Trump’s policies may not have a direct effect on pharma sales forces, but expect overarching trends such as the healthcare mergers that affect rep access, demand for value, and rep compensation to continue to play out.
Despite the general anxiety over the impact of President Trump’s policies, when it comes to pharmaceutical sales forces, little of what he does will actually affect pharma sales-force strategies. The trends that are continuing to play out are declining rep access, the size of pharma sales forces, and the struggle with the concept of key account management, as well as trying to figure out how reps should be compensated.
As Robert Kelly – Sr. Principal, Sales Force Effectiveness CoE Leader, QuintilesIMS – points out, most of that company’s pharma clients in sales and marketing tend to work in annual business cycles, so what pharma companies were planning to do for 2017 was already decided in October 2016. “By no means are pharma companies going to change their 2017 sales-force sizing and targeting strategies based on what president won the election in November,” Kelly says.
The issues administration policies might take on – for example, drug pricing or mergers among healthcare companies – will impact the marketing side more than the sales side, according to Pratap Khedkar, managing principal at ZS Associates.
Access and sales-force sizes
Khedkar says one trend that will continue is that in-person sales rep access will decline and pharma will use more digital means to contact and communicate with doctors.
“One [factor driving that trend] is that the doctor doesn’t want to see the reps anymore and is getting more and more comfortable – especially the doctor that comes from a younger generation – with digital and nonpersonal means of getting information,” Khedkar says. “I think that generational change is irreversible.”
Last year, in fact, “the number of digital touches to doctors finally exceeded the number of human touches to doctors,” Khedkar told Med Ad News.
While it is true that physicians do not open up every e-mail companies send to them, pharma is reaching out more by e-mail and other digital means rather than by rep visits.
“The fact that pharma is pumping out more touches without reps than touches with reps, that’s an unprecedented milestone, because the rep touches had been declining by 3 or 4 percent per year, whereas these non-rep touches have been increasing about 36 percent a year,” Khedkar says. “In that sense, the idea of the rep access not getting any better and the slow decline will continue.”
According to Khedkar, another factor influencing this slowdown in rep access is the merger and consolidation of healthcare provider systems. “Typically, the IDN that has the more restrictive policies ends up spreading those policies to the other entity,” he says. “So if one IDN was more rep-unfriendly – in that none of the hospitals, reps are allowed in, or in the private practices reps were not allowed in, or if they were allowed in only two days a month, with appointments, or something like that – then that sort of policy actually spreads more easily after the merger. They’ll tend to have one set of policies and it’s very unlikely that they’d undo a more restrictive regime that has been put into place over the last few years.
“So that may be the reason why rep access slowly gets worse. We have tracked it and we have seen an unmistakable pattern over the last three years.”
Although he believes nothing the Trump administration will do would directly affect pharma sales-force strategies, the repeal of the Affordable Care Act may “put the chill” on mergers between healthcare entities, especially payers and providers, Khedkar says. “So if this uncertainty puts the chill on merger activity among the providers for awhile, that may slow down this trend of declining access,” he says, but “access will continue to be a challenge.”
Surprisingly, the overall size of the pharma sales force has steadied and is even growing slightly. At the peak in the mid-’90s, there were about 102,000 sales reps. That number declined to 64,000, “and now it’s been stable for the last three years,” Khedkar says,
In the beginning of 2016, industry observers noted a small uptick, to about 66,000 or 67,000 reps. Khedkar says this modest growth is expected to continue, as many more products are expected to be approved, especially in oncology in the next two to three years.
And despite the increase in the use of digital to promote to physicians, when it comes to specialty products such as oncology drugs, “the sales force is still quite, quite important. Probably more so than in the small molecule space,” Khedkar says.
Although pricing of these new specialty products is a hot issue and will likely remain so, even if there were restrictions on pricing of these products it would be unlikely to affect the size of sales forces, Khedkar says.
The reason is that there are fewer physicians prescribing specialty drugs – for example, there are only about 10,000 oncologists in the United States.
“I end up, as an oncology marketer, sending the sales force after all of them, and I probably don’t need more than 100, 150 sales people,” Khedkar says. “And it’s not a matter of profitability. [Even] if I launched at a price that was 20, 30 percent lower than what I would have launched at before, that actually doesn’t make a difference, because every oncologist is quite valuable, and making sure that my drug is available to the last possible patient, I will go to every office. The fact that I have a 100 versus 150 is not going to make any difference to my bottom line.”
In other words, “swings in price don’t seem to impact sales-force resourcing all that much” in the large molecule drug market, Khedkar says. He adds that pricing issues do have an effect on the small-molecule drug market but the future pharmaceutical market is going to be dominated by large-molecule drugs.
Kelly agrees that the concept of large primary care sales forces is not the norm anymore, and that the new products launching are specialty driven. “Even some of the mature products in the market that are still actively being promoted are largely being driven by dedicated teams that are smaller in size, because they have a focus on the specialist, such as rheumatology or gastroenterology,” he says. “So what we’re finding is that even the large pharma companies have multiple sales forces of a smaller size that are dedicated to focus on therapeutic areas rather than the gigantic sales forces, with three reps to one territory and about 500 reps in each sleeve. Those days seem to be behind us.”
