DoD's TRICARE Pharmacy Services contract awarded to Express Scripts Inc. for $676.4M
Contract Overview
Contract Amount: $676,427,891 ($676.4M)
Contractor: Express Scripts Inc
Awarding Agency: Department of Defense
Start Date: 2016-04-14
End Date: 2017-04-30
Contract Duration: 381 days
Daily Burn Rate: $1.8M/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIRM FIXED PRICE
Sector: Healthcare
Official Description: IGF::OT::IGF TRICARE PHARMACY SERVICES
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63121
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $676.4 million to EXPRESS SCRIPTS INC for work described as: IGF::OT::IGF TRICARE PHARMACY SERVICES Key points: 1. Significant contract value of $676.4 million for pharmacy services. 2. Express Scripts Inc. is the sole contractor, raising questions about competition. 3. Risk of potential overpricing due to limited competition. 4. Sector: Healthcare, specifically direct health and medical insurance carriers.
Value Assessment
Rating: fair
The contract value of $676.4 million is substantial. Benchmarking against similar large-scale pharmacy benefit management contracts is necessary to assess pricing fairness. Without comparative data, it's difficult to definitively state if the price is optimal.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the data indicates a single award, suggesting Express Scripts Inc. was the sole awardee for this specific delivery order.
Taxpayer Impact: Full and open competition generally leads to better pricing for taxpayers. The specific impact depends on the competitiveness of the bids received.
Public Impact
Ensures prescription drug access for military personnel and their families. Potential for cost savings through negotiated drug prices and formularies. Impacts the healthcare landscape for a significant population segment.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole awardee raises concerns about long-term competition.
- Contract duration and potential for price creep.
Positive Signals
- Awarded under full and open competition.
- Provides essential healthcare services.
Sector Analysis
This contract falls within the healthcare sector, specifically focusing on pharmacy benefit management. Spending benchmarks in this area are highly variable, influenced by drug costs, patient volume, and negotiated rebates.
Small Business Impact
The data does not indicate any specific provisions or awards to small businesses within this contract. Further analysis would be needed to determine if small businesses were involved as subcontractors or in related support roles.
Oversight & Accountability
Oversight by the Department of Defense and the Defense Health Agency is crucial to ensure contract performance and cost-effectiveness. Regular audits and performance reviews are standard for contracts of this magnitude.
Related Government Programs
- Direct Health and Medical Insurance Carriers
- Department of Defense Contracting
- Defense Health Agency Programs
Risk Flags
- Sole awardee for a significant contract.
- Potential for price escalation over contract life.
- Dependence on a single vendor for critical services.
- Lack of transparency on subcontractor involvement.
Tags
direct-health-and-medical-insurance-carr, department-of-defense, mo, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $676.4 million to EXPRESS SCRIPTS INC. IGF::OT::IGF TRICARE PHARMACY SERVICES
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 $676.4 million.
What is the period of performance?
Start: 2016-04-14. End: 2017-04-30.
What was the competitive landscape during the bidding process for this contract?
While the contract was awarded under 'full and open competition,' the data indicates a single awardee, Express Scripts Inc. This suggests that while the opportunity was open to all qualified bidders, only one entity was ultimately selected for this specific delivery order. Further investigation into the number of bids received and the reasons for a single award would provide a clearer picture of the competitive intensity.
Are there any identified risks associated with the pricing structure or potential for cost overruns?
The primary pricing risk stems from the potential lack of ongoing competition if Express Scripts Inc. becomes the sole long-term provider. While the initial award was competitive, subsequent contract renewals or modifications without re-competition could lead to higher costs. Monitoring utilization, drug price trends, and seeking opportunities for competitive re-bidding are key to mitigating this risk.
How effectively does this contract deliver value to the government and beneficiaries compared to industry standards?
The effectiveness hinges on Express Scripts Inc.'s ability to manage pharmacy benefits efficiently, secure favorable drug pricing, and ensure timely access to medications for TRICARE beneficiaries. Benchmarking against other large government or commercial PBM contracts, considering factors like rebate capture and administrative costs, is essential to gauge value. The sheer scale suggests potential for economies of scale.
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: $676,427,891
Exercised Options: $676,427,891
Current Obligation: $676,427,891
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
Start Date: 2016-04-14
Current End Date: 2017-04-30
Potential End Date: 2017-04-30 00:00:00
Last Modified: 2024-05-21
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