What is “Strategic Subcontracting” of the Drug Development Small Business Ecosystem

LifeSciHub News

Thanks to the “gig economy” some of the best drug development talent has left the drug sponsor to work as independent consultants.  From manufacturing tech transfer experts to commercialization analysts,  regulatory strategists to biostatisticians, every drug development department now has an abundance of choice for on-demand, highly experienced drug development expertise.

A common challenge is attempting to engage these independent subject matter experts (SMEs) via traditional human resources channels such as staffing firms and other agencies.  Aside from unfavorable economics (middleman is incentivized to find the lowest paid talent in order to increase own profit margins), independent SMEs no longer consider themselves human resources or employees.  They have made the transition to operate as small businesses.

LifeSciHub has emerged as a channel to the small business talent vendor ecosystem.  Via Radical Transparency, LifeSciHub enables both demand and supply to know the “middleman” fees.  This ensures that the majority of drug sponsor “spend” goes to the small business, not the middleman, allowing for a much higher quality of expertise for critical drug development projects.

The Impact of Preferred Provider Lists

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.”

Radically Transparent, Strategic Subcontracting with LifeSciHub

LifeSciHub recognizes that so long as 40-60% of drug development operations is outsourced, subcontracting is here to stay.  But we, as an industry, can do better than 30-100% mark ups!  That is money that should be going to research, not inefficient middlemen.

Comprised of an ever-growing network of independent small businesses, LifeSciHub is a single Master Services Agreement that provides access to hundreds of independent small businesses.  LifeSciHub does not control rates or negotiations, each independent small business sets its own rates according to their competitive positioning and understanding of the expertise domain.  The drug sponsor pays a single, transparent mark up for all engagements.  If the engagement lasts beyond one year, the LifeSciHub mark up goes down.  LifeSciHub itself is just paperwork, compliance and payment processing.  If the engagement goes beyond a year it is because the SME has proven their value.

How to Use LifeSciHub

It’s simple establish a Master Services Agreement with LifeSciHub, then pick between the highest caliber drug development expertise available!  To learn more:  info@lifescihub.com.