Last updated: December 16, 2013 11:59 pm

GSK scraps sales rep targets after scandal

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A Chinese national flag is seen in front of a GlaxoSmithKline office building in Shanghai©Reuters

GlaxoSmithKline is to scrap individual sales targets for its commercial staff as it seeks to repair its image and reform working practices in the wake of allegations in China that its staff paid officials up to $500m in bribes.

The move comes amid concerns over aggressive marketing across the pharmaceutical industry and follows a series of damaging regulatory probes leading to a record $3bn fine in the US last year.

In a plan presented to GSK executives on Monday, the UK-based company is to eliminate bonuses linked to the use of its medicines by prescribers visited by its sales representatives. Instead, in a first for the drug industry, it says its pay awards will be linked to improved patient care and company-wide performance.

Over the next two years, it will also stop paying speaker fees to doctors outside the company for giving talks about its medicines to fellow prescribers, and cease funding travel by doctors to medical conferences – sums understood to total more than £50m a year.

Sir Andrew Witty, chief executive, said: “This is about getting better in step with what society wants as well as reflecting the modern use of technology. The time is right to take advantage of new approaches.”

Sir Andrew insisted the reforms had been long in the planning and were less related to China than to broader GSK reforms including transparency, access to medicines and the adoption of information technology.

The measures risk alienating GSK’s existing commercial staff as well as many doctors who rely on drug company support for their own medical education in the absence of alternative sources of funding.

But drug companies are under increasing scrutiny for marketing practices that have triggered investigations by regulators around the world, as well as US and UK cross-border probes as a result of anti-corruption legislation.

Against a backdrop of escalating fines imposed by US regulators in recent years on drug companies, GSK received a record $3bn penalty last year for marketing its products over many years beyond their authorised uses, including through lavish entertainment in holiday resorts for doctors.

The Chinese authorities in July said the company bribed local doctors and officials to prescribe its products, with money channelled through travel agents.

Industry critics have been sceptical of previous voluntary efforts by drug companies to curb excesses as well as the current system of regulatory penalties. Tim Reed, head of Health Action International, a European watchdog, welcomed the reforms but said: “It is like marking your own homework. The only way to properly control promotion is strong and enforced regulation by the state. There also needs to be a system of substantial penalties which match the gravity of the transgression.”

Policy makers in the US and Europe have pushed for growing transparency, with requirements introduced in recent months for drug companies to publish the sums and names of doctors receiving travel, entertainment, research or other funding.

As governments and healthcare insurers step up their focus on the cost effectiveness of medicines, individual doctors are also losing their discretionary prescribing power. Drug companies have cut back on large numbers of sales reps in favour of more targeted specialist marketing including greater use of online medical education.

GSK introduced a “Patient First” policy in the US in 2011 to delink sales bonuses from individual performance, which created frustration by some of its sales staff. But the company argues it has received positive reactions from doctors and seen a growth in sales as a result.

AstraZeneca, the Anglo-Swedish group, two years ago took the lead in announcing a ban on paying doctors’ travel expenses to international medical conferences, although until now no other leading companies had followed its practice.

GSK said it could still help support some doctors’ travel to conferences, but only by contribution to foundations that would decide recipients independently. The company will continue to pay consultancy fees and provide research funding to doctors, hospitals and academic institutions.

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