The stories about cuts in sales forces are commonplace. The Pharmalot blog reported another downsizing on Monday, July 14: this one from Boehringer Ingelheim cutting half of its neurology sales force (another 200 sales positions shed).As if to add insult to the pain of the continuing force reductions, the big pharma firms have found yet another way to “thin” the ranks of drug sales forces.
In addition to cutting the ranks, they appear also to be out to downsize the remaining reps themselves. Those reps who do remain employed are being pushed away from the entertainment table.
As part of the revised Pharmaceutical Research and Manufacturers Association Code on Interactions with Healthcare Professionals released on July 10, sales reps will not be able to take medical staff out for meals.
That’s a smart policy from a public relations/policy perspective. There clearly has been an outcry from medical groups (the Association of American Medical Colleges, for example), politicians and the media against entertaining and meals.
PhRMA President Billy Tauzin spoke convincingly and candidly about the bad impression left by private meals in restaurants while introducing the new code recently. He said those types of meals do not send the right message about the serious educational objective of appropriate contact between drug companies and the medical professions.
But PhRMA did not note one of the fine distinctions made in the new code about the ban on free meals. It relates primarily to the beleaguered sales reps.
"The Pink Sheet" looked more closely at how the code describes the ban on free meals (see here). There is a clear exemption for modest meals (pizza and sandwiches) delivered to doctors’ offices or medical centers with an educational presentation. PhRMA defended that exemption noting that “even the counterdetailers” use food to find a slot for their anti-brand messages.
When you look more closely at the prohibitions against meals, it becomes clear the prohibition is really against reps taking docs out for food. Other company execs (beyond the sales forces) can continue to provide occasional, modest meals for doctors.
The new code and explanatory Q&A does not get into specifying who might be the new class of dining execs but that might seem to be a new function for the medical sales liaisons. Sales reps can attend dinners outside of medical settings in one situation: if the meal is part of a presentation by an adequately trained expert physician and the rep attends to help with the logistics of the meeting.
There is a deeper significance to the focus on the sales reps for the cutbacks on wining and dining. It is another example of the ongoing effort to drive expenses out of the detail force: a form of industry-wide standing down in the face-to-face sales effort. From that perspective, it is closely related to the cuts in the numbers of sales reps. Companies have always been reluctant to cut the sales forces and sales force expenditures unilaterally; they feel more comfortable if they believe that all their competitors are making similar moves.
The pharma firms were willing to walk away from entertainment by reps because it looked unseemly and it was expensive. One of the critics of industry marketing practices, Sen. Herb Kohl (D-WI), estimated that gifts, meals and continuing medical education expenditures could represent as much as $19 billion per year in industry spending.
That probably overstates the saving potential from the recent code changes but the point is well taken. Just getting back a chunk of that money would create an attractive pool of resources that the companies need to support profits from their aging product portfolios and to free up funds for more efforts at consumer marketing and/or reaching the medical professions through new media. There will be lots of other places that money can go.
The new PhRMA code does not go into place until the beginning of next year. That means there should be some very interesting and rough budget re-allocation debates within the pharma companies during the final months of this year.
Drug execs have talked for years about a time when they would not need the large armies of reps for face-to-face detailing. Some companies already have strategic plans for the next decade that do not include lines for detailing expenditures.
Banning the detail forces from the fancy restaurants is just another step towards a much different world for drug marketing – one that has moved away from the personal sales efforts that have dominated for nearly sixty years.
The new PhRMA code does not go into place until the beginning of next year. That means there should be some very interesting and rough budget re-allocation debates within the pharma companies during the final months of this year.
Drug execs have talked for years about a time when they would not need the large armies of reps for face-to-face detailing. Some companies already have strategic plans for the next decade that do not include lines for detailing expenditures.
Banning the detail forces from the fancy restaurants is just another step towards a much different world for drug marketing – one that has moved away from the personal sales efforts that have dominated for nearly sixty years.
