While the entire world was waiting for the Supreme Court to rule on healthcare reform Monday morning, they instead announced the results of their deliberations on whether pharmaceutical sales representatives are sales representatives. In a very close 5-4 decision they ruled that they really are outside sales people. It is astounding that, despite the billions of dollars spent on representatives, to the outside world it is not clear they actually sell. Novartis even settled a similar lawsuit earlier this year paying $99 million to their “sales” employees.
Let’s take a quick step back to review what really happened. In cases filed by sales representatives against their companies, they claimed they should be paid overtime for time they spent working over 40 hours a week. The principle of overtime pay is one of the cornerstones of ethical treatment of workers in our country and has been earned with the blood of those who went before us. Most of us recognize that there are several exemptions to the rule, one being for outside sales people. That is why reps, like senior leaders and others, are referred to as “exempt” employees where there is no obligation to pay overtime. The fight here was not about whether reps should be working longer or shorter hours but whether or not they were covered by the sales rep exemption.
The Supreme Court ruled 5-4 that the representatives were sales people and were not entitled to overtime pay. The Huffington Post has a good overview of what the justices decided. Even though 5-4 decisions have become quite common lately, traditionally they are viewed as a failure to reach consensus and happen well under 20% of the time. Note that the Obama administration supported the representatives and the reason it even got to the Supreme Court was because of lack of agreement in the lower courts. So by the thinnest of margins possible it has been decided that our representatives are really sales representatives.
If you want to get a good read on what people think of our industry and even what the reps think of their jobs, take some time to read the articles and the posts on cafepharma.com and let it all sink in. The articles talk about golf outings, dinners, conventions and all the things the reps do for doctors. The reps talk about either how hard they are driven by their bosses or how little they work. It seems the biggest worry is being tracked by computer signature times and that requires them to work full weeks and full days. There is a lot of talk about doing stuff but not a focused discussion of sales and development of selling skills.
I was with one of the nation’s most recognized labor lawyers this week and he was astounded by the Court’s ruling. He strongly felt that if the Department of Labor didn’t think they were sales people then they weren’t. He talked about how the reps or detail people were forced to spend all these hours going to offices and perhaps giving gifts or whatever they do and were not fairly compensated because they were denied overtime. There is little if any understanding by the outside world, of the role the reps play in the delivery of healthcare. Our image stinks.
I can’t overstate the biggest concern is the lack of real acknowledgment that our sales reps are sales reps and that they actually sell! Why are we paying $100,000, including incentive compensation, for sales representatives who don’t proclaim they are sales representatives? Just as important, why doesn’t the outside world know that our sales representatives are sales people? Maybe this lack of clarity and constant ambiguity is why everything in our industry today is just so much of a struggle.
In all the time I spent in sales and working with sales people, I seldom met a rep who didn’t talk about how effective they were selling in their geography. They were proud of the work they did and loved the fact they were rewarded and recognized for their skills. They worked extremely hard and really believed that through their sales efforts they were helping their physicians provide the absolute best care to their patients. The representatives I knew would be embarrassed and quite upset if somebody said they were not sales professionals.
Perhaps the industry has reached a crossroad and some serious decisions need to be made. Do we continue to push a sales model that seems to have morphed into something so fuzzy it takes the Supreme Court to decide 5-4 that our people sell or do we try something else? I would suggest that radical change is needed, even if that means just turning our reps back into sales people. What if the 5-4 would have gone the other way?