Are Pharma Sales Reps Service Employees?

Are Pharma Sales Reps Service Employees?

The Supreme Court agreed to decide whether drug companies have to pay their sales representatives for working overtime hours, "a question that could have considerable financial impact on the industry," according to the Wall Street Journal (see "Supreme Court to Decide if Pharma Reps Are Exempt from Receiving Overtime Pay"). The question (see here) before the court in case "CHRISTOPHER V. SMITHKLINE BEECHAM CORP" is:

The outside sales exemption of the Fair Labor Standards Act exempts from the overtime requirements of the Act "any employee employed ... in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary ...)." 29 U.S.C. § 213(a)(1). The Secretary of Labor has implemented various regulations that "define and delimit" the outside sales exemption and, filing as amici in this and other related matters, has interpreted these regulations to find the exemption inapplicable to pharmaceutical sales representatives. A split exists between the Second and Ninth Circuits concerning whether this interpretation is owed deference and whether the outside sales exemption of the Fair Labor Standards Act applies to pharmaceutical sales representatives.
The questions presented are: 

1. Whether deference is owed to the Secretary's interpretation of the Fair Labor Standards Act's outside sales exemption and related regulations; and  
 
2. Whether the Fair Labor Standards Act's outside sales exemption applies to pharmaceutical sales representatives.

If the Supreme Court rules that pharma sales reps are NOT exempt as per Q#2, some sales reps worry that they will become "service" employees. "This will be a similar model to UPS / Fed Ex etc. Log in.............track activity..........gps............clock out at 5:00 pm." (see this CafePharma thread in the GSK discussion board).

This is interesting considering that the pharmaceutical industry is now moving away from the sales force being the primary channel of promotion focused on a narrow stakeholder audience to that of "a multi-faceted influence model where it has to really maximize its return on investment,” according to Mark Sales, Head of Global Brand and Stakeholder Management at Kantar Health (see "The Changing Pharma Commercial Model in 2010 and Beyond"; a PMN article sponsored by Kantar Health). The new sales model drivers are all about becoming more customer-centric and service model-focused. So, a NO ruling by the Supreme Court in this case would be a good thing for the pharmaceutical industry, aside from the billions in additional expenses?

Reps also worry that their companies would cut back on the number of sales reps and overtime hours to forestall the added expenses going forward. "The problem is that if overtime has to be paid out it will lead to more cuts," said an anonymous CafePharma poster. "Lets face it, the impact of reps has been going down for quite a while."

What do pharma sales reps do in "overtime" (after 5 PM) anyway? It may be "role-playing": "Would the role playing to India at 9:00pm count as overtime?," asks another anonymous CafePharma poster. "Get ready for bye bye role plays after 5pm," said another.

Some reps do not think this is an issue at all: "Since most reps really only work a couple hours a day, this really looks like a non-issue." To which this response was made:

"Actually it's a huge issue! Other big pharma companies have had to pay and pay big! This could cost GSK hundreds of millions. As to your comment about a couple of hours, please stop with that nonsense. I avg about 9 hrs per day. It's not back breaking work (that's why I went to college) but it is work. Inventory at the storage facility, lifting boxes, conference calls, emails, coordinating lunches/dinners, knowing and understanding the complex molecules and how they interact invivo/invitro, analytics, ability to utilize Microfoft word/excel, intrapersonal skillls, the list goes on an on...oh but you say reps only work 2 hours. When are reps supposed to answer email, voicemail, build a business plan? On their office day? Ohhhh that's right, there is no office day. So when does all this work get done? According to you we only work 2 hrs a day. C'mon dude! Look, I'm not saying the law suit is a good thing, but the pharma companies had their cake and got fat eating it."

Deconstructing Pitts' Guiding Principles for Pharma Social Media

Deconstructing Pitts' Guiding Principles for Pharma Social Media

Peter Pitts over at DrugWonks Blog has put together 11 "principles that must serve as the basic substrate of regulated social media participation" (see here). Pitts offered these principles because he is urging the pharma industry to participate in social media and not wait for FDA guidelines "not because of its potency as a marketing vehicle – but because it’s the right thing to do." Let's take a closer look at "Pitts' Principles."

