CIAs pressure pharma to rethink sales rep compensation
Novartis's recent settlement with the Department of Justice (DOJ) – to the tune of $422 million – also included the signing of a Corporate Integrity Agreement (CIA) requiring the Swiss-based manufacturer to review incentive-based compensation for reps, and to examine “the extent to which compensation is based on product performance,” according to the CIA.
Other CIAs that accompanied DOJ settlements this year, which include settlements with Forest Labs, Allergan, Elan, Johnson & Johnson and AstraZeneca, also stipulate that an independent review organization (IRO) examine incentive structures for sales reps, and “include mechanisms, where appropriate, to exclude from incentive compensation sales that may indicate off-label promotion.”
When examining sales rep compensation structures – which include salary, bonuses and contests, according to the CIA – IROs are not required to undertake a de novo review, or examine compensation practices leading up to the settlement. They are required, however, to “ensure that financial incentives do not inappropriately motivate [sales reps] to engage in the improper promotion, sales, and marketing” of products reimbursed by government healthcare plans.
Julie Masow, a Novartis spokesperson, said in an email that while the Novartis CIA does require additional monitoring and reporting, among other things, the company has “already taken steps to correct the challenged practices and comply with new government guidance.” The Novartis settlement was the result of Trileptal off-label promotion allegations, as well as other illegal promotional practices with respect to Diovan, Exforge, Sandostatin, Tekturna and Zelnorm.
GlaxoSmithKline signed a five-year CIA in 2003 (and paid $88 million) to settle False Claims litigation regarding Paxil and Flonase; the CIA has now expired. Over the summer, the company announced that it would end bonus structures for sales reps based on sales targets, and instead focus on qualitative measures, like customer evaluations.