Sunday, February 23, 2014

A Few General Observations -- And One Specific Class-Action Example -- About Historical Outside Sales At US Pharma Concerns

Back in November 2013, I said I'd likely not cover this dispute in great detail, pleading by pleading. That remains true. But some recent events have set me to thinking -- and as to the general questions raised by the suit, I feel a need to speak up. So bear with me.

Please note that the quotes in navy blue below are from attorneys not involved in this litigation. Please also note that I regard Merck as a very fair, and forward-thinking employer (here is Whitehouse Station's original answer to the complaint, in full -- a 19 page PDF). [Merck's amended and corrected answer, a 33 page affair, is here.]

I frankly cannot say the same (i.e., "fair and forward thinking"), about the former executive team at legacy Schering-Plough -- and I must also note that this suit was brought originally against legacy S-P, and largely targets its executives, for conduct occuring prior to Merck's arrival (circa 2006 to 2009). [So, once again -- should $250 million (or more) ultimately turn out to be "the bar tab" here -- it is (in my studied opinion) Fred, Tom, Tom, Brent and Carrie who skipped out on it, free and clear. And that group collectively got about $500 million (all in) in benefits and pay, for their trouble at S-P. Nice. Here is the plaintiffs' original putative class action complaint, a large 44 page PDF file.] The plaintiffs have recently amended their complaint, here -- making it a 71 page joint.

From the HR Exec article, remarking on the putative federal class action styled cause 13-2970 (US Dist. Ct., NJ) -- do go read it all, but here's a bit.
. . . .Nicholas Woodfield, principal of The Employment Law Group in Washington, has a unique perspective on the inner workings of such cases, as the firm he works for has been engaged in gender-discrimination cases against Fortune 500 companies around the United States. But, he says, he also has two sisters who were both pharmaceutical sales representatives and has gleaned knowledge from their experiences.

Historically, he says, such sales positions have been staffed primarily by women in an effort to gain access to busy – and typically male -- doctors.

"Not just women," he says, "but attractive women."

And Michael Pruitt, an employment-law attorney with Jackson White in Mesa, Ariz., has represented other pharmaceutical sales representatives in a class-action lawsuit before the U.S. Supreme Court, echoes Woodfield's assertion.

"The perception with Big Pharma," Pruitt says, "is that it employs many young females in 'outside sales' positions who meet directly with the doctors to answer questions and influence their prescription practices. But, beyond these positions, there is limited upward mobility for female employees."

And if pharma companies do indeed want young, attractive people pitching their wares to physicians, says Woodfield, then sending a visibly pregnant woman to pitch new medications to a male doctor "just isn’t as effective" a sales technique as sending a slender, non-pregnant sales rep would likely be.

This may be a cynical perspective, he acknowledges, and he emphasizes that it is his personal opinion, but "I think it’s a fair assessment of why you’re seeing this in this industry."

Importantly, Woodfield notes, those hired for these sales-rep roles must be as intelligent as they are attractive.

"It’s a complex business," he says, "and physicians are smart people."

Is it any wonder then that these individuals would want to also seek opportunities to move into more challenging, higher-paid roles after starting as sales reps?

"If the goal is to put attractive people before doctors and try to get their attention and, when they’re not as attractive, get rid of them, and if there are more women being hired, then you’ve got a situation where you’re probably going to be looking at more of these lawsuits in the future," says Woodfield. . . .

Having provided the readership with both the class's version of these events, above, and the successor company's version, here -- now twice (in each case, including my earlier backgrounder from November of 2013). . . we will likely fall silent on the topic, and let either settlement negotiations, or the federal district court determine the outcome. As a pharma veteran, I can also attest (to at least the historical) accuracy -- of Mr. Woodfield's observations in quite a number of instances above. I wish the plaintiffs all the best, as I suspect -- given the well-documented proclivities of former Schering-Plough management to skirt the law, generally -- where there is smoke. . . there is often. . . fire. [That link -- coupled to this one -- demonstrates that the ENHANCE delayed disclosure securities class action settlement was about 30 per cent higher than an ordinary "liars' discount" analysis would have predicted. Thus, those must have been some very ugly now-sealed Schering-Plough executives' depositions.]

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