Impact of GSK Ending Direct Payments to Physicians

GlaxoSmithKline's recent decision to end the practice of paying doctors is about more than just putting patients first: the drugmaker's sales and marketing efforts are not as influential as they once were.

GlaxoSmithKline recently announced it will end the practice of paying healthcare professionals to speak on the drugmaker’s behalf, about its products or disease areas, to audiences who can prescribe or influence prescribing. Translation: no more payments to physicians for speaking engagements or to attend medical conferences.

Bill Sigmund, senior vice president of medical affairs in North America for the pharmaceutical manufacturer, says the move is in response to the needs of patients, healthcare professionals, and societal expectations.

“This is really a natural progression in an evolution to operate more openly and transparently,” Sigmund says. “And that when we engage with a physician or any healthcare prescriber, our healthcare professionalism is that the patient’s interests come first. It’s really a reflection of our values as a company.”

The evolution

Sigmund says the company has made several changes in recent years related to its most recent announcement. For instance, in 2011 the company changed the way it compensates sales representatives, removing individual sales targets from sales representatives’ compensation.

But he also stresses that the change is “bigger than the compensation piece. It’s actually a bigger philosophy in that we believe that sales representatives should be measured by the value that they provide to healthcare professionals, so that healthcare professionals can make good treatment decisions.”

With regard to transparency and the recently announced changes, Sigmund acknowledges that perception is reality. And in some cases, patients may have the perception that perhaps their physicians are prescribing medications because they’re being paid to attend medical conferences.

“That is the issue,” he says. “I think there is a perception of conflict of interest, which can become reality in regard to the perception and the mistrust that could be there. So I think this is really a way to ensure that we are completely free of conflict of interest perceptions.”

Dollars and cents

Morten Hjelmsoe, chief executive officer and founder of Agnitio, and an expert and visionary within pharmaceutical marketing, acknowledges Glaxo’s commitment to putting patients first. But he also believes that the company’s recent decisions are a reflection of that fact that its sales and marketing efforts are not as influential as they once were.

“Insurers continue to have a growing voice in patient treatment,” Hjelmsoe says. “So, from an economical standpoint, it just does not make sense to dedicate dollars toward programs that no longer generate an impact.”

Sigmund does not expect physicians to be adversely affected by the company’s newly announced policy changes. He explains that GSK has between 1,500 and 2,000 physicians in the US currently speaking on the company’s behalf, and approximately $2.8 million was paid out during the first nine months of 2013.

“If you divide that out, it’s not a lot of money that they would depend on,” Sigmund says. “And I think that the ultimate result is that we’re actually going to reach more people in meaningful ways to help them understand the information on our medicines.”

The new policy changes will be phased in across GSK’s global business by the start of 2016.

Relationship impact

How have physicians reacted to the announced policy changes? Sigmund, who oversees North America medical affairs, says in that capacity he interacts with a lot of healthcare professionals, and has not heard a single negative reaction.

If anything, he says the reaction has been a positive one.

“Our sales reps actually called each of the speakers on the day it was announced so they were aware, and there was nothing negative that I’m aware of,” Sigmund says. “And, in fact, there were compliments that we called, and compliments that we’re doing it differently.”

Where the impact might be felt, says Hjelmsoe, is in the physician-manufacturer relationship. He expects other pharmaceutical manufacturers, simply as a smart business decision, to follow suit.

“There will undoubtedly be an impact as pharmaceutical companies continue to lose opportunities to engage medical professionals,” Hjelmsoe says. “To combat this, pharmaceutical companies will need to evolve their selling proposition, delivering value beyond the pill, in order to remain relevant to clinicians. What is this new value pharmaceutical companies can share? It’s the education and resources medical professionals need to deliver personalized medicine and in turn a great number of positive outcomes.”

Sigmund says that’s exactly what GSK has planned.

“We’re also going to look at multi-channel capabilities; what kind of technology solutions do we need in order to ensure that patients are educated, because this is about the patient, and making sure that the appropriate decisions are made on behalf of patients,” he says. “And I think it’s going to come through all sorts of different channels in the way we do that.”