font size
Sign inprintPrint
COURT RULINGS

Supreme Court Takes On Drug Rep Pay Case

Liability for overtime could cost billions, say industry group.

MICHAEL FITZHUGH

The Burrill Report

“PhRMA says the industry’s liability in the case could run to billions of dollars.”

The U.S. Supreme Court will decide whether federal overtime labor laws should cover an estimated 90,000 pharmaceutical sales representatives in the United States.

The appeal by two former salesmen for SmithKline Beecham (now GSK) seeks overtime pay for a nationwide class of GSK drug sales representatives who, the U.S. Department of Labor says, should never have been exempted from receiving extra wages for the often-long hours they spend waiting to meet with doctors.

Both parties, as well as the broader pharmaceutical industry, are eager for “a clear and uniform answer” to the questions raised by the case, says GSK.

The trade group Pharmaceutical Research and Manufacturers of America says the industry’s liability in the case could run to billions of dollars.

As long as the question of whether pharmaceutical sales representatives are exempt from overtime pay under the “outside sales” exemption of the Fair Labor Standards Act remains unresolved, “PhRMA members are exposed both to potentially staggering retrospective liability and to uncertainty over whether they must undertake major restructuring that would have significant consequences for the industry and its employees,” it wrote in an amicus brief.

Federal courts in the Third Circuit applied an “administrative exemption” to sales reps in overtime cases against Abbot Laboratories, Johnson & Johnson, AstraZeneca and Alpharm, according to Courthouse News Service.

But the San Francisco-based Ninth U.S. Circuit Court of Appeals ruled that GSK was in the right for not paying the representatives for the estimated 10 to 20 hours they worked outside normal business hours, based on an exemption from overtime pay requirements for outside sales reps.

While the argument will have tangible and tremendous financial significance for whichever party prevails, the fast-shrinking pool of U.S. drug sales reps could make it a bygone issue before long. The pharmaceutical industry announced 53,636 layoffs in 2010, according to Challenger, Gray & Christmas. Many of those cuts came in drug sales forces at companies such as AstraZeneca, Pfizer, and of course GSK, which cut 700 U.S. sales and marketing positions in June 2010.



December 02, 2011
http://www.burrillreport.com/article-supreme_court_takes_on_drug_rep_pay_case.html

[Please login to post comments]

Other recent stories

Burrill & Company's 25 year DVD

Sign Up to recevie the Burrill Weekly Brief


Follow burrillreport on Twitter