Pharma companies also are coming to realize that the traditional reach and frequency strategy is no longer the right approach to determining the size of a sales force, Kelly told Med Ad News. “Some physicians should be recognized as being more important in a targeting strategy because of their open payer access or perhaps their patient population having the ability to pay for a higher copay, while other physicians should be reprioritized in value because of their restricted payer environment or their patient population not being the right mix for the adoption of the promoted brand,” he says.
There is much more data companies can use, especially patient-level data and data that shows formulary restrictions, to determine rep strategies. “Maybe your product is blocked on formulary, so if the doctor is writing 1,000 prescriptions, it shouldn’t really be treated like the doctor is writing 1,000 prescriptions if half of those prescriptions are no longer accessible for your product,” Kelly says. “On the flip side, if the patient in the office doesn’t have the ability to pay for a higher co-pay, that’s a hurdle you need to overcome. So you’re not going to send the rep in there two times a month when the doctor is not going to able to write as much as you’d like them to write.”
Focus on service and value
Just because the more business-friendly GOP has the majority on government, pharma will not be able to avoid conversations on drug pricing.
“Even if you get classic Trump or the normal Republicans, the private sector will get an upper hand,” Khedkar says. “And the private sector, which is dominated by very large companies like the seven big insurers and PBMs, or 50-60 big provider networks, they will always want to make sure they are paying for value and they will put the pressure on pharma to make sure that does happen.”
According to Kelly, the companies that empower their sales representatives with data to have pharmacoeconomic conversations with their customers to talk about outcomes relative to total cost of treatment rather than just the price of therapy will be the more successful companies.
“Sales forces need to be armed with patient level outcomes data and be given proper training to have those types of conversations with their customers,” Kelly told Med Ad News. “Patient level outcome data make for richer conversations between the sales representatives and the healthcare professionals.”
Additionally, with a continued focus on drug pricing, Kelly believes that there will be more outcome-based contracts created between pharma manufactures and payers.
The main thing about sales forces going forward is that reps “will not be the main story anymore,” Khedkar says.
In the past, companies had armies of sales people, and these reps had one fairly undifferentiated role. But according to Khedkar, with the push in distinguishing the value of products and the necessity of dealing with payers and providers instead of just physicians and patients, company reps are playing many different roles. These roles include reimbursement reps who help patients, or nurse educators who help providers, or medical science liaisons to help educate physicians doctors.
“The thing is, instead of that one rep role that focused on generating demand, the story is shifting to, here’s 25 more roles, none of them having anything to do with generating demand,” Khedkar says.”It has much more to do with providing customer service, or getting some sort of information or other thing to the physician, to the payer, such as an HEOR that focuses on health economics. So reps are very specialized, in different roles, that are really not about selling anymore.”
Customers and KAM
The new sales force is not a sales force, but “a customer-facing field force with a variety of different roles that have to work together,” Khedkar says.
With this concept of a customer-facing field force has come KAM, or key account management.
“This is a thing we get asked about all the time,” Kelly says.
According to Kelly, every company is trying to solve the problems posed by how to best serve integrated delivery networks (IDNs), as more physicians leave private practice and are absorbed into these systems. “We’re kind of still early in that trend of how to respond to that corporatizing of physicians,” he says.
Many companies have tried to put KAM teams into effect, but have not been particularly successful, Khedkar says.
The problem is that KAM team members “get treated as glorified super sales reps,” Khedkar says.
“The sales rep in pharma is always a seller,” he says. “You give them a message and they are expected to convey the message. But a good KAM is actually a very good listener, meaning that they really understand in depth the complex organization that is their customer.”
Another reason why pharma companies have not been able to implement KAM effectively is that companies are still wrestling with the concept of promoting the value of their drugs.
“One phrase I like to use is, ‘guns without bullets,’” Khedkar says. “The KAMs are like great guns, maybe they are amazing people, but you have one meeting with a CEO or CMO or CFO of a provider network, what are you going to have your second meeting about? What is your value proposition, from a pharma company’s perspective, beyond the pill?
“If you don’t have any additional service that you can talk to, that you can actually help that particular customer’s metrics as opposed to your own, you’ve kind of failed in creating something special, something different. That has not happened because marketing in pharma is basically still sitting in that old mold of, ‘Let’s come up with the best product messages, we’ll do some physician research, and we’ll push it out.’”
Khedkar says the fact that most companies have not created successful KAM programs is “disappointing.”
“I think many of the more important questions that are necessary for a KAM to succeed were never answered,” he says. “In fact, the most common way of saying this is it is not a role, it is a program. People will say, yes, KAM, I know all about it, let’s try 10 of our own, we’ll just hire 10 people, or better yet, just take 10 people from a DM [direct marketing]to a KAM role and expect everything to work out.
“But it’s not a role, it’s key account management, not key account manager. Key account management means that the whole organization has to transform, marketing has to change the way they listen to customers, they way they train, the way they approach these people in these organizations is very different than what was ever done with sales people. There is a lot of promise but it’s not been executed or designed very well so far, so many companies are kind of smarting from that, saying, you know it didn’t quite pan out on its promise.”
