The courage to heed a wake-up call
Name: Deirdre Connelly
Title: President of GSK's North America Pharmaceuticals
GlaxoSmithKline's ($GSK) new method of paying sales reps--relying on analytic measures and doctor evaluations rather than prescription volume--is aimed at changing the culture at a company whose ethics have been called into question time and again. But if it catches fire, it has the potential to influence the industry worldwide. Pushed out to the entire company for this year, it was first tested for a few years in the U.S. The credit for envisioning a system that could help pharma recover some credibility, both in the eyes of doctors and the public, goes to GSK's president of North America pharmaceuticals, Deirdre Connelly. But it was no picnic getting there.
Connelly is a Puerto Rican-born, classical guitar playing dynamo who still tags along on sales calls to take the temperature of the market. She was head of Eli Lilly's ($LLY) U.S. operations when GSK CEO Andrew Witty enticed her to join his cadre in 2009. That was about the time federal authorities in the U.S. were poking around its past practices of hyping drugs for unapproved uses. GSK would eventually agree to pay $3 billion in penalties and to live by a federal corporate integrity agreement, but at the time Witty was trying to get the company's moral compass to point to true north. There was a lot of talk about how to align values and business tactics, and it was a conversation with sales reps in New York, Connelly says, that sparked the idea for a radically new compensation plan.
In a speech in 2012, Connelly explained that the discussion had moved to building and maintaining trust with physicians. It was the group's opinion that getting bonuses for selling lots of prescriptions put them at odds with doctors' goals for patients. It didn't help the reps "build trust with their customers," she explained, and it didn't line up with GSK's values as a company. The reps were talking about an entirely different way of thinking about compensation and winning sales. She says the conversation was a "wake-up call."
Connelly started in the industry as a sales rep with Eli Lilly shortly after getting out of college in 1983 with a degree in economics and marketing. So she got her sales training under the old school compensation plans, first with a straight salary and then with bonuses for sales. Paying people on volumes sold was comfortable. It reflected compensation methods in other industries, was easy to implement and offered a quantifiable measurement for evaluating reps. She had spent a couple of years running HR for Eli Lilly and understood these advantages. But it also could lead to abuse under pressure. Connelly said that "over time, I would argue, it caused us to lose our way and to lose sight of our responsibility to focus on the best interests of patients."
GSK's mammoth marketing settlement in 2012 was proof enough of the lengths a company will go to sell more drugs. Lots of other members of the Big Pharma club have settled marketing scandals with state and federal authorities, but GSK's was the largest one ever. The allegations: touting the antidepressant Paxil for off-label use in children and adolescents despite the fact that data failed to show it was effective for kids; marketing the antidepressant Wellbutrin for off-label uses like weight loss and sexual dysfunction; and failing to report safety data to FDA on potential risks of the diabetes drug Avandia.
Witty couldn't just say these problems wouldn't happen again. The company needed to find ways to make certain it didn't happen again. Changing the incentives for selling drugs was an obvious avenue, but not an easy one. Ahead of the settlement, the company started down that new, and difficult, path. After that initial talk with reps led to the idea, dozens of people spent more than a year creating a "robust methodology" that would cut across geographies and business units and include common measures while accounting for different pay grades, Connelly told Medical Marketing & Media in 2012.
Connelly acknowledges that some people think the changes were crazy, that she and her team went too far, "That our changes would hurt our business." For a woman who grew up a Spanish speaker in a family with 9 children and has risen to the top ranks of the drug industry, she knew how to negotiate through these kind of issues. She points out that GSK's U.S. business is growing and that the best sales reps under the old system are the best under the new one.
And Witty is a believer. After a couple of years working the system out in North America, the CEO in December rolled out the pay practices to the rest of GSK for this year. "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," he said.
-- Eric Palmer (email | Twitter)
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