Healthy Skepticism Library item: 18500

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Electronic Source

Hobson K
Bonuses For GSK Pharma Sales Reps Won't Be Tied to Sales
The Wall Street Journal Blog 2010 July 28
http://blogs.wsj.com/health/2010/07/28/bonuses-for-gsk-pharma-sales-reps-wont-be-tied-to-sales/

Full text:

When GlaxoSmithKline said that bonuses for its U.S. pharma sales reps will no longer be based on, you know, sales, we needed to know more!

Starting next year, bonuses will be determined “in part, by customer feedback, and by a sales professional’s adherence to the company values of transparency, integrity, respect and patient-focus,” the company said earlier this week. (Here’s the Dow Jones Newswires story.)

Customers “are asking us for more information about reimbursement, disease education, and support for improving patient health,” said Deirdre Connelly, GSK’s president of North American pharmaceuticals, in a press release. (That’s especially true as purchasing decisions themselves are increasingly made by a central authority rather than individual physicians.) This new model aligns incentives with those activities, she said.

Tying bonuses to “company values” discourages sales reps from pushing unapproved uses of drugs and has become more prevalent, Stephen Redden, the managing principal in charge of sales force incentive compensation programs at ZS Associates, a sales and marketing consultancy, tells the Health Blog. (For why a company would want to discourage that behavior, see Pfizer’s $2.3 billion payout for the off-label marketing of Bextra and other drugs, and Eli Lilly’s $1.4 billion federal settlement over Zyprexa marketing, among others.)

But linking compensation to customer feedback in a comprehensive way is new, says Redden, whose group creates and manages the comp programs for 17 of the 20 largest pharma companies. It certainly has the potential to reward non-sales activities like providing information about products and reimbursement. But there are questions, he says: What will it do to sales? Will a different type of person be attracted to the job? Will these considerations also drive career advancement and company-wide awards? (A GSK spokesman tells us in an email that the changes aren’t expected to alter reps’ earnings potential.)

Such a strategy requires using “robust” market research practices to collect all this qualitative feedback in a statistically significant way, says Redden. And feedback will have to distinguish between the sales rep and the product he or she is selling. “You don’t want a product that’s not popular to be dragging down salespeople with it,” he says. (The GSK spokesman says the company will involve sales reps and customers to develop new performance evaluation tools.)

“The devil will definitely be in the details on this,” says Redden.