Principle  1. "We engage in social media to help improve the lives of patients and advance the public health of our nation."

"improve" is the key word here. We all have different definitions of what it means to "improve  the lives of patients and advance the public health of our nation." I, for example, think it is very important to make sure all Americans have affordable healthcare insurance and support efforts to close the gap in Medicare Part D coverage (ie, the "doughnut hole"). The drug industry may not agree with me 100% on this. Lilly, for example, hosted a Twitter "chat" that tried to convince people that Medicase isn't broken, so don't fix it, but I asked "Was Lilly's #mmeds Twitter Chat a Discussion or a Press Conference?" (read this post). Also see "More Pharma Twitter Chats: Medicare is Topic."

Even if we agree on how to improve patient lives, it has not been proven that social media actually can help in this effort. There are plenty of other ways that the drug industry can -- and does -- do things to help improve patient lives. Perhaps social media can help in those efforts (see, for example, "Boehringer Ingelheim and Ashoka Make More Health via Social Media."

Principle 2. "We will thoughtfully engage in social media while remaining in compliance with both the letter and the spirit of FDA regulations."

The word "thoughtfully" requires definition, IMHO. There have been many occasions when pharma companies have seemed to put little thought into their social media activities (see, for example, "BI Masters the Art of WOM through Its 'Parrots,' er, Spokespersons"). 

Seriously, however, "thoughtful" implies best intentions as in showing consideration for the needs and sensibilities of other people (eg, "how thoughtful of you!"). Perhaps Pfizer lacked "thoughfulness" when it promoted on FaceBook a Chapstick ad that angered quite a few women (see "Pfizer's Facebook Fiasco: Chapstick Slapstick Ad Uses Woman's Ass as a Prop").

Principle 3. "Our social media engagements will have both strong public health themes and appropriate marketing communications."

IMHO, "appropriate marketing communications" is the big elephant in the room that cannot be dealt with UNTIL the FDA says what is and what is not "appropriate." This requires more than being compliant with the "spirit of FDA regulations" as noted in Principle 2. It requires being compliant with the "letter" of FDA regulations. Of course, without the "letter" being written by the FDA, there can be no compliance with it.

Principle 4. "All social media messages and partnerships must be accurate, appropriate and transparent."

Pitts said "One principle that runs as a red thread throughout all of these 11 principles is transparency. Real, honest transparency – not the usual translucency that 'in compliance' often brings." I can't agree more. But this is where the drug industry will have problems. I can cite many instances of lack of "transparency" in pharma's social media activities that I have blogged about. For example, during a Lilly-hosted Twitter chat about Medicare, I suspect an employee or agent hired by Lilly posed as an ordinary citizen (@ellsbelles3) who posted "I keep hearing that Medicare Part D is working and not to change it. what does that mean?" This sounded suspiciously like a setup from a phony ordinary citizen similar to "Joe the Plumber" (see "Was Lilly's #mmeds Twitter Chat a Discussion or a Press Conference?"). Although I suspect that Lilly was not being transparent about this, I cannot prove it. That's the problem with transparency in social media -- nobody can prove you are not a "real patient" and it's very easy for unscrupulous players to manipulate the game (ie, conversation).

Principle 5. "We believe that social media presents multiple opportunities to learn more about how our products impact the lives of patients."

Sounds good to me. I hope that pharma is actually listening and learning. It would be interesting to know exactly what the industry is learning about its products from monitoring social media. However, very few companies will even admit they are monitoring social media for fear that FDA will learn that they are not reporting adverse events they hear about (see Principle 7).

Principle  6. "We believe that social media engagement allows us to correct errors and misperceptions about both our company and our products."

