CSOs and the specialty sales transition	June 2009

Med Ad News spoke with Nancy Lurker, CEO, PDI Inc. (pdi-inc.com), about how contract sales organizations can help the pharmaceutical industry to fill its specialty sales force needs.

Med Ad News: With the growth of specialized medicine, will the nature of the pharmaceutical sales force need to change?

Nancy Lurker: Absolutely, the nature of the pharmaceutical sales force needs to change and is in the process of changing. There are some significant changes that are already occurring in not only specialty pharma companies but also large pharma.

Specifically in the case of specialty pharma companies, a lot of them, particularly if it’s their first drug being launched, are now looking much more seriously at using CSOs and not building internally. Additionally, with the increased regulatory risk around approval, you don’t know what your label is really going to look like anymore coming out of that process, which obviously impacts significantly the uptake of the product in the marketplace. So using CSOs is a way to manage your risk – just outsource your field force from the beginning. That’s probably one of the biggest changes we’ve seen.

The second important change we are seeing from the major pharma companies is a re-evaluation in how they deploy their sales forces. Now they are looking at much more variable types of reps, so they are deploying different reps beyond just the classical primary care/specialty care/hospital rep. They are looking at customer service reps, established market reps, long term care and hospital reps, and flex time reps, as well as ways they can just buy a detail and not buy the full capacity.

So, if you think about nurses as an analogue, there are some interesting parallels when you look at the hospital sector, where hospitals years and years ago used pretty much one type of nurse – the fully certified four-year RN. And what they found was, they really didn’t need a fully accredited RN nurse to take blood pressure and take patients’ vital signs in the hospitals. So that’s when they revisited the model and went to different types of nurses for different types of things, using LPNs for blood pressure and vital signs, for instance.

The same thing is happening in pharma where for a lot of established brands, they don’t need the high-end, highly-trained primary care rep to promote products that have been on the marketplace for five plus years and are already well established or for products that are nearing the end of their patent life. They can save substantial amounts of money and improve their ROI rather significantly if they begin to create a much more flexible model.

So that’s probably the biggest change we are seeing — flexibility is increasing where instead of using three types of reps, they are using five or six different types of reps to meet the different geographic and product needs that exist.

Med Ad News: So with this transition, needing a different type of rep, you’re suggesting outsourcing is a good way to go to quickly make that transition rather than try to build something from the ground up.

Nancy Lurker: Yes, it’s very hard to build those types of capabilities internally because there’s a lot of infrastructure cost associated with it. What pharma is very good at is turning out high-quality specialty reps and primary care reps. But what they’re less able to do is to turn out five different types of reps and be able to deploy them in and out as needed, in a rapid way, without causing significant disruption, both from a human resource management standpoint as well as a P&L standpoint.

Med Ad News: And in terms of managing this talent, is that something you can assist with as well?

Nancy Lurker: Absolutely, but you can do it either way. You can do it where it’s client managed or CSO managed. And there are pros and cons on both sides of those equations.

Med Ad News: In terms of managing a specialty care rep, what is different compared with managing primary care reps?

Nancy Lurker: Clearly pharma is going to continue to need their specialty reps, for example to provide assistance to pulse a launch product. Pharma is always going to continue to have a portion of their field force remain in-house, and specialty reps in particular. So, from that perspective, is the growth of specialty reps going to continue? Absolutely. But where the difference lies is at the margins. CSOs, and particularly PDI, can come in and help at the margin of the launch phase of products or where there are special needs for particular products.

If you need community service reps or long-term care reps or you’re in launch phase and you don’t know if you need 200 specialty reps or 100 specialty reps, that 100 rep swing is very expensive, and in many cases it behooves companies to say let me have 100 internal, but I’m going to outsource 100 so I can be much more flexible with the needs of the product depending on the competitive response and the uptake curve I encounter once I’m in the marketplace.

Med Ad News: Will performance measurement and incentive systems need to change?

