Dancing with Fentanyl: Insys Sales Reps Caught Rapping to Boost Sales

You can't make this stuff up!

According to Huffington Post, "Pharmaceutical sales representatives selling an opioid-based drug 50 times more powerful than heroin filmed a company-made rap video in which they danced with a giant bottle of their deadly fentanyl spray, a federal grand jury alleged in an indictment unsealed this week (for more about that, read "Founder of Insys Indicted for Bribing Docs to Illegally Prescribe Fentanyl. Lock Him Up!").

"The grand jury alleged that 'prominent' sales reps at Insys Therapeutics Inc. appeared in a 2015 music video that used a song by rapper A$AP Rocky, which was played at the company’s national sales meeting that year...Court documents didn’t say which A$AP Rocky song was used in the video, but the indictment documents strongly suggested it could be the 2012 song “Fuckin’ Problems."

“Throughout the video, Company employees danced with a life size, 1600 mcg bottle of the Fentanyl Spray, the largest dosage of the drug available for sale in the United States,” the superseding indictment alleged. The video ended with the company’s vice president of sales removing the Fentanyl Spray costume, revealing his identity. The vice president of sales, Alec Burlakoff, was previously indicted back in December.

The Benefits and Risks of Limiting Pharma Sales Rep Access to Physicians

Pharmaceutical sales representatives are faced with increasingly limited access to physicians as many academic medical centers and other healthcare centers adopt conflict of interest policies restricting detailing. This is another benefit versus risk challenge for physicians who need quick access to the latest information about novel drugs. Listen to podcast below:




Read the transcript, which includes charts, below.

Pharma Sales Reps: Declined & Denied!

#Pharma Sales Reps: Declined & Denied!

Some “Walter White” Pharma Sales Reps Make an “Ungodly” Amount of Money

Last Week Tonight with John Oliver is back on HBO and the pharmaceutical industry was the centerpiece of last night's show in which Oliver spent more than 17 minutes educating the audience on the industry's marketing practices.

Oliver began by citing some statistics such as annual sales of Rx drugs in America amount to over $1,000 per person. "Walter White could have made more money cooking up arthritis medications," quipped Oliver.

I'm not sure arthritis is where the real pharma money is these days -- maybe orphan drugs (see here and here) or cancer drugs (see here), certainly Hep C drugs (see here) are where the real money is.

Oliver focuses mostly on physician marketing and pharma sales reps. He begins by showing segments from direct-to-consumer (DTC) ads, all of which end with the phrase "ask your doctor," which of course is often the butt of jokes (see, for example, here).

"Oliver says Big Pharma wants you to talk to your doctor," says Time, "because they have spent billions of dollars marketing their drugs to physicians. Oliver’s research revealed that pharmaceutical companies spent $24 billion marketing directly to doctors last year. According to one study quoted by Oliver, 9 out of 10 top drugmakers spent more on marketing drugs than researching the drugs. In Oliver’s words, 'Drug companies are like high school boyfriends: they are more interested in getting inside you than in being effective once they are there.'"

I've written about many of the issues that Oliver speaks about in his segment and I will provide the back stories below. There was one thing in this segment, however, that stood out for me. It was a claim made by a GSK executive in a 2001 Advair launch video that the Department of Justice uploaded to its website as part of a whistleblower suit.

Even Though There Are Fewer Sales Reps, More Physicians Deny Rep Access

According to the spring 2014 AccessMonitor™ report from global sales and marketing consulting firm ZS Associates, pharmaceutical access to physicians continues to decline. Only 51% of physicians/prescribers now allow access to sales reps, down from 55% in 2013 (see chart):

Source: ZS Associates

Even among traditionally pharma-friendly prescribers (e.g, dermatologists), access is down dramatically as illustrated in this chart:

Source: ZS Associates

The decline in access continues despite the downsizing of the pharma sales force by one-third since 2008. But, the downsizing has actually helped pharma deliver better sales calls.

How?

Annual Pharma Investment in "eSales," "eDetailing," "Virtual Detailing" … Whatever!

Cutting Edge Information recently published its "Pharmaceutical Sales Management" report, which included data on "eDetailing." Ed Silverman, a Wall Street Journal blogger, summarized the data in the report and stated "the average annual [per company] investment in electronic methods [of pharma sales interactions with physicians] is $1.96 million"(see here).

Many pharma marketing professionals were skeptical of the $1.96 million number as I mentioned in a previous post (read "Pharma Spends What on eSales?").

It turns out that the confusion has to do with the terminology used. I used the term "eSales" as Twitter shorthand for "interactions ... using the Internet or mobile device to host webinars or interact with physicians by email," which is how Silverman described what Cutting Edge Information calls "eDetailing," which, as it turns out, may include only LIVE online activities such as virtual reps performing online informational sessions and linking field reps with doctors via webcams. That's a much more limited definition of "eDetailing" than is typical (see this definition).

A better term for what Cutting Edge measured, IMHO, is "Virtual Detailing." The $1.6 million annual spend per company makes sense if we are talking only about virtual detailing.

Here's the chart from Cutting Edge Information showing the "Annual Investment in eDetailing by Benchmark Partners (US Only):"

Pharma Spends What on eSales?

Ed Silverman -- formerly the author of Pharmalot, now a reporter for the Wall Street Journal -- recently published some interesting pharma sales rep data from Cutting Edge Information.

