VA Drug Accountability Conference

1. VA Drug Accountability Conference National Acquisition Center Steve Thomas Director, National Contract Service VA National Acquisition Center P.O. Box 76, Bldg 37 Hines, IL 60141 (708) 786-4920 Steven.Thomas2@va.gov David Carden Clinical Pharmacist VA National Acquisition Center P.O. Box 76, Bldg 37 Hines, IL 60141 (708) 786-4923 David.Carden@va.gov vaww1.va.gov/oamm/oa/nac/ncs/index.cfm

2. Presentation Outline Steve Thomas • National Contract Service Organization • Drug Purchasing Methods Used by VA • National Contracts • Pharmaceutical Prime Vendor • Pharmaceutical Repackaging Program David Carden • Notes from the NAC • Veterans Health Care Act of 1992

3. National Contract ServiceOrganization

4. Drug Purchasing Methods Used by VA • National Contract • Federal Supply Schedule • Blanket Purchase Agreement • Incentive Agreement • Open Market Purchase

5. Pharmaceutical National Contracts • Standardized products • Leveraged pricing • Efficient delivery • www.fbo.gov • Point of contact: Maria Ramirez (708) 786-4985

6. Pharmaceutical National Contracts – Broad Objectives • Lower Cost with Same Outcomes or, better still… • Same Cost with Better Outcomes or, best… • Lower Cost with Better Outcomes

7. Pharmaceutical National Contracts -Clinically Driven Contracting • Individual Evaluation Tools • Efficacy • Outcomes • Safety • Compliance • VA patient needs • Pharmacy factors • Clinical evaluation + Price = Best Value

8. Pharmaceutical National Contracts – Contracting Process Step 1 – Pre-Procurement Request PBM works up clinical review, meeting announcements, representative discussions with PBM Step 2 – Procurement Request from PBM to NAC Step 3 – FedBizOpps Notice Advertises Procurement for at least 15 days Step 4 – Issue Solicitation Step 5 – Solicitation Closes Step 6 – Award

9. Buy American Act • FAR 25.1 • Restricts the purchase of supplies that are not domestic end products • Applies to order values less than $194,000 • If domestic offer is not the low offer, apply: • An additional 6% to the low offeror’s price if the domestic offeror is a large business concern • An additional 12% to the low offeror’s price if the domestic offeror is a small business concern

10. Trade Agreements Act • FAR 25.4 • Waives the Buy American Act and other discriminatory provisions for eligible products from countries that have signed an international trade agreement with the United States, or that meet certain other criteria. • Offers of eligible products receive equal consideration with domestic offers. • Applies to order values over $194,000 (when not set-aside for small business)

11. Purchasing Open Market • If item(s) are on contract, order from the contracted source. • If item(s) are not on contract, seek out the advice of an acquisition professional. Why? • If order value is $0 to $3,000: • Follow Micropurchase Procedures in FAR 13.202 • Distribute orders equitably among qualified suppliers • May be awarded without soliciting competitive quotations • Use of purchase card is the preferred method • Do not split orders to keep them under $3,000

12. Purchasing Open Market (continued) • If order value is $3,001 to $25,000 • Set-aside for small business • Non-manufacturer rule does not apply (FAR 19.502-2(c) • Buy American Act applies • If order value is $25,001 to $100,000 • Set-aside for small business with exception in FAR 19-502-2 • Non-manufacturer rule does apply • Buy American Act applies

13. Purchasing Open Market (continued) • If order value is $100,001 to $194,000 • Set-aside for small business if there is reasonable expectation that 2 or more small businesses will offer products of a small business concern. • Buy American Act applies • NOTE: For orders between $50,000 and $194,000, the Israeli Trade Act Applies (FAR 25.406) • If order value is over $194,000 • Set-aside for small business if there is reasonable expectation that 2 or more small businesses will offer products of a small business concern. • Trade Agreements Act applies

14. Pharmaceutical National Contracts – Products • Pharmaceuticals • Medical gases • Dietary supplements • IV solutions • Influenza vaccine

15. Prime Vendor • Wide variety of product coverage • One stop shopping • Flexible delivery to multiple sites • Electronic ordering and price look-up • Inventory and space reduction • Fill rates greater than 97%

16. Pharmaceutical Prime Vendor Program • Awarded to McKesson Corporation on December 31, 2003 • Potential 8 Year Contract (2 year contract with three, 2 year options) • Negative distribution fees • Point of contact: German Arcibal (708) 786-7663

