A Novo Nordisk (NVO) drug sales rep's claim that he was fired for pointing out that the company might be illegally distributing free prescription samples through a web site highlights yet another way that pharmaceutical company managers are trying to reduce their reliance on their vast army of expensive reps.
This isn't a very sexy issue, but the majority of American drug companies depend on their sales reps to sell their drugs. Most drug companies' biggest quarterly cost is sales and marketing. "Wither the sales rep?" is arguably the most pressing question facing the industry today.
Free samples of new drugs are generally delivered to doctors' offices by sales reps who use the delivery as a chance to talk up the product to the doctor. Samples are often the only way reps can get a foot in the door. At one time, Big Pharma employed as many as 90,000 reps in the U.S. to buttonhole doctors and their office staff.
But as more doctors shut their doors to reps, and as drug company sales have declined due to patent expirations, the ranks of sales reps have been cut heavily. Nancy Lurker, a former Novartis (NVS) svp/chief marketing officer who now runs the contract sales organization PDI believes reps' numbers may sink as low as 50,000.
In the Novo case, former rep David Myers claims he was fired after complaining about a new web site Novo uses to allow doctors to order drug samples without seeing a rep. Myers' lawyer, Todd Bailess, told me that a potential problem with Novo's Medlink site is that anyone who obtains a doctor's DEA number -- such as a medical office assistant -- can order drugs. It's also not clear who signs for the Fedex packages when they arrive, he said. Unscrupulous medical office staff have been known to divert prescription pharmaceuticals. That may be a violation of the Prescription Drug Marketing Act of 2006, which requires strict chain of custody records for drugs, Bailess said.
Other anti-rep cost-cutting innovations include:
- Pfizer (PFE) operates a free samples web site, and reps are given a 48-hour window in which to deliver the sample by hand -- and get the selling opportunity -- or else Pfizer uses a shipping company.
- AstraZenenca (AZN) experimented by replacing most of Nexium sales force with a telemarketing center.
- And Shionogi & Co. (4507) started hiring "no-experience-necessary" reps at half the going salary rate for reps.
- Insult to Injury: Drug Company Only Wants Sales Reps Without Experience
- Death of a Salesman: AstraZeneca Replaced Entire Nexium Salesforce With Telemarketers -- and It Worked
Image by Flickr user Ramberg Medial Images, CC.