[PRACTICE NOTE] The Hidden Tax on Pharma Commercial Performance

A pharmaceutical commercial system transfers effort onto the patients it serves, the offices that prescribe and the colleagues it employs. That effort never reaches the accounts, and the Consumer-Grade Specification is what finally makes it visible.

Organizations are precise about the costs they carry and vague about the costs they create. Every operating model pushes some share of its work outward, onto customers, onto partners, onto the people standing at the edge of the system. Conventional accounting captures the first kind of cost with real discipline and rarely captures the second at all. That asymmetry is where a hidden tax begins to collect.

In pharmaceuticals the asymmetry carries a sharper edge, because a manufacturer does not control the transaction between its science and the person who needs it. Earned clinical value travels through prescribers, payers, pharmacies, hubs and specialty channels that the company influences without owning. Work falls into the spaces between those parties, and somebody has to absorb it. That somebody is rarely the organization whose design created the work.

Where the hidden tax is actually paid

The hidden tax is the effort a pharmaceutical system transfers onto the people it intends to serve and onto the people it employs. A patient pays it in repeated phone calls, in the same information given to three different parties, in forms completed more than once. She pays it in days spent waiting for an answer that nobody owes her. A prescriber's office pays it in administrative labor that no payer reimburses and no manufacturer ever books.

A field colleague pays it too, in work that was never in the job description. Reimbursement puzzles, portal failures and hub escalations often arrive at the person holding the relationship, because that is the only door a customer can find. None of this breaches a policy or triggers an escalation. Gartner's work on service channels found that 62% of channel transitions are high effort for customers, and every handoff between pharma functions is one of those transitions.

Commercial drag accumulates in a sequence I have learned to look for in order. Administrative burden lands first on the Path to Prescribe, followed by disconnected handoffs as the therapy moves toward fulfillment. Lack of visibility arrives next, when no party can say where the case actually sits. Fragmented support and poor escalation then compound along the Path to Adhere, each one returning the patient to a beginning she has already reached. Process complexity is what the whole sequence feels like from the outside, and it is the hurdle most often mistaken for the cause.

Three names for one systemic deviation

In the chapter of my book on rewiring Operational DNA I borrowed three Japanese manufacturing distinctions to describe what I came to call systemic deviations. Lean practice separates waste from unevenness and both from overburden, because the three respond to different interventions. Pharma already runs this discipline at industrial grade inside its plants and its quality systems. The gap sits elsewhere, where experience has been left to default while brand and product were deliberately designed.

Muda, the work that adds nothing

Muda is waste, any activity that consumes resources without adding proportional value. In a commercial system it can show up as unnecessary interactions, stages, steps and touchpoints that create delay rather than progress. A prior authorization resubmitted because one field was blank on the first pass is Muda, and so is an enrollment that collects what the specialty pharmacy already holds.

Mura, the unevenness clinicians read as unreliability

Mura is unevenness, the irregularity that makes an outcome unpredictable rather than simply wrong. One hub call resolves a benefit question in minutes, and the next takes days. Manufacturing sites measure variance in micrograms, while commercial variability of that size is often tolerated as the price of scale.

Clinicians work in a profession built on reliability, so they tend to read variability as unreliability. This is the point where operational friction becomes experiential friction, since a clinician grades what she can feel rather than a process she cannot see. What she feels is whether a therapy can be relied upon inside a crowded week. Unevenness at that scale rarely points to weak messaging, and it points instead to a join that no owner has been asked to govern.

Muri, the overburden nobody planned

Muri is overburden or excessive strain, and it may be the most surreptitious of the three. It shows up when customers and internal operations are subjected to unplanned demand and undue effort, producing inefficiency, errors and suboptimal outcomes. Among the systemic deviations it has a particularly detrimental effect on the wellbeing of employees. That last point deserves more weight in pharma than most commercial leaders give it.

Consider a specialty launch that routes benefit verification, copay enrollment and nurse education through a hub built for a fraction of the volume. Wait times stretch, errors multiply, and rework becomes standing work rather than an exception. Nobody forecast the demand, so the strain settles on whoever stands closest to the patient.

Why the tax stays off the ledger

No line on a profit and loss statement carries this tax, because it is paid in somebody else's time. The organization measures its own cost to serve with real rigor and does not measure the customer's cost to be served. Those two numbers move in opposite directions more often than commercial leaders expect, because taking cost out of a service model can mean putting effort into a patient's week.

Deloitte's work on engagement makes the asymmetry visible from both sides at once. Only 28% of healthcare professionals believe pharma's customer engagement strategies meet their needs, while 82% of life sciences executives are satisfied with those same strategies. The internal view measures the organization's own effort and finds it adequate. The external view measures the customer's effort and reaches a different verdict.

My own position has hardened into a plain statement. Friction is an economic variable, and accumulated friction becomes commercial drag. A commercial system that declines to price friction has chosen to let somebody else carry it.

Nobody designed it, which is the problem

Nobody sat in a room and designed this tax, which is precisely why it persists. It accumulated at the joins, between marketing and medical, between access and patient services, between a manufacturer and the outside parties that touch the therapy. Each function performs its own work capably and is measured against its own objectives, while very little rigor is applied to how those functions combine inside a single person's month.

Joins are where ownership was never appointed. A touchpoint can rate well on its own and still sit inside an experience that fails end to end, which is why the question of who owns the experience rarely has a satisfying answer. This is a design gap rather than a character gap. The people in these roles are capable, and the structure was never built to carry what it is being asked to deliver.

