Are Pharmaceutical Reps Exempt or Non-Exempt?

A recent article in the news described the court case at Novartis where sales representatives were pressing for overtime, given the structure of their accountabilities.  This has been a topic we have reviewed a number of times for our clients and which rarely lands on the same recommendation.  Pharma companies generally pay on business results – marketshare,  marketshare change and sometimes number of scripts.  The job itself of the sales rep historically has been one of narrowly defined accountabilities, which are often assessed by reach and frequency metrics.

In those cases, the department of labor and the courts have an easy time classifying a role as non-exempt in status.  The rep is required to make an average 7 – 9 customer visits per day, to deliver two or more key product messages when the opportunity arises to speak with a physician or other professional, and then must ensure that sufficient samples are available for the prescriber to dole out product, based on patient needs.  Because of the heavy focus on measured tasking (even though it is difficult to directly link the use of the product to the message delivered by the rep), the job assessor tends to say that very little is left to the rep’s own choice and that the job is pretty clearly defined in the various systems used to monitor performance.  When the job is clearly defined and leaves little to the choice of the performer, then it is classified as a non-exempt position.  There are a lot more standards that are applied to make this classification, but at the end of the day, freedom of choice on what is done and levels of decision making are at the root of the classification.

Enter the legal department at the pharma company.  In the last couple of years, there has been a strong push in job descriptions to place language around independently developing strategy, establishing priorities for the territory in terms of selling activities, and establishing one’s own daily schedule.  Using the word professional to elevate the role of rep to business “owner”  who is accountable to develop key contacts and manage a broad range of relationships has been an attempt to elevate the expectations of the role.  Somehow, these added wordings don’t quite do enough to elevate the role to the exempt level, however.  The accountabilities are still the same – see the docs, deliver the message, influence drug of choice, and leverage the relationship to access other medical providers.

What is interesting to me is the fact that with the rapidly changing landscape of the healthcare environment, the addition of so much more complexity in healthcare providers, formulary positioning, specialty pharmacies, large IDNs, care provider networks and institutions has made the job of sales rep much more difficult.  Reps have to know the clinical and treatment aspects of their products better than most physicians.  They need to understand how to help the doctor use the product with patients whose access to the drug is limited by their medical coverage or geographic location and care networks.   I doubt that the old reach and frequency model would even work effectively today in many of these situations, outside of some less sophisticated marketplaces that are not as heavily impacted by managed care practices.

A new customer development model that has emerged requires the representative to assess all of the local conditions and to devise a strategy that best addresses these conditions, while aligning to company goals, the compliance and regulatory environment, and physician preferences.  This hardly looks like a non-exempt position when you increase the complexity of the work to this level and note the amount of variation in responsibilities and approach that will is needed to perform the role properly.  Given the amount of technical clinical knowledge needed, the in-depth strategy setting and innovation required to succeed and then the amount of collaboration and networking expected, measuring success is not a simple matter of measuring number of calls, delivering the approved marketing messages, and devising the most efficiency call route.

In recent visits to the field with our client’s reps, we have seen reps changing the treatment preferences of surgeons, helping to gain approval for treatment for non-formulary drugs by establishing pre-approval systems in physician offices, and a much higher presence of medical science liaisons providing targeted messaging to pave the way for treatment protocols into the future.  The level of work being done today, which is surely indicative of the future requirements of the position, is more consultative than it is selling work.  The further the role moves in the direction of consulting, where expertise and counsel are the primary services or products provided to customers, the more difficult it will be to classify rep jobs as non-exempt.

Interesting that this case was settled in the current marketplace in the manner that it was.  Pharma companies are going to need to redefine the rep’s accountabilities, given all the complexity their people are facing today, and to reposition the rep’s defined efforts from purveyors of product to business consultants.   And those reach and frequency models will need to fall by the wayside, too, since they really do not apply to what most high level sales reps are doing today.

I believe this is an indicator of more change coming in the pharmaceutical industry. We will be seeing different sales models, new ways of getting information out to the medical community, and providing value added processes to help offices gain access to treatments for patients.