Exec says GSK is back on the straight and narrow

Connelly touts new sales-rep pay plan, argues against prison for pharma offenders
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Just a few months ago, GlaxoSmithKline ($GSK) set a record when it settled a host of U.S. marketing allegations for $3 billion. At the time, CEO Andrew Witty came close--and closer than any other pharma executive has--to outright apologizing for the company's bad behavior.

We won't belabor those allegations now (there's plenty on that in our archives). What we will do is pass along the latest on pharma behavior--bad and good--from a GSK executive. At a compliance conference this week, GSK North America President Dierdre Connelly took to the podium to explain what her company has learned about obeying the rules, written and unwritten--and to offer some cautionary words for the rest of the industry.

Lessons learned? For one, the pharma sales model--in which reps earn bonuses based on scrip numbers--led the industry astray, Connelly said. With GSK and its fellow Big Pharma companies in hot water for pumping doctors for off-label prescriptions, and using sales incentives to do so, that's not a big leap. But it gave Connelly a chance to tout Glaxo's move away from that incentive compensation.

Incentive pay for Glaxo reps "no longer bases bonuses on territory prescription volume," Connelly says, but on "behaviors essential to good selling," such as product knowledge and, yes, their ability to ask doctors to prescribe those products. The change has already converted at least one physician, she said. After that $3 billion settlement hit the news, a doctor who didn't take sales calls made a point of coming out to see his Glaxo rep one day--to chew him out. That rep told the doctor about GSK's new bonus system. "Today, that GSK sales professional is the only one that doctor will see," Connelly said.

Connelly also talked up GSK's reporting on financial payments to doctors, among other things. But she didn't stop with promoting her company's image as a change agent. She shook her finger a bit at prosecutors and industry critics who contend that drugmakers are a cynical lot, perfectly willing to pay billions in penalties so long as their rule-breaking generates enough profit--and that the only way to stop the madness is to put pharma execs behind bars.

"I reject that argument," Connelly said. "Fines and settlements do matter. They reduce the funds our industry has available for investment into research for new medicines and vaccines to help patients. ... Our settlement also wiped out an amount equal to one full quarter of profits. ... It damaged our reputation and it hurt our morale."

She also sounded as if she's ready to be deputized into the pharma sheriff's department. "If we have leaders in our business who are only motivated to do the right thing by fear of punishment or prison, then we don't have the right leaders," she said. "We are all responsible for making sure that people with the wrong values and motivations find another line of work."

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