Why Traditional Approaches Often Fall Short
Designing an effective sales compensation plan for a rare disease product is fundamentally different from designing one for a product with a broad patient population. Rare disease sales organizations are typically small, with representatives covering large geographies and highly specialized customer groups. Opportunities are fewer, each interaction is more valuable, and mistakes in compensation design can be costly.
As a result, rare disease products often require customized sales compensation solutions rather than traditional incentive plans adapted from primary care or specialty pharmaceutical models.
At The Marketing Advantage (TMA), we have found that the optimal compensation plan is largely determined by six key market characteristics.
The Six Key Market Characteristics of Rare Disease Compensation Design
Patient Population Size
The size of the patient population largely determines the flexibility available in compensation design. Larger patient populations can support more traditional sales incentive approaches, while smaller populations often require alternative methodologies.
Target Concentration and Difficulty of Diagnosis
The concentration of specialists and the complexity of identifying patients can either expand or significantly restrict the universe of promotional opportunities.
Target Concentration and Difficulty of Diagnosis
Whether a therapy is chronic, lifelong, episodic, or a one-time treatment directly impacts the importance of patient retention and the sustainability of sales growth.
Data Availability and Accuracy
The presence of competing therapies or alternative treatment approaches often determines how heavily plans should reward advocacy and market development activities.
Competitive And Alternative Treatment Environment
The quality of claims data, prescription data, and competitive intelligence influences both the fairness and credibility of the compensation plan.
The complexity of treatment administration impacts where, how, and with whom sales representatives must engage to drive adoption.
Together, these six factors influence both the structure and the details of a rare disease sales compensation plan.
Common Compensation Plans Used in Larger Rare Disease Markets
Surprisingly many large BioPharma companies treat their rare disease products (if they have larger population sizes) much like they do regular biopharma products. In fact, the three most commonly employed sales compensation plans are not truly tailored for rare disease:
1. FORCED RANKING BASED ON UNITS AND UNIT GROWTH
Administration: Quarterly
Advantages
- Easy and inexpensive to administer.
- Particularly attractive for organizations managing multiple rare disease products.
- Plan costs are relatively predictable.
Disadvantages
- Often viewed as inequitable.
- Large-volume territories and small-volume territories frequently end up in the middle of the rankings.
- Typically does not maximize sales performance.
Treatment Administration Complexity