Nov. 7 (Bloomberg) -- When 100 of the top lung doctors in the U.S. gathered at a Hilton hotel in Houston last month to learn about GlaxoSmithKline Plc’s new respiratory drug, one message rang loud and clear: don’t ignore the pneumonia risk.
Much of the two-day meeting, organized by Glaxo, was devoted to potential side effects of the medicine, called Breo, which went on sale in the U.S. on Oct 30. The shift in emphasis is part of a shakeup at the U.K. drugmaker, which remains the focus of a bribery probe in China on the heels of a settlement last year in the U.S. to pay a record $3-billion fine for illegally marketing medicines.
It’s a far cry from the strategy deployed to market the drug’s forerunner Advair, rolled out 12 years ago. To drum up demand, top executives pushed Advair for all asthma patients, even though the medicine was cleared only for severe cases, according to a U.S. Justice Department complaint that led to Glaxo agreeing to pay the largest ever settlement in a health-care fraud case.
“With the old way we did things, you emphasized the efficacy and benefits,” said James Donohue, a professor of medicine at the University of North Carolina who received a fee from Glaxo for chairing the Oct. 5 Houston meeting. “At the end, you’d always include the safety, but you just brushed over it. Now there’s a huge emphasis on the side effects.”
Times have changed in the pharmaceutical industry, and not just for Glaxo. When Novartis introduced Arcapta in the U.S. market last year, it underlined that the drug, which treats chronic obstructive pulmonary disease, shouldn’t be used for asthma, according to Donohue. And when Actelion Ltd. announced U.S. regulatory approval of its new lung drug Opsumit last month, the Swiss company mentioned in its press release the need for doctors to test patients for signs of liver damage before starting treatment, a precaution the FDA didn’t include in its own approval statement.
Breo is the first of several drugs Glaxo has developed to succeed Advair, an $8-billion blockbuster whose patent expired in the U.S. in 2010. It may generate sales of as much as $1.6 billion in 2017, according to analysts’ estimates compiled by Bloomberg. Breo is also the first major medicine to test Glaxo’s new marketing approach.
As part of the settlement in the U.S., Glaxo pleaded guilty to failing to report safety data on Avandia, once the world’s best-selling diabetes pill. The drug was pulled in Europe in 2010 and sales were limited in the U.S. because of an increased risk of heart attacks.
To help repair its reputation, Glaxo has revised its incentive compensation program for U.S. sales representatives. The company in 2011 said it’s done away with the link between sales goals and bonuses. Bonuses are now based on selling competency, customer evaluations and overall performance of the representative’s business unit, according to Glaxo.
Dubbed “Patient First,” the new marketing strategy involves a team-based approach focused on educating and having discussions with doctors and pharmacists about the product, as opposed to individual sales representatives pushing prescriptions, according to Jorge Bartolome, senior vice president of Glaxo’s U.S. respiratory business. Doctors who attended the Oct. 5 event are now able to lead peer education sessions in their local area as speakers compensated by Glaxo, which under the 2010 health reform act must inform regulators of payments made to doctors.
Glaxo Chief Executive Officer Andrew Witty said on Oct. 23 he is considering exporting lessons from revising the strategy in the U.S. to other markets, including China, where corruption allegations led to a 61 percent plunge in third-quarter sales.
Outsiders see as much pragmatism as public service in the company’s new approach.
“Yes, they’re doing good, but they’re doing it for their own pocket,” said Fabian Wenner, an analyst with Kepler Cheuvreux in Zurich who rates Glaxo a buy. Repairing Glaxo’s image “isn’t going to happen overnight,” he added.
Others believe Glaxo has little choice but to embrace the tell-all approach.
“Selling as a practice in most industries means just giving the good news and leaving out the bad,” said marketing expert Bill Lee, president of Lee Consulting Group. The Web has changed that. “Buyers have the power now. They can easily go to the Internet and get pretty much all the information they need.”