4 billion purchase of a pharmacy benefits-management company. And the famously stuffy corporate culture relaxed, in part because Mr. Tobias often ate lunch or gave press interviews in shirtsleeves in the cafeteria.  

One brainstorm was to send engineers to watch M&M's being made.  

"A single M&M has to be uniform in size and quality and is a human consumable, which is also true of pills," he said then. "But the pressures on cost control had always been greater in the candy business than in pharmaceuticals. So what could we learn?"  

Eleven months into his tenure, his wife of 28 years, who had raised their two children and christened company boats, killed herself. "She'd had health problems for years and had been to a number of doctors, all of whom diagnosed the problem based on what it said on their door," he said in an interview. "Lyme disease, chronic fatigue, lupus."  

Only when they moved and she went to a new doctor did she learn that she had severe depression. She began taking Prozac, then Lilly's blockbuster drug. It did not help her, nor does it help 30 percent of those who take it, he said, and she stopped.  

Months of other treatments did not help, and she ultimately took her life, with car exhaust just after their children had finished college and law school. Mr. Tobias talks about that as part of his "put the moose on the table" attitude, because he hates the shame over mental illness that his wife felt and because feels the mental-health care system is inept.  

After remarrying and retiring, he started family foundations with profits he made in Lilly stock. Most of his giving — besides large private donations to the Republicans — has been to Indiana elementary schools, but some has gone to Mr. Elliott's AIDS group. "They said it was because of a personal connection with folks with AIDS," he said. "They weren't at all specific."  

Mr. Tobias's wife, a pianist with the Indiana Symphony, he noted, played at an AIDS fund-raiser in April.  

Of Mr. Tobias's job, Mr. Elliott said, "I imagine he'll attack it as a practical businessman, saying `We've got a market to reach.' "