Drug sponsor procurement is on a never ending quest to reduce the number of vendors.  This is often called a “preferred provider” list, which, the thinking goes, is intended to drive efficiency, manage risk, and provide better insight to “Spend”.  Seen from a certain lens, all of this is true.  The less understood down-side, however, is how this procurement strategy gives rise uncontrolled middleman economics.  The assumption is that competition among middlemen will give drug sponsors the best prices and the best quality.  In some cases this is true.  In others, middlemen are overly-empowered to increase profit margins by driving supply-side to the bottom, and will refuse to put forward excellent independent experts because the expert’s rate is too high relative to the middleman’s target mark up of 30%-100% percent.

Since those of us in the drug development independent small business workforce left industry at senior-level positions, many of us were shocked to get “offers” from these middlemen at less than half what we, as drug sponsor Directors and VPs, hired experts for.  Dan, a 25+ year biostatistician whose last industry title was VP of Biostatistics, explains:  “As VP of Biostat I regularly brought on temporary expertise for anywhere from $300-400 an hour from certain firms and agencies.  When I became an independent consultant these very same firms offered me $180 an hour.  I didn’t realize that I’d been paying $120/hr or more to the middleman, for nothing but paperwork and payment processing.”