Nancy Lurker: In some cases you’re seeing more of a shift, though I think it’s going to take time to really understand this, toward helping reps understand and be incentivized on treatment outcomes rather than just prescription volume. It’s going to take some time to make that shift, and I think there’s going to have to be some learning that will have to occur before the whole industry shifts that way altogether.

But certainly I think the Obama plan is going to encourage this so that the incentives of the rep become more aligned with the incentives that the doctor has, which is to improve health outcomes of the patient and not just drive prescription volume.

Med Ad News: In terms of the practicalities of your mission, when you’re providing reps across so many different specialties, how do you handle training?

Nancy Lurker: Oftentimes if you’re looking at a product launch scenario or even if it’s an established brand, the company has those training materials. We don’t create those training materials, other than what we do very well is what I would call basic training. This encompasses: How do you close a detail? How do you make sure you’re answering the physician’s questions appropriately? How do you get the most out of probing? This training involves selling skills as well as compliance, so those are probably the two critical areas where we have robust training programs in place. Making sure the rep has very solid selling skills, and making sure the rep is very compliant and that the compliance training is robust, are a key part of what we offer.

The product training is the client’s. Typically the client wants to manage this training because it’s their drug and they know it better than anybody.

Med Ad News: In your hiring processes, are you generally looking for different types of candidates when you’re looking for a specialty rep as opposed to a primary care rep.

Nancy Lurker: Oh, absolutely. Typically a specialty rep is much more experienced in the marketplace, has some specialty selling experience, and generally speaking has at a minimum a B.S. or B.A. degree, and often an advanced degree. They tend to be slightly more educated, have been in the marketplace longer, have had more extensive training and have more know-how than your average primary care rep.

But I would also state this. The day and age of, if you go back five years and beyond, when CSO reps typically might have had a little bit of pharma experience but were more coming up through the CSO ranks, and the perception at least was perhaps they were not as well trained as an in house pharma rep –that day is gone. And why is that? Because our access to the very best pharma reps is now terrific. We can get access to all the Merck, Pfizer, Sanofi-Aventis, Novartis, Wyeth reps – all who have been long-tenured reps with the top companies in the world.

Med Ad News: What’s the long-term viability of the pharma sales force? With shifting physician attitudes and tighter budgets, could we actually see the death of the pharma sales force in the not too distant future?

Nancy Lurker: First let me say this. Is it going to change? Definitely. And it’s going to change significantly. There is no doubt. Pharma right now is in the midst of a radical overhaul of their commercialization infrastructure and their field force structures. And it’s needed.
However, I would also go to the other end and say the death of the pharma sales force has been predicted many, many times, and it is yet to occur. And quite frankly, that opinion tends to originate more with consultants who perhaps want to be a bit provocative. I don’t think anyone truly believes it’s completely going away.

If you look at Europe where you have pretty much nationalized healthcare, though in different forms and flavors in all the major countries, you still have somewhere between 80,000 and 100,000 sales reps if you add up all the major countries in Europe. That’s not an insubstantial field force covering the per capita size of the United States.

So, I do not see the death of the pharma sales force. What I do see is a dramatic overhaul in terms of how the industry deploys their reps. I think the role that CSOs play is going to grow because they provide increased flexibility and higher ROI. I think you’re going to see an increased focus on specialty reps, but you’re going to a different type and different flavors of primary care reps. And you’re going to see a different way of approaching the doctors’ offices as well. I think non-personal promotion is going to grow as well as different ways that the sales rep interacts with the doctor’s office. That is all going to change and change significantly. But the day when the rep ceases to exist and a doctor only interfaces electronically, at the margin it’s definitely going to change, but in total, no.

Let me close by saying, there’s real value to a rep call, and doctors get value out of that interface with a live person, and I don’t see that changing 100%. Reps will continue to play an important role, however unlike in the past where it was the size of your field force that mattered the most, now the emphasis will rest on the quality and impact that a more tailored and flexible field force, comprised of many different rep types, can bring to both physicians and pharma alike.