VA's $912M Pharmaceutical Prime Vendor Contract Awarded to McKesson Corporation for November 2024
Contract Overview
Contract Amount: $911,976,278 ($912.0M)
Contractor: Mckesson Corporation
Awarding Agency: Department of Veterans Affairs
Start Date: 2024-11-01
End Date: 2024-11-30
Sector: Healthcare
Official Description: EXPRESS REPORT: PHARMACEUTICAL PRIME VENDOR (PPV)FY2025 NOVEMBER
Plain-Language Summary
Department of Veterans Affairs obligated $912.0 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT: PHARMACEUTICAL PRIME VENDOR (PPV)FY2025 NOVEMBER Key points: 1. Significant contract value of $911.98 million for a single month's pharmaceutical supply. 2. McKesson Corporation is a major player in pharmaceutical distribution, indicating a competitive but consolidated market. 3. Potential risk lies in reliance on a single vendor for critical medical supplies. 4. The healthcare sector is characterized by high demand and complex supply chains, making efficient procurement crucial.
Value Assessment
Rating: good
The contract value is substantial, reflecting the scale of the VA's pharmaceutical needs. Benchmarking against similar large-scale pharmaceutical prime vendor contracts would be necessary for a precise value assessment, but the amount appears consistent with industry standards for such comprehensive agreements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: unknown
The contract type is a Delivery Order, suggesting it might be part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. The specific competition method for this order is not detailed, but the pharmaceutical prime vendor market typically involves significant competition, which should drive price discovery.
Taxpayer Impact: Efficient procurement of pharmaceuticals ensures that veterans receive necessary medications, representing good value for taxpayer investment in healthcare.
Public Impact
Ensures timely access to a wide range of pharmaceuticals for veterans nationwide. Supports the VA's mission to provide comprehensive healthcare services. Contributes to the stability of the pharmaceutical supply chain for a critical government agency.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Single vendor reliance for critical supplies
- Potential for price increases in future contract periods
- Supply chain disruptions impacting delivery
Positive Signals
- Established vendor with proven distribution capabilities
- Supports a large veteran population's healthcare needs
- Potential for economies of scale
Sector Analysis
The pharmaceutical sector is a vital component of the healthcare industry, characterized by high R&D costs, complex regulatory environments, and significant government spending. VA contracts like this are essential for maintaining the health and readiness of military personnel and veterans.
Small Business Impact
This contract appears to be awarded to a large prime vendor, McKesson Corporation. Analysis of subcontracting opportunities for small businesses within this large award would be necessary to assess their participation and benefit.
Oversight & Accountability
The Department of Veterans Affairs is responsible for overseeing this contract to ensure timely delivery, quality of pharmaceuticals, and adherence to pricing agreements. Regular performance reviews and audits are standard oversight mechanisms.
Related Government Programs
- Department of Veterans Affairs Contracting
- Department of Veterans Affairs Programs
Risk Flags
- High contract value concentrated with one vendor
- Potential for price escalation over time
- Dependence on a single entity for critical medical supplies
- Vulnerability to pharmaceutical supply chain disruptions
Tags
department-of-veterans-affairs, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Veterans Affairs awarded $912.0 million to MCKESSON CORPORATION. EXPRESS REPORT: PHARMACEUTICAL PRIME VENDOR (PPV)FY2025 NOVEMBER
Who is the contractor on this award?
The obligated recipient is MCKESSON CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).
What is the total obligated amount?
The obligated amount is $912.0 million.
What is the period of performance?
Start: 2024-11-01. End: 2024-11-30.
What is the historical pricing trend for this specific pharmaceutical prime vendor contract, and how does it compare to inflation and market benchmarks?
Analyzing historical pricing data for this PPV contract is crucial to understand if costs are escalating faster than inflation or industry benchmarks. Consistent year-over-year increases without corresponding service improvements or market justification would raise concerns about value for money and potentially indicate a need for renegotiation or enhanced competition in future solicitations.
What are the contingency plans in place to mitigate risks associated with supply chain disruptions or a single point of failure with McKesson Corporation?
Robust contingency planning is essential given the critical nature of pharmaceutical supply. This includes identifying alternative suppliers, maintaining strategic stockpiles, and having clear communication protocols with the vendor and VA logistics. The VA should have documented procedures to ensure uninterrupted access to essential medicines even if McKesson faces unforeseen challenges.
How effectively does this contract facilitate the VA's ability to procure a diverse formulary of pharmaceuticals at competitive prices, ensuring optimal patient care?
The effectiveness of this contract hinges on its ability to provide a broad range of necessary medications at prices that reflect market competition. A well-structured contract should enable the VA to access both high-volume generics and specialized drugs efficiently. Performance metrics tracking formulary availability, fill rates, and price competitiveness are key indicators of its success in supporting patient care.
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