Former Pharmaceutical Executive Talks Drug Pricing, Future of Sales Reps

Ever wish you could pick the brain of a pharma insider who not only has deep knowledge of the pharmaceutical industry, but also has their pulse on Washington?

That was exactly what Matt Wallach, co-founder and president of Veeva, did during his company’s annual Veeva Summit held in Philadelphia earlier this week when he interviewed pharmaceutical and healthcare industry expert Alex Azar in a fireside-type chat in front of more than 1,300 attendees.

Azar, who most recently served as president of Lilly USA before leaving in January to pursue other professional opportunities, also has extensive experience in the public health sector, having served first as general counsel of the U.S. Department of Health & Human Services, before becoming deputy secretary under Mike Leavitt.

Here are some brief snippets of what he had to say about some of the hottest topics facing the pharmaceutical and healthcare industries.

Future of the sales representative

“Stories about the death of the sales rep are greatly exaggerated,” said Azar.

He believes that in many instances the sales rep position is still the highest ROI tactic for many brands.

“As a corporate leader, there is nothing like when a sales rep goes on vacation and you get a call from the doctor’s office asking, ‘what happened to our rep?’” he said. “These people are intimately involved in helping physicians with caring for their patients.”

The problem, Azar says, can be access.

“Access [to doctors] is getting worse, but it’s not as bad as some suggest, especially if you are an established pharmaceutical company,” he said.

Azar relayed an example of how when he was with Lilly, the company created a suite of interactions to test how influential they could be at reaching physicians that categorically were considered “white space”-those that were never called on by a rep.

Over a period of six months, Lilly engaged the physician in a variety of touch points-peer-to-peer videos, direct mail, email, etc. He said the company was able to convert 18% of those who never saw a rep from its bottom tier to its top tier of advocacy.

“That tells me it can work, but I don’t think it can replace the rep,” Azar said.

When it comes to account management, he says the sales rep position plays a huge part.

“Sales reps don’t just do short sales,” he said. “They build relationships over the long term and add value over time.”

Healthcare reform

The Veeva Summit was held less than a week after the U.S. House of Representatives passed a measure to replace and repeal the Affordable Healthcare Act, making Washington politics a topic on everyone’s mind.

“Life sciences mainly hasn’t seen a huge impact out of Obamacare’s implementation,” Azar said.

Getting the legislation through the House was “the easy part,” according to Azar, who added that getting it passed in the Senate could present a challenge.

A frequent expert guest on TV news programs, Azar predicted that as the legislation progresses, you will see it become more liberal with more subsidiaries included.

Drug pricing

That discussion transitioned perfectly into the next hot topic of drug pricing, which Azar pointed out was not addressed in any of the new legislation.

“We have a problem,” he said. “Patients are paying too much for drugs.”

Over the last five to seven years, the price model has not changed, Azar explained, but what has changed is health insurance. More people have higher deductible plans and the burden of the cost of insurance out-of-pocket is being pushed on to employees or individual markets.

What used to be a tool that was part of the process of negotiations between the pharmacy and the insurance company has now put the patient in the middle, often having to pay the bill, he explained.

“We have got to solve it,” said Azar. “It is not sustainable for patients to pay list price for a drug [when they go to the pharmacy]. Even if you cut the list price of drugs by 50%, that is still very expensive for a patient when they walk into a pharmacy. The fall-off rate will be gigantic on adherence.”

But, government interference may not be the best way to solve the drug pricing problem, he said.

“We have to work with the insurance industry,“ Azar stressed. “It’s something for insurance and pharma to work together to solve as opposed to the government. How do we pull forward rebates? The company may be paying 50 to 60% rebate to the insurance company, but the patient isn’t seeing that. Somehow, we have to adjust that to solve the high out-of-pocket cost.”