The Perils of Purchase-Order Contracting In Pharmaceutical Transactions - Pharmaceutical Technology

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The Perils of Purchase-Order Contracting In Pharmaceutical Transactions
Purchase-order contracting is a commonly used approach to conducting commercial transactions, but it is a risky proposition when applied to pharmaceutical transactions, including the buying and selling of contract services and pharmaceutical ingredients. The authors examine the contract provisions covered in a commercial-supply agreement that are likely to be omitted under purchase-order contracting and the risk-reduction benefits that a commercial-supply agreement can offer in pharmaceutical procurement.

PTSM: Pharmaceutical Technology Sourcing and Management
Volume 3, Issue 9

Looking forward

Failing to contractually address well-known "hot-button" issues, and hoping (essentially holding your breath) that contractual disputes will not arise and litigation will be unnecessary is a recipe for disaster. Suppliers and purchasers are well advised to negotiate commercial-supply agreements in advance of problems, spelling out the parties respective rights and obligations. Because of the substantial financial and legal risks, purchase-order contracting in pharmaceutical transactions should generally be avoided.

Stephen D. Sayre is a member of Dykema's corporate finance department and Todd Grant Gattoni* is a member of Dykema with his practice concentrated on products liability, business, and chemical exposure toxic-tort litigation, including pharmaceutical and medical device manufacturers in mass tort and class-action lawsuits involving commercial-supply agreements, 400 Renaissance Center, Detroit, MI 48243, tel. 313.568.5318, fax 313.568.6893,

* To whom correspondence should be directed.


1. FDA, The Center for Drug Evaluation and Research's Report to the Nation: 2005 (FDA, Rockville, MD, 2005), http://, accessed Aug. 27, 2007.


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