According to his report ("The Pharmaceutical Sales Rep Lives to Fight Another Day"), "an average of only 10% of all interactions [between sales reps and physicians] are spent using the Internet or mobile device to host webinars or interact with physicians by email. The vast majority of physician outreach efforts continue to be undertaken through traditional methods – a face-to-face encounter with doctors. In any event, the average annual investment in electronic methods is $1.96 million."

$1.96 million? Is that a typo? Is this per company or per brand?

I've seen estimates that the pharma industry spends about $17 billion annually on physician promotion: $15 billion on detailing and $2 billion on meetings (see "U.S. e-Detailing Spending Up 74% in 2012. Yet Pharma Still NOT 'Digitally Mature'"). If only about $2 million per company -- or, let's estimate, $80 for all US activity -- is spent on electronic methods, that means only 0.5% of the total physician promotional budget is allocated to digital!

This number seems wrong and certainly not consistent with data from Cegedim Strategic Data (CSD), another market research firm. [See end of post for an UPDATE.]

"Not everything which is technically doable should be done."

That is a quote from German chancellor, Angela Merkel, published in a NY Times story about NSA's spying on Ms Merkel's cell phone calls (see "Anger Growing Among Allies on U.S. Spying"). I think this is good advice for the pharmaceutical industry, which is currently monitoring social media conversations, smartphone keystrokes, physical location, and electronic medical records (EMRs) of patients and perhaps even physicians without their permission or knowledge.

The pharmaceutical industry may not be emulating NSA by tapping directly into phone calls, but it has the capability to monitor and record ALL keystrokes from apps installed on smartphones. Janssen, for example, discloses in the disclaimer of its Psoriasis/PASI physician app that certain data are being collected (read "Checking Under the Hood of Pharma Mobile Apps: Disclaimers Tell Only Part of the Story"). Your physical location can also be tracked via your smartphone (read "Is Your Smartphone Tracking Your Keystrokes, Texts and Location?")

Big Inside Joke About Doctor Surveys: 90% of Physicians Believe They Graduated in the Top Half of Their Class

Richard Meyer, author of World of DTC Marketing Blog, is a big believer in physician surveys, including the survey that the FDA intends to do regarding how physicians feel about direct-to-cinsumer (DTC) advertising.

Rich was interviewed on HuffPost Live recently along with a health reporter and former Zyprexa Drug Rep, Shahram Ahari, who now is a consultant for Pharmedout. The 30-minute interview -- see embedded video at the end of this post -- was titled "Big Pharma's Pill Pushing." The description reads: "Big Pharma spends almost twice as much on promotion as it does on research and development. Drug company revenues climbed more than $200 billion in the years between 1995 and 2010 and so did the number of addicts. How can this be better regulated?"

Rich did his best to defend the drug industry in such an obviously biased setup. The part of the discussion I found interesting in light of my recent post about the FDA physician survey (see "Is FDA Doing DTC, Social Media, & Professional Market Research On Behalf of the Drug Industry?") was Rich's comments about a similar survey by CMI/Compas, which I also wrote about (see "Most Physicians Agree That DTC Advertising Leads to Inappropriate Prescribing -- by OTHER Doctors, Not Them!"), and Shahram's reveal of how pharma sales reps view physician surveys. Here are the two relevant excerpts:

Fixing Pharma's Reputation: IMHO, the Train Has Left the Station

In an "open letter" to PhRMA CEO, John Castellani, Forbes Blogger and former president of Pfizer Global Research, John LaMattina, offers several suggestions for improving the reputation of the pharmaceutical industry. You can read the "letter" here.

Unfortunately, IMHO, the "train has already left the station" as they say. In fact, the train has crashed!

You might recall that LaMattina famously called for the end of DTC (direct-to-consumer) advertising in his book, Devalued and Distrusted (see "Bad, Devalued, Distrusted & Defensive Pharma: A Tale of Two Books").

In his open letter, however, LaMattina focuses on the R&D side of the pharma enterprise. Specifically, he calls upon PhRMA to "put more of a human face on the R&D process."

"Why not put together a group of PhRMA scientists who were key members of the teams that produced these [newly FDA-approved] drugs?," LaMattina asks. "Then, pair them up with patients who have personally benefited from these breakthroughs and ask that they give talks or meet with the media in cities throughout the U.S. I have found that, while many members of the pharma industry are viewed with skepticism, scientists still have a good deal of credibility."

That's a good idea. In fact, I suggested almost the same thing repeatedly as far back as 2007 and earlier when that train was still in the station. In a 2007 post to this blog, I said: "God bless the dedicated researchers and scientists of the pharmaceutical industry! They are truly the unsung heroes of the pharmaceutical industry! Too bad they are sequestered in their labs!' (see "God Bless R&D, but Marketers May Go to Hell!").

The "guys" in the labs are "isolated from public view, locked away in cages like lab rats!," I said.  "And that's a problem I have always railed against. Time and again, I point out to any industry executive who will listen: give these people a voice!. Instead, the industry gives sales reps a voice among the public (see, for example, the section "Clarence," GSK's R&D Guy, Trumps "Jamie," Pfizer Viagra Guy! in this 2006 post: "GSK's 'Plain Talk' Flawed").

But that train may have left the station and crashed in 2008 when the "dark side" of pharma's R&D leaders was exposed  (see "Pharma R&D Succumbs to the Dark Side"). R&D is succumbing to the demands of the commercial side of pharma. I said, "It's not quite under the thumb of the dark side, but it's tainted, which is one conclusion I came to after reading the EHNANCE story" (op cit).

