Think U.S. Sales Forces are Having a Hard Time?

With headline grabbing layoffs from Pfizer and other major firms, a career in pharmaceutical sales may seem a little risky at the moment.

Things are a lot worse over in Hungary where approximately half the country’s 2,700 pharmaceutical sales reps have been laid off since April. The cause: passage of drastic cost-containment legislation called The Safe and Economic Supply and Distribution of Medicines and Medical Devices Act. The bill contains a number of provisions aimed at reducing the country’s pharmaceutical bill, but a steep increase in the licensing fee for medical representatives is driving the staff reductions.

Hungary has long required that medical reps be licensed. Until the end of March 2007, however, the fee was approximately less than $100. On April 1, that increased a mere 300 fold to 5 million Hungarian forints (approximately $27,000) one time fee with a 1 million forint ($5,300) annual renewal fee. Medical device companies have it a little easier: their initial registration fee is 1 million forints and the annual renewal fee is also much lower.

Obviously, this would be a major expense anywhere. But in a country where the average annual income is around $11,000 and per capita drug consumption was $238 in 2006, it’s a near-crippling burden for most companies.

The pharmaceutical industry may get relief when Hungary’s Constitutional Court rules on the legality of the reform measures. A decision is expected in late 2007 or early 2008. Unfortunately, the industry may be facing an uphill battle as the country’s health budget is operating with a surplus for the first time since the fall of communism.