None of it reflects a shortage of patient commitment. Patient centricity is native to this industry. What arrived a decade ago was a consumer customer experience playbook whose first iterations did not fit a regulated, multi-party commercial model, so the industry set it aside. The rejection was rational, and the wrong lesson was drawn from it, because the discipline was discarded along with the misfit.

Heroics operate as a subsidy

I have come to read heroics as a subsidy rather than a virtue. Capable people absorb the tax instead of letting it surface as a visible failure, and the system records a success. A nurse educator stays late to untangle a benefit denial, and a hub agent works around a portal that will not accept a date. Each act is admirable, and each one conceals the defect that made it necessary.

Because the cost is paid in discretionary effort, nobody books it, and the organization only ever sees the cases that broke through into a complaint. A subsidy funded by goodwill is a fragile way to run an operating model, and strain of this kind wears down exactly the people a commercial system can least afford to lose.

The tax is also a loss

Burden and loss are largely the same phenomenon measured in two directions. Every interaction either compounds value or creates drag, which is the plainest way I know to state the economics. Effort is where a clinically justified decision quietly ends, because a prescriber facing a multi step access process usually has a simpler option available. Gartner has found that low effort customers are 61% more likely to stay with a company.

In pharma the equivalent of leaving is an abandoned prescription, a skipped refill or a therapy never started. Those dropout points are experiential rather than clinical or promotional, which is why they survive sharper messaging and better targeting. The share of earned value that becomes sustained therapy is the Realization Rate, and the distance between earned and realized value is value leakage. Customer Value at Risk puts a figure on the exposure, calculated as earned value multiplied by one minus the Realization Rate.

Work published with TheyDo traced that ladder as an illustrative compounded scenario rather than a benchmark. A billion dollars of earned value becomes roughly seven hundred million after prescriptions that are never filled. It falls again after early discontinuation, reaching close to four hundred and fifty million in realized value once long term adherence erosion is counted. No competitor takes the difference.

Effort is one of six Consumer-Grade conditions

Consumer-Grade is a specification rather than an aspiration, and the Specification is a closed structural set of six conditions. They are Recognition, Anticipation, Coherence, Effort, Resolution and Visibility. Felt attributes such as easy, simple, fast and transparent are reported outcomes that decompose into those six conditions. Thresholds are set per organization, which is the discipline that turns a mood into a measurable standard.

Effort is the condition this argument sits inside. The hidden tax is what Effort measures once somebody has set a threshold for it, and in most commercial organizations no threshold has ever been set. Without one, effort is governed by whatever the system happens to produce and whatever its people are willing to absorb. Setting it means asking how many steps, how many days and how much repeated information a therapy demands of the person taking it.

The standard the patient already applies

At this point the matter stops being a service question and becomes a competitive one. The patient is not comparing a manufacturer to another pharmaceutical company. She is comparing it to the last competent transaction she had, which may have been a same day delivery or a rebooked flight settled in one message. That comparison is the threshold she carries into every interaction, whether or not the organization has written it down.

Meeting it is the practical work of rewiring Operational DNA, and it begins by treating effort as a quality defect rather than a cost of doing business. The capability can be designed in, which is a more useful conclusion than it may first appear.

Key Takeaways

• The hidden tax is the effort a commercial system transfers onto patients, prescriber offices and its own colleagues, paid in time rather than money.
• Commercial drag accumulates in a recognisable order, from administrative burden and disconnected handoffs through lack of visibility, fragmented support, poor escalation and process complexity.
• Muda, Mura and Muri give leaders three distinct diagnoses, and overburden is the one that most often goes unnamed.
• The tax stays invisible because organizations measure their cost to serve and never measure the customer's cost to be served.
• Heroics act as a subsidy, concealing structural defects and funding the operating model out of discretionary goodwill.
• Effort is one of six Consumer-Grade conditions, and the hidden tax is what it measures once a threshold exists.

Diagnostic Questions to Consider

1. Name the steps, days and repeated disclosures a patient must complete between a prescribing decision and a first dose on your lead therapy.
2. Locate where administrative burden, disconnected handoffs and lack of visibility first appear in that sequence, and name who owns each one.
3. Identify which of your service economies were achieved by moving work onto a patient, an office or a field colleague.
4. List the recurring heroics your organization relies on, and treat each one as evidence of an unnamed structural defect.
5. State the threshold your organization has set for Effort as a Consumer-Grade condition, and what follows when a journey breaches it.

Closing Reflection

The science in this industry is extraordinary and the experience surrounding it is frequently ordinary. That contradiction reflects a gap in design rather than a gap in commitment, because the people inside these organizations are among the most committed I have worked with anywhere. Design gaps are fixable in ways that gaps of conviction rarely are.

What makes the hidden tax worth a leadership agenda is that it compounds in silence. No complaint arrives, no alarm sounds, and the quarterly review shows activity holding steady while realized value drifts downward. Leaders who want to see it will have to go looking deliberately, in the joins, in the rework and in the discretionary effort their best people spend to keep a design intact.

Every commercial system imposes some measure of effort, so the useful question lies elsewhere. It asks whether the organization has chosen to measure that effort, assign it an owner and set a threshold it is willing to defend. Answering that question is what separates a brand that is trusted from one that is merely tolerated.

About the Author

Wayne Simmons is the founder of The Customer Excellence AGENCY and the author of The Customer Excellence Enterprise (Wiley, 2024). He is founding faculty of the MS in Customer Experience Management at Michigan State University's Broad College of Business. He led global customer excellence in Pfizer's first Chief Marketing Organization and in Bayer's Customer Powerhouse.

The Customer Excellence Agency: Advancing the Pursuit of Excellence in Service of Science.