LaMattina also addresses the issue of "clinical trial transparency" in his open letter. Lack of transparency about negative clinical trial data is another, more recent, manifestation of the "dark side" of pharma R&D. Dr. Ben Goldacre, author of Bad Pharma, has written and lectured extensively about this (see "Bad, Devalued, Distrusted & Defensive Pharma: A Tale of Two Books").

On this issue, LaMattina recommends that all pharma companies follow GSK's lead and make all clinical trial data available for 3rd-party analysis. Recently, Roche agreed to release all of the trial data for its controversial influenza drug Tamiflu to the Cochrane Collaboration (see here). Roche did this kicking and screaming and may have put limits on the data revealed. To the public, this sounds like "too little, too late"; i.e., another way of saying "the train has already left the station."

Sales Rep "Free Speech" Does Not Include Important Safety Information: I Call this "Free Non-Speech"

Everyone is talking about the 2-to-1 split decision by the 2nd U.S. Circuit Court of Appeals in New York, which threw out the conviction of a sales representative for promoting off-label use of a prescription drug. Many pundits believe that the court decision will allow pharma sales reps to exercise their right to freely talk about off-label uses of the products they are selling.

"From our vantage point as digital health communicators," says Michael Spitz of Pixels&Pills Blog, "the ruling has the potential for transforming how the industry connects with its targets, perhaps some day getting us all closer to using the incredible power of digital to deliver the most patient benefit" (see "Free Speech, Fair Balance, and the Future of Pharma").

That's all very well and good. But did you know that even when sales reps are "staying on label" in discussions with physicians, they almost never mention serious adverse events as required by law, not to mention required for "patient benefit"?

A study published online in the Journal of General Internal Medicine shows that sales representatives "failed to provide any information about common or serious side effects and the type of patients who should not use the medicine in 59 per cent of the promotions" (see here).

According to the study abstract:

Serious adverse events were rarely mentioned (5–6 % of promotions in all four sites), although 45 % of promotions were for drugs with US Food and Drug Administration (FDA) “black box” warnings of serious risks. Nevertheless, physicians judged the quality of scientific information to be good or excellent in 901 (54 %) of promotions, and indicated readiness to prescribe 64 % of the time.

I call this "Free Non-Speech."

Lazy IT "Nazis" Thwart iPad Use by Sales Reps

In a recent post, Rich Myer asked "how can pharma avoid the 'IT Nazis'"? Of course, he meant "Nazi" in a "good" sense, akin to the "Soup Nazi" on Seinfeld, the old TV sitcom.

Myer was talking about faulty IT policies that disallow pharma employees -- including marketers -- from accessing "a whole range of sites" on company computers while at work.

"There comes a time when some IT policies could hurt pharma marketers and prevent them from learning what is going on around the health conditions they market in and treatment options they market," said Myer (here).

But this may not be the only way that the Pharma IT "Nazis" are hurting pharma marketers. They may also be standing in the way of more widespread adoption of iPads by sales reps.

While at CBI's Sample Management and Mobile Sales conference yesterday in Princeton, NJ, I heard from some pharma people about the "limitations" of iPad use by sales reps in a roundtable discussion. In one case, IT took away all the iPads from reps and replaced them with MS Surface Tablets so that reps can use MS Excel and Word desktop applications without switching to a laptop.

Someone at the table called this "The Excel Spreadsheet Hurdle."

Now, I'm not going to get into the fact that Microsoft Surface Tablet Sales are "Nothing to Brag About" (see here, for example) and the folly of betting on a dead horse in the tablet race.

But taking the iPads away from sales reps to run desktop programs like Excel is so old school! It's an example of how legacy systems are putting pharma on the wrong side of the digital divide.

What do sales reps use Excel for? The major use seems to be travel and expense reporting. Why isn't there a mobile app for that? Pharma IT people should be able to create these or buy them from vendors pretty easily. Are they "Nazis" or just lazy or too cheap?

Another "hurdle" to iPad adoption I heard was that many Web pages sales reps need to access on mobile devices like smartphones and iPads do not display very well on these devices. Duh! I've already explained how pharma could greatly benefit by optimizing their web sites for mobile (see "Mobile Optimization Offers Better ROI Than Mobile Apps").

When I pointed out these and few other "technical" tips to the people at the table, you would have thought I was a technology genius! One woman asked me if I had any other good ideas. That's when I handed out my infamous @Pharmaguy card with the QR codes (see here). That, of course, lead to another discussion -- about QR codes -- What are they? How do I read them?, etc.

Some day this stuff will be as simple as pie for pharma marketers. Right now, however, I am a big fish swimming in a small pond, if you know what I mean.

Some Interesting Pharma Predictions for 2013

It's appropriate that I present a few pharma industry predictions for 2013 in the last post of the year to Pharma Marketing Blog. To compile the following list, I used data from surveys, looked at the past year as an indication of what may be important in 2013, and reviewed predictions from  the usual suspects (e.g., people in the #pharma100 list).

It's also a good time to revisit a survey I started a couple of years ago that attempted to predict future healthcare market scenarios that would impact the drug industry. The survey asks respondents how likely it is for certain events or conditions to unfold in the next 5 to 8 years (ie, 2012 to 2019). You can see some results of that survey and my comments here.

So, here are my predictions for 2013, in no particular order. I invite you to provide feedback in comments to this post or in the surveys mentioned.

