Why Glaxo Won't Pay Doctors To Sell Its Drugs Anymore
Doctors talking up drugs to other doctors has been quite lucrative for pharmaceutical companies — and the physicians who moonlight as their salesmen.
Drugmakers learned long ago that deputized doctors were effective pitchmen. A doctor paid by a company to give a dinner speech or to chat over lunch with colleagues can go a long way toward changing their prescribing habits.
But now drug giant GlaxoSmithKline says it's going to stop paying doctors to speak about drugs or diseases to people with the power to write prescriptions or influence those who do. Doctors will still be able to earn money from Glaxo through research collaborations and consulting agreements.
The company will also stop paying sales reps based on sales targets. Historically, Glaxo and other companies have tied reps' compensation to changes in the prescriptions written by doctors they call on.
The changes "are designed to bring greater clarity and confidence that whenever we talk to a doctor, nurse or other prescriber, it is patients' interests that always come first," Glaxo CEO Andrew Witty said in a statement.
Glaxo says the new approach will be implemented in all the countries it operates in by early 2016.
Some of the changes, such as the shift in sales rep pay, got rolling in the U.S. a few years ago. In 2011, Deirdre Connelly, Glaxo's U.S. president, talked about decoupling rep pay from prescriptions in a speech that acknowledged that "our industry lost its way."
Why is Glaxo making these changes now? Well, the company has been rocked by allegations of ethical missteps and worse. There's been a bribery investigation in China. And last year, a settlement of alleged health care fraud involving the marketing of some drugs in the U.S. The settlement included a restrictive corporate integrity agreement with the federal government.
But CEO Witty told The New York Times the shift wasn't related to events in China or anything else in particular. Instead, he said, the changes are part the company's effort "to try and make sure we stay in step with how the world is changing. We keep asking ourselves, are there different ways, more effective ways of operating than perhaps the ways we as an industry have been operating over the last 30, 40 years?"
There are some other reasons it might be more palatable for Glaxo, and perhaps other companies, to dial back marketing now. There are fewer new drugs being launched for mass markets — think cholesterol-fighters, antidepressants and blood pressure pills. And more doctors' offices and hospitals have restricted interactions between physicians and the drug industry.
Also, public scrutiny of these relationships has been increasing year by year. In 2014, a plank of the Affordable Care Act will bring even more sunshine to bear. Makers of drugs and devices will have to make public what they pay doctors.
"Many people have wondered, what difference will it make?" asked Susan Chimonas, a research scholar at the Center on Medicine as a Profession at Columbia University. "Will it clean up practices, or just allow the status quo to continue so long as there is transparency? Glaxo's move is giving us an early answer — and reason for optimism," she told ProPublica. "The saying about sunlight being the best disinfectant — that's exactly what we're seeing here. The sunshine law is working."