Just as the Supreme Court is weighing the compensation system for pharmaceutical sales representatives at GSK (will the word "sales" ever be the same?) so too is ... GSK.
I was recently briefed by a senior GSK executive on that topic as well as about the company’s pending agreement in principle with the DOJ.
I wanted to talk details. He wanted to talk about Deirdre Connelly, GSK’s President for North America Pharmaceuticals and her views of a post-settlement company.
His meeting. His agenda.
Specifically, I learned that Deidre’s favorite topic, “is the future and how potential recidivism will not be tolerated.”
GSK, according to my interlocutor, is a company that’s ready to look ahead with some fresh ideas.
We’ll have to wait and see on the specifics (of both the DOJ settlement as well as what those new approaches may be) – but a recent speech by Ms. Connelly (at the CBI 8th Annual Pharmaceutical Industry Compliance Congress) lays out some initial propositions – about values, compliance, and a new model for pharmaceutical representative roles, responsibilities – and compensation.
Here are some snippets from that oration.
Since January of 2009, the Justice Department has reached settlements totaling nine billion dollars against healthcare companies. These cases involved alleged false claims, fraud, and FDA violations.
As someone who decided more than 25 years ago to pursue a career in the pharmaceutical industry, I ask myself: what’s going on? Why is this happening? What went wrong?
The answer, I believe, is that, in some ways our industry lost its way, and failed to fully appreciate the evolving expectations of our stakeholders.
Society holds our interactions with our customers – healthcare providers and payers – to a higher standard. And it should. Society expects our business to be conducted openly and transparently and in a way that does not create even a perception of inappropriate influence.
To be fair, our industry has made significant changes in how we operate over the past several years. What our critics either are unaware of – or choose to ignore – is that our industry adopted the PhRMA Code almost ten years ago, which serves as a baseline for how we should work with healthcare providers and institutions. The industry then strengthened the code in 2009, making additional changes in areas such as meals, continuing medical education, support for educational and professional meetings, and the use of consultants and speakers, among other things.
But negative perceptions remain. Some of this has to do with long-running government investigations, litigation over past practices, and the resulting news coverage that makes it look like we still take doctors on trips to exotic locations –which we don’t. Some of it is because we haven’t done enough to communicate what we do and don’t do. Some of it is because industry bashing is good politics. Some of it is because we still make mistakes. No matter the reasons, at the end of the day, we must regain the public’s trust in our industry.
So, what should we do?
Of course, we must comply with the laws and regulations that govern how we in the pharmaceutical industry are required to operate our business. That is not subject to debate or open to interpretation. It’s a given.
But our customers need to understand – that beyond compliance – we operate from a core set of values that underpins every decision we make and every action we take. A values-based culture creates a framework and a mindset in which compliance with rules and regulations is not the ceiling, but the floor from which our organizations should operate.
In my mind, three key elements make it happen: First, you have to be willing to break the mold and fundamentally change your approach to certain aspects of your business. Second, you must align your resources with your values. And, third, you must demonstrate leadership based on those values.
To help ensure that the behavior of our representatives is consistent with our values, we’ve also decided to break the mold and change the way we provide incentive compensation to our sales representatives.
In the past, like other companies, we based the variable portion of the compensation for our sales force on the volume of prescriptions they obtained in their sales territory. That is no longer the case. We are now in the process of putting in place a new incentive compensation system in which individual sales representatives are not bonused on scripts, but on three factors: an assessment of their scientific and business knowledge; feedback from customers in their region, including demonstration of our values; and overall performance of the business unit they support.
Importantly, we’re shifting our focus from obtaining the next script to providing the information and support our customers want and need. We may not be able to provide all our customers with everything they want, but what we do provide will be aligned with what they need to treat their patients better.
As part of our performance management process, our employees have a values and integrity objective included in their annual performance plans. They are evaluated for not only “what” they do, but also “how” they do it. This enables us to incorporate a behavioral component into our performance evaluation process, further supporting our commitment to the company’s values.
We’ve also made a significant investment in establishing 60 Integrity Champions who provide training and support so that we can further ingrain accountability for values and compliance throughout the business.
Ultimately, you get returns from what you invest in and what you reward.
But I believe the greatest imperative for us, as leaders, is to look forward and examine what more we can do to ensure our practices are in step with societal expectations.
Our customers are watching.
The complete text of Ms. Connelly’s speech can be found here.