DoD Spends $659M on Pharmacy Services for Option Period 1 of HT9402-14-D-0002

Contract Overview

Contract Amount: $658,869,774 ($658.9M)

Contractor: Express Scripts Inc

Awarding Agency: Department of Defense

Start Date: 2015-04-14

End Date: 2016-04-30

Contract Duration: 382 days

Daily Burn Rate: $1.7M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: IGF::OT::IGF THE CLINS ORDERED ON THIS TASK ORDER REPRESENT OPTION PERIOD 1 (OP1) FOR CONTRACT HT9402-14-D-0002. FUNDING IS OBLIGATED TO SUPPORT PHARMACY SERVICES FOR OP1.

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63121

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $658.9 million to EXPRESS SCRIPTS INC for work described as: IGF::OT::IGF THE CLINS ORDERED ON THIS TASK ORDER REPRESENT OPTION PERIOD 1 (OP1) FOR CONTRACT HT9402-14-D-0002. FUNDING IS OBLIGATED TO SUPPORT PHARMACY SERVICES FOR OP1. Key points: 1. Significant expenditure of $659M for pharmacy services highlights the scale of DoD's healthcare operations. 2. Competition was full and open, suggesting a robust market for these services. 3. Risk appears moderate given the established contract and fixed-price structure, but long-term cost trends warrant monitoring. 4. The healthcare sector, specifically insurance carriers, is the primary focus of this spending.

Value Assessment

Rating: good

The $659M obligation for pharmacy services represents a substantial investment. Benchmarking against similar large-scale government pharmacy contracts would be necessary for a precise value assessment, but the full and open competition suggests a competitive pricing environment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This method generally promotes competitive pricing and ensures the government receives fair market value.

Taxpayer Impact: The competitive nature of the award is expected to benefit taxpayers by driving down costs for essential pharmacy services.

Public Impact

Ensures access to essential prescription medications for military personnel and their families. Supports the operational readiness of the armed forces by maintaining the health of service members. Contributes to the overall efficiency and cost-effectiveness of the TRICARE pharmacy benefit program.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for rising drug costs over time.
Dependence on a single contractor for a critical service.
Ensuring continued quality of service delivery.

Positive Signals

Full and open competition likely secured favorable pricing.
Fixed-price contract provides cost certainty.
Long-term contract structure offers stability.

Sector Analysis

This spending falls within the healthcare sector, specifically related to health insurance carriers providing pharmacy benefit management. Government spending in this area is substantial, driven by the need to provide comprehensive healthcare to beneficiaries.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. The scale of this contract suggests it is likely awarded to large, established providers in the pharmacy benefit management industry.

Oversight & Accountability

The contract was awarded under full and open competition, implying a structured procurement process. Ongoing oversight by the Defense Health Agency would be crucial to ensure performance and cost control.

Related Government Programs

Direct Health and Medical Insurance Carriers
Department of Defense Contracting
Defense Health Agency Programs

Risk Flags

Potential for long-term cost escalation due to pharmaceutical price inflation.
Dependence on a single vendor for a critical healthcare service.
Ensuring consistent quality of care and member satisfaction.
Cybersecurity risks associated with handling sensitive patient data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $658.9 million to EXPRESS SCRIPTS INC. IGF::OT::IGF THE CLINS ORDERED ON THIS TASK ORDER REPRESENT OPTION PERIOD 1 (OP1) FOR CONTRACT HT9402-14-D-0002. FUNDING IS OBLIGATED TO SUPPORT PHARMACY SERVICES FOR OP1.

Who is the contractor on this award?

The obligated recipient is EXPRESS SCRIPTS INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Health Agency).

What is the total obligated amount?

The obligated amount is $658.9 million.

What is the period of performance?

Start: 2015-04-14. End: 2016-04-30.

What is the projected cost savings or value realized from utilizing Express Scripts Inc. compared to alternative providers under full and open competition?

While the data confirms full and open competition, it does not provide specific cost savings figures. The value is implicitly derived from the competitive bidding process, suggesting that Express Scripts' offer was deemed the most advantageous. A detailed cost-benefit analysis or comparison with benchmark pricing would be needed to quantify the exact savings.

What are the primary risks associated with a fixed-price contract for pharmacy services, particularly concerning potential fluctuations in drug prices or utilization rates?

The primary risk with a fixed-price contract for pharmacy services is that the government might overpay if drug prices or utilization rates decrease significantly below projections. Conversely, the contractor assumes the risk if costs escalate beyond the fixed price. Effective contract management and performance monitoring are crucial to mitigate these risks.

How does the performance of Express Scripts Inc. on this contract align with the Defense Health Agency's objectives for providing efficient and cost-effective pharmacy benefits?

The provided data focuses on the obligation and contract terms, not performance metrics. Alignment with DHA's objectives would depend on factors like patient satisfaction, formulary management, cost containment, and adherence to service level agreements. Post-award performance reviews and quality assurance data are necessary to assess effectiveness.

Industry Classification

NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers

Product/Service Code: MEDICAL SERVICES › GENERAL HEALTH CARE SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HT940213R0001

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Priority Healthcare Distribution Inc

Address: 1 EXPRESS WAY, SAINT LOUIS, MO, 63121

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $659,291,093

Exercised Options: $659,291,093

Current Obligation: $658,869,774

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HT940214D0002

IDV Type: IDC

Timeline