GlaxoSmithKline said Tuesday it will stop paying doctors in many - but not all - situations that it and other drugmakers do now and will make further changes to the compensation system for sales representatives by removing individual sales targets.
GSK is based in London, but has a facility in Philadelphia's Navy Yard and other facilities in the suburbs.
For decades sale reps made money by urging doctors to write prescriptions for a drug company's medicine. The more prescriptions written, the more money that went to the rep. That basic commission system exists in many industries and is still in use with most drug companies. To further encourage doctors to pick a drug company's medicine, drugmakers would pay doctors consulting fees, pay for travel to conferences in warm and sunny places, all under the guise of continuing education.
In the wake of a U.S. investigation that resulted in three criminal charges and $3 billion in penalties, GSK changed its leadership in 2007 and changed its U.S. sales compensation system in 2011. It was also the first to offer more disclosure on clinical trials, though that process is just starting. Tuesday's announcement means further changes to the sales rep compensation system with "no individual sales targets," according to the company. Reps will be evaluated and rewarded for "their technical knowledge, the quality of the service they deliver to support improved patient care and the overall performance of GSK's business."
A second (of many) point of pressure is an investigation of GSK by the Chinese government. GSK says it wants this compensation system to be in place "in all of the countries GSK operates in" by early 2015.
GSK would be the first major pharmaceutical company to publicly move toward ending "direct payments to healthcare professionals for speaking engagements and for attendance at medical conferences," according to the company statement. (Full statement here.)
"We believe that it is imperative that we continue to actively challenge our business model at every level to ensure we are responding to the needs of patients and meeting the wider expectations of society," CEO Andrew Witty said in the statement. "Over the past five years, this has seen us take significant steps to increase access to medicines in developing countries and to be more transparent with our clinical trial data. We've also made changes to how we work with healthcare professionals. Building on this, today we are outlining a further set of measures to modernize our relationship with healthcare professionals. These are designed to bring greater clarity and confidence that whenever we talk to a doctor, nurse or other prescriber, it is patients' interests that always come first. We recognize that we have an important role to play in providing doctors with information about our medicines, but this must be done clearly, transparently and without any perception of conflict of interest."