Today, GlaxoSmithKline (GSK) announced that they will stop paying healthcare professionals for speaking engagements and for attendance at medical conferences. Furthermore, GSK announced they will abandon individual prescription sales targets. They are looking to have the new compensation system in place in all of countries GSK operates by "early 2015."
Specifically, GSK states that they will "end the practice of paying healthcare professionals to speak on its behalf, about its products or disease areas, to audiences who can prescribe or influence prescribing." They will also stop providing support "directly to individual healthcare professionals to attend medical conferences." Instead, the company will "fund education for healthcare professionals through unsolicited, independent educational grant routes." GSK will still pay fees to doctors carrying out company-sponsored clinical research, advisory activities, and market research, which it said were essential in providing important insights on specific diseases.
GSK's further changes include tying global sales representatives' pay to the quality of services sales reps provide to doctors, their technical knowledge, and the overall performance of GSK's business, rather than to prescriptions.
The company's announcement comes amid a major bribery investigation in China, where authorities have accused GSK of funneling up to 3 billion yuan ($494 million) to travel agencies to facilitate bribes to boost its drug sales. However, the Chicago Tribune reports that GSK said the measures were not directly related to its Chinese problems and were rather part of a broad effort to improve transparency.
The CEO of GSK, Sir Andrew Witty stated: "We recognize that we have an important role to play in providing doctors with information about our medicines, but this must be done clearly, transparently and without any perception of conflict of interest."
GSK's changes to its sales practices could very well be a sign of things to come. With member pharmaceutical companies under scrutiny for marketing drugs, many may be forced to follow suit.
This is the first time a company on a global level has discontinued the practice of paying physicians to speak about their products. This is an unprecedented move and will send ripples throughout the industry, though this is a phased in implementation with the total ban not taking effect until 2016. One physician we discussed this with today was disappointed that GSK has asked him to speak and now is backtracking on the legitimacy of his involvement in speaking for them.
GSK is not the first company to stop paying for physician travel. In 2011 Astra Zeneca also announced they were no longer paying for physician travel unrelated to core business. Given the difficulties that GSK has had with their travel agents in China it makes perfect sense for them to discontinue this practice on a global level. For the US market this is not an issue, travel for US physicians attendees to accredited educational events has been banned since the 1990's.
There has not been a great move at companies to adopt this policy since the Astra Zeneca policy. If more companies do adopt a no travel policy it will have a direct affect on US and European medical congresses, such as ASCO and AHA. Many of the international attendees have their travel supported by industry.
For sales compensation, this policy follows the guidelines with the corporate integrity agreement that GSK completed with the US federal government to ensure that they don't get in trouble outside the US for aggressive sales policies. The model of compensation is new, so it will be interesting to see if there is a flight of sales representatives to other companies, or the net effect on sales this year in the US and next year in rest of the world.