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Physician Marketing, Sales, & Education Topics related to pharma's communications with physicians, including marketing, sales, and support of symposia and continuing medical eduaction (CME)

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Old 23rd January 2011, 07:53 AM
Pharma Newshound Pharma Newshound is offline
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Default GSK Scraps Sales Commissions Based on Prescription Volume

Source: FT.com

GSK’s US sales tactics undergo radical change

By Andrew Jack in London

GlaxoSmithKline will this month scrap payments to its US-based commercial staff based on individual sales targets, as it attempts to draw a line under past aggressive marketing practices that have incurred substantial fines.

From January the UK pharmaceutical company’s sales “reps” will no longer receive commissions based on their ability to push prescriptions. They will instead be paid based on their scientific knowledge, feedback from customers and the performance of their business unit.

The action is one of several the company has undertaken following concern over past approaches by it and rival drug companies that have triggered a surge in US regulatory settlements.

In a report this week, Morgan Stanley was negative about the sector, partly because of a rising trend in litigation in the US. It singled out GSK for damage to its future earnings, even after the company this week added a £2.2bn ($3.5bn) charge to cover a range of US regulatory and plaintiff actions.

Morgan Stanley calculated that “whistleblower” settlements with drug companies under investigation were likely to rise by 50 per cent from 2008 levels, with many outstanding cases dating from early in the decade. It pointed out that GSK’s legal provisions are triple the average of its European peers.

While GSK’s latest charges and settlements could suggest that it has already taken hits that rivals will eventually face, the bank also said that GSK was likely to be a target in the coming years.

It said that GSK had received the highest number of “warning letters” from the US Food and Drug Administration, covering manufacturing and marketing violations, ahead of Novartis, Bayer and Pfizer.

Some of the aggressive marketing practices relating to a probe in Colorado are outlined in filings linked to a separate case brought by US authorities against Lauren Stevens, former GSK associate general counsel, for allegedly concealing information from the FDA. She has denied the charges.

The filings allege that GSK in 2002 identified presentations for its anti-depressant Wellbutrin made by 28 doctors it paid to promote the drug to other prescribers. Each contained suggestions that the product was effective for indications that had not been authorised by the regulators.

Such “off label” marketing is illegal, but was widely practised and supported by drug companies, especially those marketing primary care drugs to US doctors.

With some of these drugs losing their patent protection, and growing centralisation among health insurers over pricing and prescription policies, pharma companies have been cutting US sales staffs – GSK now employs 5,500, down from 9,500 in 2007.

It has also imposed a cap on payments to doctors it uses to promote its drugs. The ceiling is $100,000 a year per doctor and amounts in total to millions of dollars.

GSK also now demands control over the presentations made by doctors to strengthen compliance, and has restricted funding of formal “continuing medical education” courses to a small number of non-profit institutions.

GSK said: “We are also working hard to reduce our litigation risk, for example, through the significant legal provisions we have taken recently and ongoing improvements in our compliance procedures.”

But even if the changes begin to work, GSK and its rivals face several years of scrutiny by regulators poring over past tactics.
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