Tens of thousands of drug sales reps could sue their current and former employers for overtime pay--joining a class action case arguing that the nature of the job does not exclude them from time and a half requirements.

In class action suits across the country, reps are arguing that their role isn't a sales job in the traditional sense--and, moreover, that their scripted calls leave little room for independent decision-making. Only outside sales reps and administrative positions are exempt under overtime pay laws.

Suits have been filed against at least 10 major drug makers, including Johnson & Johnson, Eli Lilly, and Amgen. As of now, they will be tried state by state, company by company. Collective settlements of about $1 billion are at stake for the industry. Similar suits awarded $98 million to stockbrokers at Smith Barney and $135 million to State Farm insurance adjusters.

"There's going to be some question about what it means to be making sales in this business," said Michael D. Thompson, an attorney at Epstein Becker & Green, who is not involved in the case. "Obviously you're never closing deals."

Indeed a California suit against AstraZeneca states, "Plaintiff and the class members did not sell tangible or intangible items nor obtain orders or contracts for products, services or use of facilities. Therefore, the outside-sales explanation [for the overtime exemption] would not be applicable." It seeks $5.5 million in damages.

In addition, plaintiffs' attorneys argue that restrictions on off-label promotion and similar marketing regulations have made sales calls very scripted. "Sales reps have gotten less and less discretion in how they make presentations," Thompson said.

The suits come at a time when drug companies are reevaluating their sales model and trimming their ranks. Pfizer in December cut about 20 percent of its sales force, backing off a tactic it pioneered of having multiple reps calling on the same physician. The company is using more electronic selling methods--like its MedNet Web site--to fill some functions like facilitating sample orders. Merck, after implementing telephone or video detailing in 50,000 physician offices, reports that annual calls per rep increased 20 percent.

In contrast to the job's perceived easygoing glamour in days past, pharma sales reps are now under pressure to call on 40 or 50 physicians a week--at a time when harried doctors are increasingly barring their doors against the onslaught. "Reps today have really been challenged in terms of time management," said Eric Newmark, a senior research analyst at Health Industry Insights, a market research firm.

Newmark believes that the suit will spur investments in more sophisticated automation systems that provide reps with information on specific doctors, their prescribing habits, and route planning. Still, technology is unlikely to replace face-to-face interactions in the near term. "Most of the industry sentiment is that e-detailing hasn't been as successful as hoped," he said.

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Class action suits across the country challenge firms to pay overtime.

Sales Reps to Big Pharma: 'Sue You!'

Could Big Pharma be casting off its Luddite habits and catching up with the Internet age? Well, Johnson & Johnson at least is turning to the Web as the next frontier in corporate and promotional communications--at a time when most of its competitors are also struggling to get more bang for their advertising buck.

 The New Jersey-based drug giant cut 10 percent of its marketing budget last year, spending $1.9 billion compared to $2.1 billion in 2005; this added up to 32.7 percent of sales last year, down from 34.1 percent in 2005. But that wasn't the only surprising marketing-money move: Many of the cuts appear to come from DTC television advertising in favor of more experimental methods of reaching consumers.

The new approach can also be seen in the newly posted videos featuring employee stories on J&J's Web site. Links to the videos are displayed on the homepage (http://www.jnj.com/home.htm)--where they're accessible to analysts and investors, doctors and consumers, career-searchers and current employees--and also woven through its 2006 annual report. The online report is perusable in standard PDF format or on self-turning "virtual paper," where a camera icon launches the videos.

"There's more passion and enthusiasm in the people who work here than you can convey," said Ray Jordan, vice president of public affairs and corporate communications. "The videos really brought the stories to life, and the stories really brought the strategic principles to life."

Jordan noted that while many companies include employee stories on their own Web sites, he couldn't find another firm that is taking it a step further by adding video.

 The videos aren't related to the advertising shift per se, but the same line of thinking drove both. "It's about a migration from print to online," Jordan said. "It's no surprise that where we're going in the advertising space is consistent with corporate communications."

Last month, for instance, the company invited several medical bloggers for an over-dinner discussion of social media like blogs and other online forums. "This is a very appealing space, and we're looking into it," Jordan said.

Drug giant moves corporate, promotional communications online.

Pharmaceutical Executive-04-11-2007

Sales Reps to Big Pharma: 'Sue You!'

J&J is Wired About the Web