The New Commercial Model: Selling To Insurers

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prescription.jpgIncreasingly, sales reps appear to expendable. With each big layoff announcement, sales reps seem to figure prominently. And as a slide at Merck’s annual Wall Street briefing earlier this week seems to indicate, reps are seen as inefficient tools. Of 100 reps, on average, only 83 make it past reception, and 27 of them simply drop the samples and then leave. Meanwhile, 56 do get to see a doc, but fewer than two dozen have “quality, two-way discussions.” Average sales call: 4.6 minutes.

So Merck has been running pilot programs with 700 reps in a few states under the rubric of a ‘new commercial model,’ in which reps are assigned to spend more time with certain doctors and, in particular, third-party payers. “We’re trying to partner with customers,” Ken Frazier, who heads Merck’s global pharma business, told the crowd. “We think the focus should be on the Medcos of the world.”

This isn’t surprising, given that Merck ceo Dick Clark previously ran Medco, the big pharmacy benefits manager, when it was still owned by the drugmaker. By moving in this direction, Merck hopes to drive more top-down decisions that are based on pharmacoecnomics and, in the process, reduce costs if fewer reps can be used. The thinking goes that docs are less likely to prescribe drugs if payers won’t pay.

And Merck isn’t alone. Joe Jimenez, the new ceo of Novartis’s pharma biz, tells The Wall Street Journal that reps in some markets will start calling on payers more heavily, bringing data to try to show its drugs are worth their price tags. In some US markets, many docs work for HMOs that decide which drugs docs can prescribe, based on cost and effectiveness.

Novartis plans to begin pilot projects in Minnesota, Washington and Oregon. And the drugmaker will also increasingly try to involve payers in new-drug development, the paper writes. Novartis is starting to ask payers for feedback on experimental meds to see what sort of evidence of efficacy and value the payer would need in order to cover the drug. Novartis can then modify its clinical trials to try to answer payer questions. “If you are organized around the physician,” says Jimenez, “you are missing the key influencer.”

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  1. It’s truly the beginning of the end for the armies of cheerleaders called “drug reps.”

  2. I think this is a good example of the transition that is in place today where by some Pharma Reps call on Pharmacists, office staff, & other ‘influencers’. Change is a part of life.

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