Health Inc.

Glaxo Exec Concedes Drug Industry 'Lost Its Way' And Prescribes Changes

The same day the feds said they recovered $4 billion related to health care fraud in the government's last fiscal year, a leading drug company exec acknowledged the industry had gone off course.

Glaxo's U.S. President Deirdre Connelly i

Glaxo's U.S. President Deirdre Connelly GSK hide caption

itoggle caption GSK
Glaxo's U.S. President Deirdre Connelly

Glaxo's U.S. President Deirdre Connelly

GSK

In a speech Monday to hundreds of people who make their living keeping drugmakers on the straight and narrow, GlaxoSmithKline's U.S. President Deirdre Connelly noted the huge fines paid in recent years by drugmakers and the low esteem consumers have for the companies these days.

Then she asked the obvious question. "So what went wrong?"

In the speech, whose prepared text we got from the company, Connelly said, "The answer, I believe, is that, in some ways, our industry lost its way." Nobody I know would argue with that. She faulted a "competitive selling model" that works fine for autos or candy, but just isn't right for medicines that can save people's lives.

Recall that only last week, Glaxo said it would set aside $3.5 billion to cover the cost of product-liability lawsuits and an investigation into the company's past marketing practices. In July, the company said it would take a $2.4 billion charge for legal problems and a few months later said it would pay $750 million to settle charges about poor drug quality at a plant, now closed, in Puerto Rico.

Connelly said a voluntary marketing code, beefed up in 2009, has curtailed industry excesses. "But negative perceptions remain," she conceded. Glaxo, she said, has gone farther than the code requires and is changing some things about how it does business.

Her prescription for change included focusing on patients' needs and operating with greater transparency.

One specific change worth noting: Glaxo won't be paying drug reps bonuses based on increases in prescriptions in their territories anymore. Instead, Connelly said, Glaxo will base the compensation on specific scientific and business knowledge, customer feedback and performance of the business unit they're part of.

You can read the full text of Connelly's speech here.

We'll be checking CafePharma's Glaxo bulletin board, a hangout for sales reps, for reaction. So far the anonymous posters aren't loving it.

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