1. Direct-to-Consumer (DTC) Spending Will Continue to Decline

In the Predicting the Future of the Drug Industry: 2012 and Beyond survey, I asked respondents if broadcast (i.e., TV) Direct-to-Consumer (DTC) drug promotion will be banned or sharply curtailed by law in the U.S. This may have been a big issue back in the day, but it doesn't seem to be center stage right now. Less than 10% of survey respondents thought this was very likely to happen before 2019; it certainly would not happen in the coming year when lawmakers have many other pressing issues to mull over and do nothing about.

The economy, however, will continue to have a negative impact on DTC advertising causing a slow death by a thousand cuts. There already is a declining trend in traditional (broadcast TV, radio, and print) DTC spending as evidenced by this chart, the last bar of which I projected based on Lipitor going off patent and Pfizer's subsequent abandonment of efforts to continue promoting it (see "Lipitor Holds Key to DTC Ad Spending in 2012" and "Pfizer Throws In the Lipitor Marketing Towel").

Although the downward trend in the past may have been due to pharma falling over the "patent cliff," that will not be the main factor impacting DTC in the future. I believe that the "fiscal cliff" will be a major factor in 2013 as ALL advertisers -- not just pharma -- cut back on advertising. And it doesn't matter if we go over that cliff or not. The economy still sucks and companies as well as consumers will cut back their spending.

An article in today's WSJ said "Even before the uncertainty in Washington, the ad business had been expecting a lackluster ad climate for 2013, thanks in part to concerns about the U.S. economy. Earlier this month, several ad holding companies, including WPP, downgraded their global and U.S. ad spending forecasts" (see "Fiscal Cliff Casts Shadow Over Madison Ave."). "The drop in consumer confidence is concerning," said Tony Pace, chief marketing officer at fast-food chain Subway.

You may think that pharma consumers are not prone to the same economic pressures as are consumers of other products, but you are wrong. Some of the key findings from a Rodale DTC Marketing study illustrate a trend that will result in decreased traditional DTC spending:

• People actively look to reduce their medical costs > Fewer doctor visits (21% canceled/delayed appt.)
• Switch to generic when available 
• More engagement in social media

You can weigh in on this topic by taking my "Future of Rx DTC Ad Spending" survey, which asks "Regarding the trend in measured media (broadcast TV, radio, and print) DTC spending by pharma, what do you predict will be the level of spending in 2013-2016 compared to 2009-2012?". You can see a summary of de-identified results after taking the survey yourself.

2. FDA Will NOT Issue Significant Social Media Guidance for Pharma in 2013

I already made this prediction; see "My Prediction for 2013: No Social Media Guidance from FDA."

3. A U.S. Citizen Will Be Injured or Die Due to Counterfeit Cancer Medicine

In 2012, we saw many deaths due to one unregulated compounded medicine produced and sold in the U.S. But we may be in for a rude awakening when the market is flooded with a slew of fake cancer drugs. As reported in an article in today's WSJ "fake Avastin that surfaced in the U.S. this year grabbed headlines, but it was just one example of a growing problem in the pharmaceutical world: the rise of counterfeit cancer drugs.

"Fake versions of costly cancer medicines have appeared in increasing numbers in Asia and the Middle East in recent years and occasionally in Europe and the U.S. In 2011, cancer drugs ranked eighth among the top 10 types of drugs targeted by counterfeiters, according to the Pharmaceutical Security Institute, an industry-funded group; five years ago, they weren't on the list at all.

"Authorities have seized some of the fakes in warehouses or shipping containers before they reached patients. But other counterfeits have turned up in pharmacies and hospitals, in one case injuring 80 patients in Shanghai."

If you think U.S. citizens are better protected than Chinese citizens, then you are not putting two and two together. The supply chain for cancer drugs is probably as loosely regulated as is the supply chain for compounding drugs. Doctors in the U.S. can order these drugs direct from wholesalers who compete to sell them at the lowest price. Again, due to the poor economy, many doctors are also looking to save money and increase profits by ordering drugs from shady sources. Perhaps this year one doctor will inject a counterfeit drug into a patient who may die as a result. It will be hard to prove the cause of death because of the dismal tracking of health records in this country, so while my prediction may come true, we may never hear of it!

4. Pharma Will Step Up Its Mobile Optimization Efforts

The next BIG opportunity for targeted pharma marketing to patients and physicians is mobile apps on "smart phones." That's one of the predictions I asked for input on in my "Predicting the Future of the Drug Industry: 2012 and Beyond" survey, which I invite you to take here. Seventy-seven percent (77%) of respondents to date agree with this prediction.

Up until now, there have been only one or two Rx branded pharma mobile apps released in the U.S. (see here and here). There may be a few more such apps in 2013, but pharma will really step up its effort to create Web sites that are optimized for mobile use. This makes sense because (1) only about 9% of U.S. adults over the age of 18 (19% of the 45% of smartphone owners) "happen to have" apps that help them track or manage their health, and (2) Mobile Optimization Offers Better ROI Than Mobile Apps. Read more about that here.

It also makes sense because pharma is so far behind other industries with mobile optimization, the only direction it can go is "up."

5. We Will See the Rise of the "Pharma Sales Rep Cyborg" -- Part Human and Part Machine (i.e., iPad) -- Which Will Save the Pharmaceutical Sales Rep from Early Extinction

A majority of respondents to my "Predicting the Future of the Drug Industry: 2012 and Beyond" survey think it is very or somewhat likely that "the role of traditional sales representative will become obsolete" by 2020. I think the "role" of sales reps has already changed and will be changed further in 2013 due to one device: the Apple iPad!

