Three Sales Compensation Pitfalls to Avoid for a Rare Disease Product Launch
May 9, 2023
Since the Orphan Drug Act was passed in 1983, the number of products being researched and approved for rare and orphan diseases has increased dramatically, offering hope and life-saving treatments for the millions of patients affected by these often under-served conditions. In fact, over half of recent novel drug approvals were for rare diseases. Nevertheless, launching a rare disease product continues to be incredibly challenging; in extreme cases, companies have even chosen to cease all commercial sales efforts for their rare disease treatment. In this blog post, we will explore three sales compensation pitfalls to avoid in the design of the sales compensation plan for a rare disease product launch.
Market Characteristics & Implications for Launch Sales Compensation
The rare and orphan disease market exhibits a number of unique characteristics that have significant implications for launch sales compensation. Not only is launching a rare disease product extremely different from launching a product with a much larger patient population, but nuances exist from one rare disease to another as well, demonstrating just how intricate and difficult launch truly is.
Let’s explore four characteristics of the rare disease market and their implications for sales compensation:
Small Patient Population
A disease is considered rare in the US if it affects under 200,000 patients
A small patient population means rare disease sales forces tend to be small and, accordingly, cover large territories. Additionally, a small patient population makes forecasting the national goal more volatile as a forecast being off by only a few patients can result in the national goal being missed dramatically.
Lack of Data and/or Proxies
There is typically little to no competitive data available
With over 95% of the over 7,000 estimated rare diseases having no treatment, these products typically have no competition and thus no competitive data. Additionally, though claims data, ICD-11 codes, patient advocacy groups, etc. provide some insight, they are frequently only of marginal assistance.
Long/Difficult Road to Diagnosis
It often takes years and several physicians to reach a diagnosis
Knowing the types of physicians that patients are likely to see on their road to diagnosis means companies can pursue those physicians to drive early diagnosis and treatment. However, patients may see several physicians before being diagnosed, meaning a small sales force may need to service many physicians.
Lack of Physician Exposure
Few physicians have experience with rare diseases
Although there are rare disease specialists, not only are they few in number, but patients will likely see other physicians before being diagnosed. Thus, one role of a rare disease sales force is education on the rare disease and its diagnosis. This, in turn, calls for a more expert and specialized sales force.
Thus, there are numerous characteristics of the rare disease market that have significant implications for the sales compensation design process, especially for launch. Let’s explore some of the most common pitfalls to avoid in sales compensation design for the launch of a rare disease product.
Pitfall 1: Not Planning for Launch Early Enough
Planning for the launch of a rare disease product must begin earlier than launch planning typically does for products with larger patient populations. Recall from the earlier section that one of the primary roles of a rare disease sales force is not just education on the product and its efficacy, side effects, etc., but, unlike most products with larger patient populations, education on the rare disease itself and its diagnosis. This calls for a more specialized and expert sales force, requiring longer and more rigorous hiring and training processes. The difficulty of identifying and locating patients furthermore demonstrates the need to start as early as possible.
Pitfall 2: Setting the National Goal Too Optimistically
The focus of the sales force during launch should be education rather than sales, so the sales compensation plan must be designed with the expectation that sales will likely be scarce at first as representatives build awareness of the rare disease and its diagnosis. Furthermore, too often, companies believe that a rare disease product will readily be adopted once physicians are aware of it since there typically are no competing medications, but this is not always the case. This pitfall is further exacerbated by formulary wins not being as automatic as expected; the sales compensation plan must be designed to keep the sales force motivated and compensated even if the national goal is missed.
Pitfall 3: Mitigating Uncertainty with Forced Rank
How companies oftentimes guard against this uncertainty takes us to our next pitfall: compensating the sales force against a forced rank sales compensation plan since such plans ensure the entire sales compensation budget is paid out even if the national goal is missed. However, forced rank plans have significant limitations, particularly during the launch stage, and do not properly reward on sales performance. Although this is true for any biopharma product, it is intensified in the rare disease space as sales for rare disease products are typically very low, especially for the bottom half of the sales force. Because ranking loses relative performance differences (i.e., how much better is rank 1 versus rank 2 versus rank 3), two representatives can earn very different payouts for very similar performances or, alternatively, very similar payouts for very different performances. In short, forced rank seldom properly compensates on performance and this leads to sales representatives being less motivated than they should be and not driving sales as well they could be during the critical launch phase.
Conclusion
The rare disease market presents a number of unique characteristics that have significant implications for launch sales compensation design. These implications make it critical to avoid three of the most common sales compensation pitfalls for a rare disease launch: not planning for launch early enough, setting the national goal too optimistically, and mitigating uncertainty with forced rank. Request a free consultation with us today to get started on ensuring your launch sales compensation strategy maximizes your rare disease product’s ability to reach and improve outcomes for as many patients as possible.