"correct errors and misperceptions" is really a slippery slope. Who defines what is "correct" and "not correct"? There are many scientific studies and clinical trials whose results are challenged by the drug industry but that are accepted as correct by other experts. All sides of a debate involving scientific evidence should be discussed with the (transparent) participation of the industry. But if the goal of the drug industry is to "correct" other points of view, then the industry will not be engaging in discussion but trying to manipulate it. Also, keep in mind that the industry itself has often been caught make false statements about its own products -- hence all the warning letters from FDA!

A little pedantic aside: "misperceptions" is a curious word choice. Since Pitts is known to choose his words carefully, the distinction deserves some analysis in the present context of "misperceptions" of drug products by the general public.

According to Grammarist: "To perceive is to become aware of something directly through the senses. To conceive is to form something in the mind or to develop an understanding. So to perceive is merely to see something, and to conceive is deeper. But perception often involves passive evaluation, and this is where the line between the verbs perceive and conceive becomes blurred. Think of perceptions as relatively shallow interpretations, and conceptions as more creative interpretations involving substantial thought or imagination. Think of a misperception as a mistaken impression... and a misconception is a mistake of imagination or interpretation." A simpler distinction: Misperception, means to not understand, misunderstand; Misconception means a mistaken thought.

It's possible that patients, for example, might believe that a muscle ache after being prescribed a statin for high cholesterol is a side effect of the drug. This could be a "misperception" (not a a true pain) or a "misconception" (a real pain but not caused by the drug). Another example: some patients may believe the risks of a drug outweigh the benefits and then decide not to adhere to the treatment regimen prescribed by their doctors. Is this a "misconception" or a "misperception?" Of course, it may be neither: the risks may actually outweigh the benefits!

Anyway, perhaps a better word to use in this context would be "misunderstandings."

Principle 7. "We believe in using social media to discover adverse drug experiences, which will then be addressed off-line."

I like this, but would like to see more real-world examples. I recall only one example of a pharma company that has publicly embraced discovering AEs via social medias: ie, UCB, which partnered with PatientsLikeMe  to create an online, open epilepsy community that includes a pharmacovigilance program to monitor the site for adverse events and report directly to the FDA adverse events associated with UCB products (see "Finally, a Drug Company Embraces Social Media, AEs Included!"). I haven't heard much about this lately -- did UCB find many adverse events and what else did they learn (ie, re Principle 5)? I've seen several studies by agencies that work for the pharmaceutical industry that suggest very few reportable AEs are found on social media sites. PatientsLikeMe, however, reported that 7% of 500 randomly selected posts from the 364,000 posts contributed by patients within the PatientsLikeMe Forum during 2009 incorporated all four elements required for reporting an adverse event (see "PatientsLikeMe Reports High Rate of Adverse Event Reporting Among Its Members"). Also see: "The British Pharmaceutical Industry Issues Social Media Guidance for Adverse Event Reporting."

Principle 8. "We will strive to interact in a timely manner, appropriate to the general expectations of social media."

I expect there's a difference in opinion of what is meant by "timely." As has been demonstrated many times, pharma can get into trouble when it does not respond in a timely fashion to social media crises as was the case with Sanofi's response to a disgruntled patient (see "Disgruntled Patient Shuts Down sanofi-aventis Facebook Page"). The ultimate decision of whether a response is "timely" or not is up to the customer (ie, patient, physician, or payor). Whether "striving" is adequate or if "succeeding" is better, remains to be seen.

Principle  9. "We believe that social media must be regularly monitored and our programs measured in real time to gauge effectiveness."

See my comments under Principle 5. The industry also is struggling with how to "measure" social media campaigns. There is also a question whether or not social media should even be campaign-oriented, which implies a beginning and an end.  We've already seen pharma companies shut down Facebook pages and abandoning their social media audiences (see "Pharma Facebook Pages Being Phased Out: A Good Run While It Lasted! Did Facebook Kill the Beast?"). Companies are blaming new Facebook rules for the shut-downs, but I think "campaignitis" has hit -- new marketers come on board and want to run their own "campaigns" or the "campaigns" were not as successful as expected. Which leads me to ask, How do you measure social media success?

Principle 10. "We respect but are not responsible for user-generated content that resides on sites we do not control."