Pharma companies will develop smarter interactive detail aids for their sales reps in 2013 (e.g.., see "What Pharma Can Learn from Dexter"). This will definitely change the role of the sales rep, but I'm not sure how it will change. Most likely, smarter detail aids will allow physicians to interact with the data while the sales rep focuses on establishing rapport and making the sales pitch. That would mean that sales reps may revert back to being less knowledgeable about biology, chemistry, data, etc. All the recent talk about the "new sales model" may be turned on its head when reps become more like "sales rep cyborgs" -- part human and part machine (iPad)!

I could attempt some other predictions, but I think I covered enough areas of interest to me and I hope my readers. But the long-term predictions in the "Predicting the Future of the Drug Industry: 2012 and Beyond" survey is still of interest to me and I urge you to weigh in on those.

How Many Sales Reps is One Key Opinion Leader Worth?

Remember Marcia Angell, former editor in chief of the New England Journal of Medicine? She wrote the book "The Truth About the Drug Companies: How They Deceive Us and What to do About It," which I reviewed back in 2004 here in Pharma Marketing News

Angell was recently quoted in a Scientific American article where she estimated the worth of one good "Key Opinion leader" (KOL) as equal to 100,000 pharma sales reps: “To buy a distinguished, senior academic researcher, the kind of person who speaks at meetings, who writes textbooks, who writes journal articles -- that's worth 100,000 salespeople,” said Angell. The article is titled "How Drug Company Money Is Undermining Science" (find it here).

Obviously, Angell is just pulling a number out of nowhere for its sensational value. But it would be interesting to calculate the return on investment (ROI) for a KOL and compare it with the ROI for a sales rep. Just for fun, let's do the math.

First let's calculate the investment side of the ROI analysis. 100,000 sales reps, which is somewhat greater than the current total complement of reps in the U.S. (see "further thoughts" at end), would cost the pharma industry about $10 billion in salary & benefits alone (not counting travel & entertainment expenses). Actually, I've seen estimates that the total investment in sales reps, including all expenses, is about $17 million per year. Let's use that number.

Let's say that sales reps are responsible for 75% of drug sales in the U.S. I use that percentage because most reps sell the top 20 or so drugs and direct-to-consumer advertising must account for some sales. I've seen estimates of yearly Rx drug sales in the U.S. of about $320 billion (2011). Using my 75% estimate, $240 billion of that is due to a salesforce that cost $17 billion per year. The ROI is 225/17 or about 14:1.

Robert Lindsay, a physician/researcher who is the kind of "distinguished, senior academic researcher" Angell is talking about and who is featured in the Sci Amer article, was said to receive more than $124,000 from Eli Lilly in 2009 and 2010; much of it for speaking fees. So, let's say that the average high calibre KOL might get  $100,000 per year from a pharmaceutical company.

For such a KOL to be worth ONE sales rep, he/she would have to be responsible for about 14 X $100,000 or $1.4 million in drug sales per year. That's a pretty good sales number (you would have to spend about $700,000 in DTC advertising to generate that level of sales; DTC ROI is said to be about 2:1). But for a KOL to be worth 100,000 sales reps, the ROI would have to be astronomical -- about 2.4 million:1! That is, every dollar spent on the KOL would have to generate $2.4 million in sales!

My conclusion? If my estimates are correct or close to reality, then one KOL might be worth maybe ONE or LESS sales rep in terms of drug sales. What do you think?

Further Thoughts
According to ZS Associates, the current U.S. pharma sales force total stands at 64,000 (see chart). So, I really should redo the math to get a more accurate estimate of the worth of a sales rep.

If 64,000 reps are responsible for 75% of the $320 billion in U.S. Rx drug sales, then each rep accounts for $3.75 million in sales!

By some estimates, it costs the pharma industry $150,000 per year per sales rep. This includes travel and other expenses. Using that number, the ROI for a sales rep today (2012) is about 23:1!

Ergo, one KOL is worth much less than one sales rep. Caveat: Without the KOLs to legitimize claims made by sales reps, the sales rep ROI might be much less than it is, whatever the exact number may be.

Days of Live Pharma Reps are Numbered: M&A's and Outsourcing - the "Bain/Bane" of the U.S. Pharma Industry

Last night, my sons and I attended a NJ BioPharma Networking Group (NJBPNG) meetup at the Princeton Sports Bar and Grille. NJBPNG is an ad hoc LikedIn group, which you can join (here).

This group is mostly comprised of senior pharmaceutical executives in the research side of the drug industry (click on infographic on the right for more NJBPNG demographics).

It was a good night out with my sons, but not so upbeat for most of the people I met there, many of whom are out of work -- including PhDs, organic chemists, and project  managers.

When meeting new people I usually ask "What do you do?" The most frequent answer I received last night was "I'm in transition," which is one of those "Awkward Euphemisms" for out of work and looking for a job (see other euphemisms listed by Michael Spiro, a professional recruiter, on his blog here).

When I asked "Why?", the response was either mergers and acquisitions or outsourcing, which, I note, was the specialty of Bain Capital in its glory years. Sorry, I just had to throw in a Romney reference and relate "Bain" to "Bane" (i.e., the super-villain nemesis of Batman).

Seriously, outsourcing in the pharmaceutical industry is on the rise. Clinical research is being outsourced to countries like India, and China. Basic research is also being outsourced to startup companies and academia and maybe even overseas.

I also met a few people who are doing very well, thank you. One was the owner of a sales outsourcing agency that specializes in non-personal pharma sales and marketing; i.e., sales calls done by phone via a call center.

