PDSA Releases Prospectus To Prospective Governance Group Members

Last week the Pharmaceutical Distribution Security Alliance (PDSA) released a prospectus for the, as yet, unnamed non-profit organization that they are trying to kickstart to help govern supply chain interoperability of the Drug Supply Chain Security Act (DSCSA) solutions targeting the Enhance Drug Distribution Security (EDDS) phase that will go into effect in November of 2023 (see “PDSA’s Proposal for Governance of DSCSA Phase II Interoperability” and “PDSA Brainstorms Vision For DSCSA Governance Organization With Stakeholders”).  You can download the prospectus here.

For the most part, the prospectus is a solid summary of their earlier proposal from April.  All the key points from that proposal are contained in the prospectus.  In fact, just about the only change I could find was in the treatment of “service providers” and “technical experts”.  In the original proposal, these organizations were allowed to join non-member advisory groups under the four main committees.  In the new prospectus, there is only one group that non-members—”Technical or process experts (e.g., thought leaders, service providers)”—may join and it is called a “technical work group” under the Interoperability Committee.  This is not a big difference.

Here is the current timeline from Appendix B of the prospectus. Click on the image to enlarge.

The prospectus also includes an annual membership fee table.  Each of the three supply chain segments (manufacturers, wholesale distributors and dispensers) are broken into four tiers based on revenue and number of employees.  Actually, only the lowest tier is based on the number of employees…25 or fewer full-time employees puts you in the lowest cost membership tier.   Trade associations or societies composed mainly of trading partners, and technical experts may also join under their own separate dues tier irrespective of size or revenue.

The pricing was determined through an understandably difficult set of decisions.  The formation group needed to balance the dues to assure enough funds to accomplish at least the first year of operation, without making them so large that it scares too many companies away from joining.  Their goals were to:

“(i) not dis-incent membership by any trading partner,

“(ii) incent early, diverse membership, and

“(iii) incent long-term membership commitment.”

They started by constructing a first-year budget for the group based on a goal of establishing a high-level blueprint for interoperability by September 2020, in addition to other business necessities.  Then they estimated the number of companies in each segment, tier and category that would likely join the organization in that first year and then figured out the price of the membership dues from there.  By category, they figured that 52 trading partners, 6 associations, and 14 technical experts would join.  In the end, they decided:

“…formation of the governance body would be initiated upon commitment from half of the targeted number of members and the budget will be managed fluidly over the course of the year to scale up to the budgeted levels as the full targeted number of members are added.”

So now it is time for prospective member companies to find the first year membership dues in your current budget and inform the formation group that you intend to join, preferably by the end of September.

On Thursday, the formation group held a conference call to go over the prospectus with interested parties, answer questions and call for companies to sign up.  The biggest expression of interest came from call participants who wanted to know how annual dues would be handled, considering that pretty much every company is currently working under a pre-established budget, and some companies will not get a new budget until January, April or even July next year. 

That’s a problem, because this organization needs to start this year if it has any hope of completing its plan on time, but the dues are so high that many companies will have a hard time finding the full annual dues before their 2020 budget year.  The formation group anticipated that problem, and so they also provided a chart showing the price for dues paid monthly for each tier.  The hope is that companies can join now, pay their dues monthly until they get a new budget, when they can switch to annual dues payment.  This only gets complicated when the price of dues goes up or down in the second year—who pays what when?—and it adds another layer of cost to administer, so they propose charging an extra 10% for monthly installment payers.

I am excited that the formation group has completed their work on time and the organization is about to begin counting the companies who are committed to joining.  The outcome of Thursday’s call was to set up a survey of potential participants to find out how they want to handle the dues/budget problem.  This problem has the potential to make or break the organization before it gets off the ground, and I fear that a survey is unlikely to result in consensus.  Fortunately, now that an updated version of the document was posted late Sunday evening, it appears that they have decided to collect that information at the same time they ask people to sign up. Well done.

As for me, I would love to be a part of this new organization.  I consider myself to be one of the many “technical experts” out there who could help make this organization successful, but my current consulting practice cannot support the dues, which would be significantly higher than any other membership organization I am currently or have been a paid member of, so I will have to monitor the organization from the outside.  I suspect many other technical experts will be in the same boat, so I will be pleasantly surprised if they are able to find the anticipated 14 of them who will join.  Fortunately, how many technical experts join will not make or break the organization’s critical first year.  I just hope the same situation doesn’t occur with the trading partner members.