TRICARE Pharmacy Services contract awarded to Express Scripts Inc. for over $53.8 million

Contract Overview

Contract Amount: $53,811,925 ($53.8M)

Contractor: Express Scripts Inc

Awarding Agency: Department of Defense

Start Date: 2022-07-29

End Date: 2022-12-31

Contract Duration: 155 days

Daily Burn Rate: $347.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 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 $53.8 million to EXPRESS SCRIPTS INC for work described as: TRICARE PHARMACY SERVICES Key points: 1. Value for money assessed through comparison with similar contracts and market rates. 2. Competition dynamics indicate a full and open competition, suggesting potential for price discovery. 3. Risk indicators are monitored through performance context and contractor track record. 4. Performance context is evaluated against contract duration and delivery order type. 5. Sector positioning within Defense Health Agency's pharmaceutical services. 6. Contract type is firm fixed price, which shifts cost risk to the contractor.

Value Assessment

Rating: good

The contract value of $53.8 million for a 5-month period (July 29, 2022 - December 31, 2022) suggests a significant but potentially reasonable expenditure for comprehensive pharmacy services. Benchmarking against similar large-scale pharmacy benefit management contracts within the federal government would provide a clearer picture of value. The firm fixed-price nature of the contract is a positive indicator for cost control, as it caps the government's liability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The specific number of bidders is not provided, but the nature of the competition suggests a robust process aimed at securing competitive pricing and optimal service delivery. This approach generally leads to better price discovery and a wider range of innovative solutions.

Taxpayer Impact: A full and open competition is beneficial for taxpayers as it fosters a competitive environment, driving down costs and ensuring the government receives the best possible value for its investment in essential pharmacy services.

Public Impact

Beneficiaries of TRICARE, including active duty military personnel, retirees, and their families, will receive essential pharmacy services. Services delivered include prescription drug fulfillment and management through the TRICARE network. Geographic impact is nationwide, covering all eligible TRICARE beneficiaries. Workforce implications may include support for pharmacy technicians and administrative staff involved in service delivery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if not managed carefully.
Ensuring consistent quality of service across all network pharmacies.
Monitoring for any unexpected increases in prescription volume or cost drivers.

Positive Signals

Firm fixed-price contract limits cost overruns for the government.
Full and open competition suggests competitive pricing was achieved.
Awarded to a known entity in the pharmacy benefit management space.

Sector Analysis

This contract falls within the Healthcare sector, specifically focusing on pharmaceutical services and pharmacy benefit management (PBM). The federal government is a major purchaser of healthcare services, and contracts like this are crucial for managing prescription drug costs and ensuring access for beneficiaries. The market for PBM services is highly concentrated, with a few large players dominating, making competitive bidding essential.

Small Business Impact

Information regarding small business set-asides or subcontracting plans was not explicitly provided for this contract. Given the scale and specialized nature of pharmacy benefit management, it is possible that large prime contractors are involved, and the extent of small business participation would depend on subcontracting opportunities offered by the awardee.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Health Agency (DHA), a component of the Department of Defense. Accountability measures would include performance metrics, quality assurance reviews, and adherence to contract terms. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive.

Related Government Programs

TRICARE Pharmacy Benefit Management
Department of Defense Healthcare Services
Federal Prescription Drug Programs

Risk Flags

Contract duration is relatively short (5 months), potentially indicating a bridge contract or a specific phase.
Lack of detailed bidder information limits full assessment of competition intensity.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.8 million to EXPRESS SCRIPTS INC. 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 $53.8 million.

What is the period of performance?

Start: 2022-07-29. End: 2022-12-31.

What is the historical spending pattern for TRICARE pharmacy services over the past five years?

Historical spending data for TRICARE pharmacy services reveals a significant and consistent investment by the Department of Defense. While specific annual figures fluctuate based on utilization, drug costs, and contract awards, the overall trend indicates a substantial budget allocation to ensure beneficiaries have access to necessary medications. For instance, prior contract periods and related pharmacy benefit management services have often involved expenditures in the hundreds of millions, if not billions, of dollars annually, reflecting the scale of the TRICARE program. Analyzing these patterns helps in understanding cost drivers, identifying potential efficiencies, and forecasting future budgetary needs for pharmaceutical care within the military health system.

How does the awarded price per prescription compare to industry benchmarks for similar government contracts?

Comparing the awarded price per prescription to industry benchmarks requires detailed data on the specific services rendered and the volume of prescriptions processed under this contract. However, given that this is a firm fixed-price contract awarded through full and open competition, it suggests that the pricing was deemed competitive at the time of award. Benchmarking would involve analyzing the average cost per prescription for government programs like Medicare Part D or other large federal health insurance contracts, as well as private sector PBM rates. Factors such as formulary management, generic dispensing rates, and negotiated rebates significantly influence the effective cost per prescription. Without specific per-prescription data from this contract, a precise comparison is difficult, but the competitive award process is a positive indicator.

What are the key performance indicators (KPIs) used to evaluate Express Scripts Inc.'s performance under this contract?

Key Performance Indicators (KPIs) for TRICARE pharmacy services contracts typically focus on ensuring timely access to medications, maintaining cost-effectiveness, and ensuring beneficiary satisfaction. Common KPIs include metrics related to prescription fulfillment rates (e.g., percentage of prescriptions filled within a certain timeframe), network adequacy (e.g., number and geographic distribution of in-network pharmacies), drug cost containment (e.g., generic dispensing rate, rebate capture), and beneficiary access to formulary drugs. Additionally, quality metrics related to medication safety and adherence programs may be included. Performance is often assessed through regular reporting, audits, and potentially user surveys to gauge the effectiveness and efficiency of the pharmacy services provided by Express Scripts Inc.

What is the potential impact of this contract on drug pricing and availability for TRICARE beneficiaries?

This contract is designed to ensure consistent drug pricing and availability for TRICARE beneficiaries. By leveraging the purchasing power of the federal government and negotiating with pharmaceutical manufacturers and pharmacies, Express Scripts Inc. aims to provide medications at competitive prices. The firm fixed-price structure helps stabilize costs for the government and, by extension, for the beneficiaries. Furthermore, the contract likely includes provisions for maintaining an adequate network of pharmacies and ensuring access to a comprehensive formulary, thereby safeguarding drug availability. The competitive nature of the award process further supports the goal of achieving favorable pricing and broad access.

Are there any known performance issues or disputes associated with Express Scripts Inc. on previous TRICARE contracts or similar federal contracts?

Assessing Express Scripts Inc.'s track record on previous TRICARE contracts or similar federal engagements requires a review of contract performance reports, past performance evaluations, and any documented disputes or corrective actions. While specific details of past performance are not publicly available in this summary, large government contractors often have extensive histories with various agencies. Generally, the award of a new contract implies a satisfactory past performance assessment, though agencies maintain mechanisms for addressing performance deficiencies. Any significant issues would typically be reflected in contract close-out reports or agency performance databases, which are not detailed here.

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: $53,811,925

Exercised Options: $53,811,925

Current Obligation: $53,811,925

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