"This year has been my best year ever," said this person. He's been doing this for several years. In fact, his prediction for the future of live sales reps is dire: "they will disappear."

Frankly, I had hoped that my son -- a recent Penn State Smeal College of Business graduate -- would make some connections at the meetup that could help him find a job. He doesn't have any pharmaceutical experience, which is what a young recruiter attendee was looking for. Perhaps my son should become a recruiter -- if you aren't qualified for a job, maybe the next best thing is finding a qualified person.

But we learned of one job that my son IS qualified for: one of those people on the phone at the call center mentioned above. It turns out that this is a low-paying, entry-level job paying about $20 per hour. You don't have to be a nurse or former pharma sales rep. In fact, such people are over qualified for this sort of non-personal sales and marketing.

Just like young, entry-level commercial airline pilots bunk together in small apartment nearby airport hubs, young call center employees relocate near the call center and share low-rent apartments. Sounds like Penn State to me!

What advice should I give my son? Should he apply for a job at the call center?

Will Drug Samples Soon Be a Thing of the Past?

We all know that the number of pharmaceutical sales representatives have declined significantly since the high point in 2007 when approximately 105,000 members of this species were alive and well in the U.S.

Sales rep visits that included samples have dropped even faster. According to Cegedim Strategic Data (SD), the number of detailer visits that included samples has decreased 35% from 116 million in 2007 to 76 million in 2011 (see " Spending on Drug Samples Continues to Decline").

There are lots of reasons why sales rep visits that include drug samples is declining. For one thing, many physicians are refusing samples because they think they promote more expensive treatments. However, it's more likely due to cutbacks to the sales force. "If we're seeing a decline in samples at this point, today one of the major drivers is the drop in the overall number of sales calls being delivered," Jerry Maynor, director of marketing and business development for CSD's U.S. division. eSampling, where physicians can order samples without the sales rep, is a very minor activity that does not account for the trend (only 5% of doctors want to receive samples by mail only).

What percent of total details include samples? That gets complicated because numbers are all over the place. In 2008, there were 92.93 million details according to data reported here. But CSD says 106 million details in 2008 included samples. Of course, that's a mathematical impossibility. I will have to track down more compatible numbers.

How much do drug companies spend on samples? That's a number in dispute, depending on how you calculate the value of samples (ie, retail value of samples vs. Average Wholesale Price; see here). By CSD's estimate, in 2007, drugmakers spent nearly $8.4 billion on samples. That figure fell to about $6.3 billion in 2011, the most recent data available.

Paula Deen & Victoza: Brilliant or Dumb?

OK. I've written so much about Novo Nordisk's deal with celebrity chef Paula Deen that even I am tempted to say "Enough already! Move on." Well, there is one side of this story that I and others have not yet commented on. That is, what do Novo's troops (ie, sales reps) have to say about it? Specifically, do they think this deal will help them sell Novo's type 2 diabetes drug Victoza -- the drug Deen is a spokesperson for? Or will it hurt sales?

To get answers to those questions, I turned to the Novo Nordisk company board on Cafe Pharma (CP) - the notorious but always entertaining and enlightening pharma sales rep message board. I learned about some other issues that the "troops" discussed, including:

• Heredity vs. Lifestyle as contributing factor
• Is drug treatment the first option recommended when diagnosed with type 2 diabetes?
• The role of the American Diabetes Association (ADA)
• Will Victoza be prescribed off-label for weight loss?

One anonymous commenter,  had this to say:

"This is either the most brilliant marketing strategy ever or the dumbest."

That, of course, remains to be seen.

It's Dumb!
Interestingly, this commenter added some further remarks that offers intriguing insight into the possible strategy of Novo Nordisk's entire diabetes franchise:

"Just think," said this anonymous sales rep, "Paula and her fat fans go from victoza to levemir to novolog. I give her 1 more year and she is on insulin." Not that this rep thinks this is an honorable strategy for Novo to support. "Novo should do the honorable thing here and cancel this deal. Defeat diabetes my ass. They have just done more to cause diabetes than mcd's [McDonald's]. It is like Marlborough Man being a spokesman for Nicorette. Shameful."

Of course, it's possible that this anonymous rep was a rep from a competing pharmaceutical company and not a Novo rep at all. In any case, other commenters had similar things to say, such as:

"Wow. This is a PR disaster. Who were the brains behind this fiasco? Victoza is taking major hits in the media with the whole world now focused on price ($500 a month!) and questions being raised about drug safety and marketing ethics. Novo just bought itself a few million dollars worth of bad publicity. Time to pull the plug to save face."

It's Brilliant!
There were also plenty of posts in defense of the deal:

"Granted, she is still in denial, but she's on Victoza, she's already lost a dress size since starting and it's a Dean family endorsement. Which is even better because it shows it does take a village to help patients with diabetes treat their disease. This is a horrible disease that is difficult to manage. Everyone is playing into Novo's hands with all the press around diabetes and becoming more aware. Novo couldn't pay for all the ads they've gotten over the past week."

"First of all, this whole flap will be short lived. It wont be long before it's been long forgotten. Secondly, PD's hardcore fans couldn't care less about how long she took to reveal her diabetes. If Paula takes Victoza, guess what those hardcore fans are going to ask their doctors to prescribe for them. And there's millions of them too. Most of the critics are selling Novo's management short. Time holds the answer as to what will happen, but my money is on the whole thing being wildly successful.