17. Pharmaceutical Repackaging Initiative • NAC coordinates bulk order shipments to PrePak • PrePak repackages product in government labeled bottles • Facilities order from PrePak • 7 Drugs Currently Covered by the Program – Alprazolam, Furosemide, Ibuprofen, Isosorbide Dinitrate, Omeprazole, Spironolactone & Temazepam • Point of Contact: Fran DeRosa (708) 786-5921

18. Notes from the NAC • Notes From The NAC  March 26, 2010Attached are this week's Top 10+ Report, an Open Market Report, a Prepak Fax in order form, a Wyeth Product Status Report a Merck Vaccine Status Report and a copy of the FDA Unapproved Drug Initiative Link I forgot last week.FSS QUESTIONS…The Federal Supply Schedule management now has a “Help Desk” for any questions you may have about products that may have dropped off contract or need to be on contract. helpdesk.ammhinfss@va.gov or 708-786-7737. Please copy me on e-mails so I can follow up and maybe suggest alternatives and let other centers with the same problem know. Many Big Shortages Continue…Since the end of last year there has continued to be ongoing shortages of many drug products. Ciprofloxin regular release tablets is one drug that is experiencing shortages due to the Apotex and Ranbaxy problems with the FDA; the other generics and the brand have been either unavailable or on very low allocation. Only in the past few weeks have products from Teva,Watson and a few smaller companies been available open market along with the contract brand but all of these are still subject to allocation. Doxazosin and Prazosin generics are still not available in most cases and the brands are allocated. The newer problem is Flunisolide Nasal where the brand was discontinued and the generic used most by the VA had raw material shortages. The other generic has not been able to keep up and conversion of patients to Fluticasone has created a shortage and allocation of that product. This little review does not even cover half the drugs that have been in short supply. The only good news is that where many of the products since January have had no expected return date, many are now listed as “April”. Some say “early April” and some say “late April” but we now have some hope. Let’s just hope that in April the expected return date does not change to June or July, that would make a painful summer.

19. Notes from the NAC • The Attachments • Top 10+ Report • Open Market Report • Prepak Fax in Order Form • Wyeth Product Status Report • Merck Vaccine Status Report • Others as needed

20. Notes from the NAC Top 10 + Report

21. Notes from the NAC Top 10+ Report Stock Status

22. Notes from the NAC Open Market Report

23. Notes from the NAC • Other Attachments • Prepak Fax in Order Form • Wyeth Product Status Report • Merck Vaccine Status Report • Others… Notices from companies, Holiday hours for ordering and pages that may help clarify one of the “Notes”.

24. Veterans Health Care Act of 1992Public Law 102-585 Section 603 • Only covers brand name (NDA) prescription products and biological products. • For these “covered” drugs, companies must follow the rules under the Public Law and their product is given a Federal Ceiling Price (FCP). • Generic products (ANDA), OTC (non-prescription) and certain brands that were grandfathered out of the law in 1992 are not subject to the law.

25. Veterans Health Care Act of 1992Public Law 102-585 Section 603 • Companies are required to submit their NFAMP (Non Federal Average Manufacturer’s Price) for each new drug (NDC). • The companies are given temporary FCPs during the first 90 days of sales but basically once the NFAMP is determined they have a permanent FCP. FCP = 76% of the NFAMP (The VA gets about a 24% discount)

26. Veterans Health Care Act of 1992Public Law 102-585 Section 603 • “Covered” drugs must be on FSS. • The Big4 price must be equal to or lower than the FCP. • Some companies have “dual” pricing. That means their product has a Big 4 FCP price but can have a FSS negotiated price for all “OGAs” other government agencies. • Companies can have National Contracts, BPAs (Blanket Purchase Agreements) or TPRs (Temporary Price reductions) but the price must be lower than the FCP for Big 4 customers.

27. Veterans Health Care Act of 1992Public Law 102-585 Section 603 • Each year in November companies must supply their current NFAMP. • The previous calculation is done and compared to the current FSS price plus the increase in the CPI-U as of October. • The lower of the two is the new FCP. • Every 5th year, the FCP goes back to the original calculation, not lower of the two. (2009) • In some cases, where a company raises prices too fast, they can cause an additional discount which causes a negative FCP. The company then gets a penny price for a year.

28. THANK YOU