This should not be a principle. It's just common sense. Duh! But wait! The word "control" needs to be defined. Comments to FDA by several drug companies addressed this.

Principle 11. "We believe the path to engagement is through useful and thoughtful content and commentary."

I've already commented on "thoughtful" (see Principle 2). "engagement" is a key word here. What do pharma marketers really think of when they think of "engagement?" Is it the same as what you or I think of? If pharna social media programs are controlled by marketers or corporate communications people, it's difficult for me to think the goal is not just "engage" but also to "convince." That was my criticism of the Lilly chat regarding Medicare (see "Was Lilly's #mmeds Twitter Chat a Discussion or a Press Conference?"). Also see "Will Patients Find Value in Discussions with Pharma Marketers on Social Media Sites?" 

A book can be written about this stuff and I suspect someone out there is already finished with the first draft. I thank Peter Pitts for drawing up these 11 principles around which we can organize an ongoing discussion. I invite your comments.

What's On Pharma's 2011 List for Santa?

What's On Pharma's 2011 List for Santa?

At this time every year, the good "boys and girls" of U.S. pharmaceutical industry send a letter to Santa that includes a list "presents" they would like to receive. Help me create this list.

I've put together a list as a starting point. Please select the items you think are appropriate to include in Pharma's letter to Santa. Feel free to add an item if it's not on the following list. Also: @PharmaSanta is putting together his "naughty" & "nice" list of pharma companies. Help him! See Q2.

Results of this poll will be summarized in a future  post to Pharma Marketing Blog.

Pfizer, World's Most Innovative Drug Company - Not!

Pfizer, World's Most Innovative Drug Company - Not!

Pfizer is the world's most "innovative" drug company, not in terms of developing new drugs to treat, for example, high cholesterol -- which it failed at spectacularly (see "Why Pfizer Flopped"), but at keeping old drugs on the market beyond their patent expiration date and competing with generic drug companies. I am referring, of course, to its efforts to keep Lipitor on the market competing with generic versions after Lipitor's Nov 30, 2011, expiry date. Lipitor Won't Go Gentle Into that Good Generic Night! as I commented on in a previous Pharma Marketing Blog post (see poem here).

The first phase of Pfizer's innovative "Save Lipitor" plan was an unprecedented level of direct-to-consumer (DTC) marketing of Lipitor. In 2010, Pfizer was the biggest DTC spender -- it's $967.5 million DTC budget for that year was more than double the DTC spend of its closest rival, Eli Lilly (see "Double Dip in DTC Spending Plus 33% Drop in Internet Display Ad Spending!"). Of that amount, approximately $251 million was spent to advertise Lipitor to consumers. An additional $410 million was spend promoting Lipitor to physicians ($1500 of which went to "wining and dining" my physician; see "Physician Bailout: On Average, Pharma Pays Every US Physician Over $750 Per Year") and supplying free samples (see chart below).

Just a week or so ago, I learned that Pfizer reached a deal with several PBMs -- middlemen between drug companies (the sellers) and insurers and employers that sponsor insurance plans (the buyers) -- that would compel many drugstores to block prescriptions for a generic version of Lipitor (see "Occupy Pfizer! Protest It's Deal to Block Sales of Generic Lipitor! #OccupyPFE").

Now, according to this WSJ article, Pfizer is planning to sell Lipitor at generic prices directly to patients. "If successful," says the WSJ, "the risky move could rewrite the industry's playbook for selling medicines." So, THAT's the "Playbook" Pfizer is writing (see back story on that here).

All this sounds like good news for patients like me who have been advised by their physicians to switch to Lipitor because "it's a second generation statin that will be available in generic form." But wait! First of all, my drug plan has to be in cahoots with Pfizer to offer it to me at the generic price (actually, to request pharmacies and PBMs it works with to NOT substitute a true generic version of Lipitor when my doc writes "Lipitor" on the script).

But the savings will not be passed on to employers who will pay higher rates to keep Lipitor on their plans' formularies. What are employers likely to do in that case? They'll pass the added expense on to their employees by requiring them to contribute more to their health coverage!