"the posters who think its ridiculous are the competitors bc they are mad their idiot companies didnt do this first. Its brilliant. Brilliant bc we all know the success rates with Victoza. Our docs rave about it all the time. Theyre not going to write more lantus bc PD was hired by Novo.

"This is brilliant. Do you think Weight Watchers cared when Barkely supposedly trashed their endorsement by saying it was easy money to eat their meals and lose weight? No, it was good TV. This will be for Novo, too. Welcome to big pharma."

From a marketing perspective, is the Novo Nordisk deal with Paula Deen Brilliant or Dumb?
	Brilliant!
	Dumb!
	It remains to be seen.

Someone else pointed out that drug treatment is not the only solution for people with Type 2 diabetes ("T2DM"):

"It is not a 'horrible disease' – it is a disease of gluttony and sedentary lifestyle. T2DM is reversible with implementing healthier eating habits and adding exercise to your daily routine. The alliance with Paula Deen (spelled D-E-E-N) suggests that people can continue to eat what they want and take a drug to make everything all better. Don’t try and spin this alliance as social responsibility – your intentions are purely economic in nature."

You'll Hear More About Heredity and Type 2 Diabetes
The lifestyle change solution POV will be something that Novo and Deen will have to combat as they get deeper into this. In fact, they have already pinpointed "heredity" as the most important factor. This was re-iterated in a comment in response to the above:

"Heredity? Have you ever heard of that? But, what do doctors know? After all, you're an anonymous CP poster, so you know it must only be about gluttony and a sedentary lifestyle. Pick up a textbook some time...you might actually learn something."

In response:

"When diagnosed with t2dm, what are the first instructions a doctor should give to their patients according to the ADA? The answer: diet and lifestyle changes. Why is that? Is the ADA wrong? Are doctors wrong for following the ADA guidelines? Why even bother with this step if heredity is such a controlling factor? Your message to people with diabetes suggests that they can't help themselves without the aid of your pharmaceuticals."

Will the ADA be Caught Up in This?
I'll have to check up on what the ADA has to say about first options. I already know that ADA is part of the deal because the organization has said the Deen family will participate in select diabetes health expos the ADA hosts around the country. It has also been reported that Deen will contribute some of her Novo earnings to the ADA, although no specific monetary amounts were mentioned.

Is Weight Loss a Possible Future Indication for Victoza?
One last point concerns weight loss and whether or not Paula Deen will help sell Victoza for that purpose. CP comments relating to that include:

"She will drop 40 lbs over the next year or less and "bang" we have an unofficial weight loss drug. (no indication necessary) Frankly I think its brilliant, she is probably under contract to eat healthier and exercise....and write a a cookbook with healthier versions of her food. We should look forward to seeing her at the next national POA. May I suggest identifying and adding the weight loss clinic docs in your area to your universe, otherwise you will not get paid Bad press now...millions of dollars later. Laughing all the way to Denmark."

Of course, if Novo or any Novo sales rep were caught mentioning weight loss as a indication, they would be breaking the law and subject the company to hefty fines, as this commenter pointed out:

"glad to hear all the weight loss drug talk. Can't wait to see Novo pay all those off label promotion fines"

Lilly Sales Reps Learn Marketing Lessons From Disney's Animal Keepers

Lilly sales representatives are learning about customer service by observing Disney Animal Kingdom workers as they "[greet] families at the gate and [answer] questions around the attractions," according to an article in today's Wall Street Journal (read "Drug Sales Reps Soften Pitches").

"Lilly's most recent national sales meeting, held at Disney's business training institute in Florida in February, was devoted to customer service, not product training," said the WSJ.

"Increasing physician satisfaction, it turns out, is a much better way to promote a pharmaceutical agent than simply telling them to write more prescriptions or what the benefits" are, said David Ricks, president of Lilly's global business unit.

I'm not sure it was necessary for Lilly to bring its sales reps to a Disney resort in order to learn about the "new service model," which I have been writing about for the last few years in collaboration with Kantar Health (a client). You can read the latest installment, "Stakeholder Effectiveness: Maximizing the Value of Your Interactions with Multiple Stakeholders" (here - use discount code '101701stake'), which ranks the top 15 pharmaceutical companies on how well their sales reps provide services desired by physicians. Also, you can read the first article in the series, "Reinventing the Sales Model: Moving from Sales to Service" (pdf).

Each year Kantar Health asks physicians in the U.S. and Europe if they have started to notice a move toward a “service model” experience, where other services are emphasized beyond sales reps detailing physicians, such as patient education and information and internet-based services. They quantify this using what is called a TRI*M™ index. The lower the TRI*M, the better service provided and the higher the ranking. The 2009 through 2011 U.S. Primary Care Physician rankings are shown in the following chart (click on it for an enlarged view).

Lilly improved its rank somewhat in the last two but is still not among the "Top Tier" companies such as Pfizer, Merck, and GSK. Hopefully, Disney's animal trainers will help improve Lilly's TRI*M index in 2012.

Some Interesting Numbers Regarding US Sales Reps & Budget

As reported in the WSJ (op cit), "the industry has slashed 33,000 sales jobs in the U.S. from its peak five years ago, when 105,000 representatives flooded the zone. Most recently, AstraZeneca PLC said it would cut its U.S. sales staff by 24%, or 1,150 jobs. The industry spent $14.5 billion on marketing in the U.S. in 2010, down about 15% from five years ago, according to Cegedim Strategic Data."

Predicting the Future of the Drug Industry

It's time to revisit a survey I ran a couple of years ago that attempted to predict future healthcare market scenarios that would impact the drug industry. The survey asks respondents how likely it is for certain events or conditions to unfold in the next 4 years or so.