The industry needs to revisit the KAM concept, Khedkar says, “We have to go back and revisit that and make sure that the industry does it well, because the future is still going to belong to large providers and payers, regardless of what the Trump administration does,” he says.
“One thing it will never do is hobble the private sector.”
The rules of compensation
As physicians become more unreachable and companies try and focus more on customer service than sales, the question of how sales forces should be compensated comes up.
Companies will not be compensating on sales, but on other objectives, Khedkar believes. “This change will be a very interesting one, because you almost go away from calling it the sales force to calling it a customer-facing role, because that implies that it is not just about selling,” he says.
The shift of the industry from primary care drugs to specialty drugs has additionally affected what reps expect in salaries and compensation. According to Dan Ganse, general manager, Incentive Compensation CoE at QuintilesIMS, primary care sales representatives are looking to move into specialty sales. Reps surveyed by QuintilesIMS report higher salaries and base compensation in specialty drug companies, and view these positions as a step up in the career ladder.
However, even for specialty drug reps, and even with the emphasis on providing customer service, Ganse reported that companies have not changed their practices. “You’re given a goal, you’re asked to go out and achieve it, and that is primarily the same way” primary care reps are compensated, he says. “Ultimately companies are looking for some [drug] sales performance, which they track against their goal.”
Ganse says he does not believe that pharma companies will stop emphasizing script and sales performance when it comes to determining rep compensation. But he has seen “some traction” with the use of anonymized patient data, particularly with tracking how many patients are new to the brand – those being prescribed a drug for the first time instead of a refill.
“Doctors are reluctant to switch patients, so if you get someone who is writing new scripts, and those scripts are actually new patients, that is more valuable,” he says.
And companies are starting to consider at that metric more often in designing rep compensation programs, though it is not a main consideration. According to Ganse, 15 percent of the companies QuintilesIMS surveyed in its 2015 compensation study said they considered the new to brand metric as part of a rep compensation or contest program, and that number rose to about 30 percent in 2016. “It’s doubled, but it’s still not a dominant metric,” he said.
GSK’s different approach
Only one company in the pharma industry has openly stepped away from compensating its reps based on sales targets, and that is GlaxoSmithKline.
According to Cheryl MacDiarmid, senior VP of U.S. primary care sales for GSK and one of the senior executive team members in the United States, the decision to separate rep compensation and sales targets was made as part of the company’s efforts to become more transparent. The company also made available its clinical trial data registries and stopped paying doctors to speak on its behalf.
“We were the first and I think still the only company in the industry that has eliminated individual prescription sales targets as a bonus measure for our sales professionals,” MacDiarmid told Med Ad News. “What that means is that they are no longer compensated or bonused on prescriptions that they generate in their territories where they work. Instead, they’re bonused and compensated on their expertise, their knowledge, their selling skills, their planning capabilities, etc.”
According to MacDiarmid, a measure of a rep’s bonus comes from their manager’s evaluation of their capabilities, such as selling skills, product knowledge and planning skills. “And then there’s another component of their bonus, which is similar to anyone else at GSK, and it is a financial measure, but it’s at a corporate level as opposed to a much higher level than their actual territory performance,” she says. “It’s very much around their own behaviors. We have robust ways to measure that and calibrate that, and make sure it’s fair and equitable, in terms of their leader’s evaluation of them.”
MacDiarmid admits when it came to GSK instituting its transparency measures, “It was a bumpy start, I’ll be honest – but I think we’re in a much better frame now.”
GSK is using technology, specifically Veeva’s sales and CRM platform, to assist rep knowledge and efficiency. “Instead of having some educational resources or sales materials that are on paper, and some are digital, all of a sudden we have the opportunity to wrap all of that off of a digital platform,” MacDiarmid says. “It’s a lot more professional in the customer interactions themselves as we’re not groping for different resources or different tools or flipping across different platforms.”
GSK has been using Veeva’s technology globally but will only be training U.S. sales forces on it in this quarter.
MacDiarmid says the use of Veeva’s platform by sales forces outside the United States has been very successful, and she believes that there will be the same success by sales forces in the United States.
“Before I was in this role, I used to run a sales organization in primary care. And as we were embarking on the decision to actually launch Veeva in the U.S., I was really deliberate in wanting to ensure that I could see and put into my own hands what this technology looked like, felt like, and what our sales professionals were going to experience,” she says. “We’ve done so many different technologies over the last many years and they don’t always land well necessarily in the hands of sales professionals. It was really important to me that I saw it and experienced it myself before we actually decided what we were doing.”
MacDiarmid invited into the meeting with Veeva some of GSK’s strongest – though not particularly tech savvy – sales professionals to see their reactions.
“Long story short, it met my expectations and beyond,” MacDiarmid says, and the sales people were extremely receptive to the platform, describing it as intuitive and simple.
“I really believe that this will be another step that enables the next step of competitive advantage for us,” MacDiarmid notes.