Pharma’s incentive problem

money-pillsHarvard Business Review examines the ways in which Pharma’s employee and business unit incentives contributes to the opioid crisis. It’s not as piercing as one might home, but it’s interesting food for thought.

Here’s one portion:

It isn’t news that rewarding sales volume rather than public health outcomes is a problem in the pharmaceutical industry. In fact, this is the root of nearly all the mistrust that clouds the industry’s operations, relationships, and reputation. The memory of hefty legal settlements for improper marketing and obfuscation of safety risks lingers, the biggest being GlaxoSmithKline’s 2012 $3 billion penalty over the marketing of antidepressants and a safety issue for a diabetes drug.

But there are ways that employee compensation around outcomes could change that. For one, it could instantly align each sales rep, and other commercial employees, with their customers — and with the patient. Suddenly doctors and pharmaceutical employees could be working to the same defined outcome goal for patients.

So, for example, part of the incentive compensation for the commercial team could be tied to real outcomes in patients in their territories. Certain territories will be more challenging — for instance socio-economic factors, diet, education, and behaviors like smoking could vary from area to area. Adjusting for that, a sales rep could have higher compensation potential for working in such areas and generating results.

Legally, salespeople can only talk about outcomes if they are approved in the drug’s label by the Food and Drug Administration — another reason to have more outcomes data determined in the testing phase. But commercial employees also could work to help improve outcomes through community outreach.

This reimagination of the sales rep as a health outcomes advocate would require some different skills and a new collaboration with health providers and insurers. Strategically, however, it could transform the value of the frontline sales force. Rather fighting for doctor time, the sales force could be a grassroots, public health army working and advocating for optimal health outcome in patients and the community. The opioid story, after all, might have been different if bonuses incentivized value instead of volume.

It’s hard to imagine this kind of transformation of values in this business. I’m not holding my breath. It seems like it would take payer or regulatory intervention.

One thought on “Pharma’s incentive problem

  1. Sounds great but you have 2 very strong skills sets that are probably driven from 2 different point of views. Sales rep. POV: You keep your job by $$$ earned. You don’t have to believe in product to make $$$
    Recovery Coach, POV. Your drive is making a difference in people’s lives and so the product must be effective.
    So how do you reconcile drugs that make drug addicts and $$$
    Recovery coaches that love sales and have a heart for making a difference in peoples lives. Slower return on investment. Bad business model in today’s age of RUSH…


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