Let’s start at the beginning and talk about the product this supplier owns: the Physicians’ Desk Reference (PDR). Never heard of it? Don’t worry, here’s a short background. And the story of how I saved a $1M dollars with a Sole Source Supplier
The book is pictured on your right. It’s a HUGE books with thousands of pages that doubles as a massive paperweight. The PDR includes FDA-approved drug label information of the most common BioPharma drugs (>1100). The information includes warnings and precautions, drug interactions, and full-color pill images, etc. Now the fun part – the ONLY way to get your drugs into the book is to pay PDR. There are no other options.
This fossil was useful in the 20th century when we didn’t have the internet or a growing number of FDA approved drugs. But as soon as the PDR is published, it’s already starting to expire like roadkill in the sun. There are constant updates that can happen multiple times throughout a year. So they have a hard time staying relevant for more than five minutes.
So pretend you’re the publisher of the PDR and are aware of this, what do you do? You could add a Board of Directors that can highly influence the FDA and drug approvals. What about starting a digital channel to have this information available as well? You won’t be able to charge as much since there is competition, so it’s only a partial answer. Now let me tell you what else they did…
This is where the story begins. My boss gave me this project to work on to help guide an intern, but unfortunately, he wasn’t up to the challenge. So I took a brief look at what companies had published in previous versions vs. the most recent edition (mind you this was around 2011). Wouldn’t you know it, it took me a whole five minutes to realize one of our biggest competitors went from publishing ALL of their products to one. That’s right – from about 40-ish to ONE (their name starts with Gene…).
I saw this and I immediately emailed the supplier and asked for tiered pricing. Told my boss as I was sure we had found the solution! But, I was met with a lot of unanswered emails, phone calls to discuss to that it’s on the way or replies with pointless questions to stall. After a month of this, my boss and I had enough and decided to escalate the situation. So we escalated a call to include VP’s on both sides.
This is my favorite part…
During the call, there were blatant lies and ridiculous accusations. Apparently, we never even had a single conversation, exchanged an email and when we did talk I was extremely rude and unprofessional. Being naive and from the midwest – I hadn’t ever experienced anything like it. I’m pretty sure my face turned a shade of red previously never seen and my blood pressure was not in any healthy range. So my response was -“I’ll send all the emails and phone calls to everyone once I get back to my desk if you’d like.”
My boss gave me the side eye. I shut up from that point on. I don’t have the tolerance for things like this. But once the VP then specifically requested it, s the tiered pricing came the next day. The escalation worked, but unfortunately – the unethical business practice didn’t.
Neither did loading the Board of Directors who with FDA connected staff (who approve drugs). It may not be ‘intentionally’ unethical, but it works great as a scare tactic. It is easier to pay 500k-1M+ instead of risking the possibility a drug wouldn’t be approved. Don’t you think? We even had to tiptoe around it when presenting with Executives. In the end, we reduced our spend by a MILLION dollars. Hard dollar savings. Removed from a yearly budget. So it was worth all the BS.
So what’s the take away on this for working with Sole Source Suppliers?
- 1. Be persistent
- 2. Keep ALL your emails
- 3. Escalate to Executives for support
- 4. Don’t be afraid to push boundaries previously considered “untouchable spend”
- 5. Always stand your ground (a little side eye never hurt anyone!)
- 6. Do what’s right /ethical
Do you agree/not agree? Send me a message or comment below!
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