DoD Awards $1.46 Billion for BEBTELOVIMAB to Eli Lilly, Raising Questions on Competition
Contract Overview
Contract Amount: $1,463,250,000 ($1.5B)
Contractor: ELI Lilly and Company
Awarding Agency: Department of Defense
Start Date: 2022-02-10
End Date: 2023-09-30
Contract Duration: 597 days
Daily Burn Rate: $2.5M/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Healthcare
Official Description: LYCOV1404 BEBTELOVIMAB
Place of Performance
Location: INDIANAPOLIS, MARION County, INDIANA, 46285
State: Indiana Government Spending
Plain-Language Summary
Department of Defense obligated $1.46 billion to ELI LILLY AND COMPANY for work described as: LYCOV1404 BEBTELOVIMAB Key points: 1. Significant award to a single vendor for a critical pharmaceutical. 2. Lack of competition raises concerns about potential overpayment and limited market access. 3. The firm-fixed-price contract type offers some cost certainty but may not reflect true market value without competition. 4. The pharmaceutical sector is highly specialized, but competitive bidding is still crucial for taxpayer value.
Value Assessment
Rating: questionable
The contract value of $1.46 billion is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential market alternatives or if it reflects a premium due to the lack of competition.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and may lead to higher costs for taxpayers as there was no opportunity for multiple vendors to bid.
Taxpayer Impact: The lack of competition in this large award means taxpayers may be paying more than necessary for this pharmaceutical preparation.
Public Impact
Potential for higher drug costs due to lack of competitive pricing. Limited access to alternative treatments if this is the sole contracted option. Impact on government's ability to negotiate favorable terms in the future. Questions about the justification for a sole-source award in a potentially competitive market.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- High contract value
- Lack of transparency in pricing justification
Positive Signals
- Award to a known pharmaceutical manufacturer
- Firm fixed price contract provides cost certainty
Sector Analysis
The pharmaceutical preparation manufacturing sector is characterized by high R&D costs and significant regulatory hurdles. However, even in specialized sectors, competitive procurement is vital to ensure value for money and encourage innovation.
Small Business Impact
This contract was awarded to Eli Lilly and Company, a large pharmaceutical firm. There is no indication of small business participation in this specific award, which is common for large-scale pharmaceutical procurements.
Oversight & Accountability
The sole-source nature of this contract warrants close scrutiny from oversight bodies to ensure the justification was sound and that taxpayer funds were used responsibly. Further review of the procurement process is recommended.
Related Government Programs
- Pharmaceutical Preparation Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Potential for inflated pricing due to lack of competition.
- Limited transparency regarding the sole-source justification.
- Risk of setting a precedent for non-competitive awards in the sector.
- Uncertainty about the true market value of the procured pharmaceutical.
Tags
pharmaceutical-preparation-manufacturing, department-of-defense, in, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.46 billion to ELI LILLY AND COMPANY. LYCOV1404 BEBTELOVIMAB
Who is the contractor on this award?
The obligated recipient is ELI LILLY AND COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $1.46 billion.
What is the period of performance?
Start: 2022-02-10. End: 2023-09-30.
What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
The justification for a sole-source award typically involves factors like unique capabilities, urgent need, or lack of viable alternatives. Without detailed documentation, it's impossible to confirm if other competitive avenues were explored or if specific circumstances necessitated bypassing the standard competitive process. This lack of transparency raises concerns about potential inefficiencies.
How does the awarded price compare to benchmarks for similar pharmaceutical preparations, considering the lack of competitive bids?
Benchmarking the price is challenging without competitive data. However, given the substantial value and sole-source nature, it's crucial to compare this award against publicly available pricing for comparable drugs, considering dosage, therapeutic class, and manufacturer reputation. Any significant deviation from market norms would indicate potential overpayment.
What is the potential long-term impact on the government's ability to procure this or similar pharmaceuticals effectively and affordably?
Sole-source awards can set a precedent, potentially discouraging future competition if other manufacturers perceive limited market access. This could lead to sustained higher prices and reduced negotiation leverage for the government in subsequent procurements, impacting the long-term affordability and availability of essential pharmaceuticals.
Industry Classification
NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Pharmaceutical Preparation Manufacturing
Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: LILLY CORPORATE CTR, INDIANAPOLIS, IN, 46285
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $2,105,000,000
Exercised Options: $1,463,250,000
Current Obligation: $1,463,250,000
Actual Outlays: $582,981,800
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Timeline
Start Date: 2022-02-10
Current End Date: 2023-09-30
Potential End Date: 2023-09-30 00:00:00
Last Modified: 2025-04-22
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