You can take the survey here. But before you do that, let's review the first-round of results (ie, responses collected from 2 December 2009 through 8 January 2010). Events since then may have made some of the following scenarios more or less likely. You tell me.

The scenarios -- with my updated comments included in brackets [] -- that are included in the survey are as follows (see the chart afterward for the first-round results):

1. New follow-on biologics legislation in the U.S. will increase competition from generic equivalents and eventually decrease brand profits. [I think the legislation is still bogged down and when finalized may not have much impact within the time frame specified.]
2. Broadcast (ie, TV) Direct-to-Consumer (DTC) drug promotion will be banned or sharply curtailed by law in the U.S. [This may have been a big issue back in the day, but it doesn't seem to be center stage right now.]
3. The European Union will finally allow Direct-to-Consumer (DTC) advertising to its citizens. [The European Commission, the executive arm of the EU, recently ruled that pharma companies would not be allowed to disseminate information about drugs and their indications beyond a narrow set of circumstances. For the details, see, "In Rejecting Proposal, EU Dashes Drugmakers’ Hopes of Having a Voice"]
4. Internet-based drug promotion (including search engine marketing) will overtake TV-based DTC in the U.S. in terms of dollars spent. [There's still time for this to happen. I'm guessing that right now only about 5% (maybe 10% if you include search advertising) of pharma's DTC advertising budget is spent on Internet advertising whereas TV accounts for over 50% of the budget. See "Double Dip in DTC Spending Plus 33% Drop in Internet Display Ad Spending!"]
5. Due to decreasing effectiveness of traditional physician detailing and rise of non-personal detailing, the role of traditional sales representative will become obsolete. [I'm surprised that over 50% of respondents think this is likely to happen before 2020 (see chart below). Perhaps a sign is the recent closing of Pharmaceutical Representative Magazine (see here). Also read this article: "Consequences of eDetailing Technology".]
6. New healthcare reform legislation will dramatically increase the sales of drugs in the U.S.
7. Extensive outcomes data available to payers and comparative effectiveness research will force the industry much further down the path of pay-for-performance (ie, adopt a more flexible approach to pricing). [For background in this, read the article "A Case for Supporting Comparative Effectiveness Research".]
8. Patients will become even more influential and empowered in making healthcare decisions as they are forced to pay a larger share of costs and/or have access to health information from a variety of sources. [For more background on this, read the article "The Empowered Patient: What It Means for Pharma Marketers".]
9. Despite lack of innovative new drugs and/or generic competition, sales of brand drugs worldwide will show a sharp increase due to increased demand in emerging markets (eg, China). [See the following articles: "Getting Market Research Right in Emerging Markets", "Getting Market Research Right in the Middle East", and "Getting Market Research Right in India & China".]
10. More efficient targeting of drugs and marketing to specific patient populations will greatly increase effectiveness and decrease side effects of drugs. [See, for example, "New Big Pharma Economies of Scale: Less Patients Needed to Reach Blockbuster Sales". At least one targeted therapy (I can't recall which), however, recently failed and that may cast a shadow on progress in this area.]
11. Social media marketing will become a significant part (>10%) of the pharmaceutical marketing mix. [Hmmm... A lot of people seem to believe this is likely (see chart), but FDA's delay in issuing guidance may have dampened the outlook for pharma use of social media.]
12. The next BIG opportunity for targeted marketing to patients and physicians is mobile apps on "smart phones." [To prepare for this, I recommend you read the article "Everything You Need to Know About Mobile Platforms". Take the survey and you will get a discount code that allows you to get this at no charge.]
13. Pharmaceutical and biotech companies will continue to increase their outsourcing of clinical trials and related drug development. Outsourcing will account for more than 50% of R&D spending by 2019.

The following chart summarizes first-round (prior to January 2010) survey results. Please take the survey now and help me get a more current view of what may be dow the road.

Pharmaceutical Representative Magazine Closes. Blame CafePharma!

"Pharm Rep Closes After 41 Years" is the title of parting editorial by Reid Paul, Editor in Chief of Pharmaceutical Representative magazine, which was trade publication focused on pharmaceutical sales.

"Nostalgia from my days 'carrying the bag' makes me sad to see this publication go," tweeted Mike Capaldi (@mikecapaldi), Associate Vice President at Sanofi.

"The reality is that pharmaceutical sales and marketing has changed dramatically over the past few years," said Paul. "It's more than a numerical decrease in the number of pharmaceutical sales professionals. The "traditional" sales role of the rep is rapidly evolving into something new and different that defies easy categorization. In the inaugural editorial, founding publisher Bill McKnight wrote, 'If salesmen really needed their own communication medium, then there must be enough sales managers willing to provide it through paid subscription.' While that may have been true in 1971, over the past four decades the publishing landscape has changed equally dramatically. Pharm Rep was one of the first, but now reps and execs have a broad range of options to communicate and find objective information on the industry."

Reps and execs certainly have a much broader range of communication options. As for reps, one of their favorites is CafePharma, an online discussion board for sales reps that is often maligned by pharma executives who have little time themselves for such frivolous activity! When Lilly's Deirdre Connelly described CafePharma as one of those "outlets for people who don't have the courage to speak out with their ideas," it didn't negatively affect her rise up the ranks (see here).

I'm thinking that other glossy print, paid subscription pharma trade publications will follow Pharm Rep down the worm hole of extinction.