DoD's $73M Pharmacy Benefit Management Contract with Wisconsin Physicians Service: A Deep Dive
Contract Overview
Contract Amount: $72,958,000 ($73.0M)
Contractor: Wisconsin Physicians Service Insurance Corp.
Awarding Agency: Department of Defense
Start Date: 2015-01-01
End Date: 2024-03-01
Contract Duration: 3,347 days
Daily Burn Rate: $21.8K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIRM FIXED PRICE
Sector: Healthcare
Official Description: IGF::OT::IGF A. TASK ORDER FOR OPTION YEAR 1 SERVICES (JANUARY 1, 2015 THROUGH DECEMBER 31, 2015) AND OBLIGATE FY15 FUNDS. FY16 FUNDS ARE SUBJECT TO AVAILABILITY OF FUNDS.
Place of Performance
Location: MONONA, DANE County, WISCONSIN, 53713
Plain-Language Summary
Department of Defense obligated $73.0 million to WISCONSIN PHYSICIANS SERVICE INSURANCE CORP. for work described as: IGF::OT::IGF A. TASK ORDER FOR OPTION YEAR 1 SERVICES (JANUARY 1, 2015 THROUGH DECEMBER 31, 2015) AND OBLIGATE FY15 FUNDS. FY16 FUNDS ARE SUBJECT TO AVAILABILITY OF FUNDS. Key points: 1. The contract awarded to Wisconsin Physicians Service Insurance Corp. for Pharmacy Benefit Management is substantial, totaling $72,957,999.77. 2. This award was made under full and open competition, suggesting a competitive bidding process. 3. The contract spans a significant duration, with an end date of March 1, 2024, indicating long-term service provision. 4. The primary service involves Pharmacy Benefit Management and Third Party Administration of Insurance and Pension Funds. 5. The contract type is Firm Fixed Price, which helps in cost predictability.
Value Assessment
Rating: good
The contract value of approximately $73 million for a single year of services appears reasonable given the scope of Pharmacy Benefit Management. Benchmarking against similar large-scale PBM contracts would provide a more precise assessment, but the scale suggests a competitive market price.
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 leads to better price discovery and potentially lower costs for the government compared to sole-source or limited competition.
Taxpayer Impact: The competitive nature of the award suggests that taxpayers are likely benefiting from a fair market price for these essential pharmacy benefit management services.
Public Impact
Ensures access to prescription drugs for beneficiaries. Manages costs associated with pharmaceuticals for the Department of Defense. Supports the overall health and readiness of military personnel and their families. Contributes to the efficiency of the DoD's healthcare system.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns if not managed effectively.
- Dependence on a single vendor for critical pharmacy services.
- Risk of service disruption if the vendor faces operational issues.
Positive Signals
- Awarded through full and open competition.
- Firm Fixed Price contract provides cost certainty.
- Long contract duration suggests established relationship and potential for economies of scale.
Sector Analysis
The Defense Health Agency operates within the broader healthcare sector, specifically focusing on managing pharmaceutical benefits for military personnel. Spending benchmarks in this area are highly variable, but large contracts like this are typical for comprehensive PBM services.
Small Business Impact
The data provided does not indicate whether small businesses were involved as subcontractors or partners in this contract. Further analysis would be needed to determine the extent of small business participation.
Oversight & Accountability
The Department of Defense, through its agencies like the Defense Health Agency, is responsible for overseeing this contract. Standard oversight mechanisms would include performance monitoring, financial audits, and compliance checks to ensure the vendor meets contractual obligations and provides value.
Related Government Programs
- Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds
- Department of Defense Contracting
- Defense Health Agency Programs
Risk Flags
- Potential for vendor lock-in due to contract duration.
- Complexity of managing pharmaceutical benefits can lead to unforeseen costs.
- Reliance on external vendor for critical health service component.
- Need for robust oversight to ensure cost-effectiveness and quality of service.
Tags
pharmacy-benefit-management-and-other-th, department-of-defense, wi, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $73.0 million to WISCONSIN PHYSICIANS SERVICE INSURANCE CORP.. IGF::OT::IGF A. TASK ORDER FOR OPTION YEAR 1 SERVICES (JANUARY 1, 2015 THROUGH DECEMBER 31, 2015) AND OBLIGATE FY15 FUNDS. FY16 FUNDS ARE SUBJECT TO AVAILABILITY OF FUNDS.
Who is the contractor on this award?
The obligated recipient is WISCONSIN PHYSICIANS SERVICE INSURANCE CORP..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Health Agency).
What is the total obligated amount?
The obligated amount is $73.0 million.
What is the period of performance?
Start: 2015-01-01. End: 2024-03-01.
What is the projected cost savings or efficiency gain achieved through this PBM contract compared to in-house management or alternative approaches?
Quantifying the exact cost savings requires a detailed analysis of the contract's performance metrics against a baseline. However, PBMs typically leverage bulk purchasing power, negotiate rebates with manufacturers, and implement formulary management to reduce overall drug spending. The efficiency gains stem from specialized expertise in managing complex pharmacy networks and claims processing.
What are the key performance indicators (KPIs) used to measure the success of this Pharmacy Benefit Management contract?
Key performance indicators likely include metrics such as drug cost containment (e.g., average wholesale price discounts, rebate capture), formulary compliance rates, member satisfaction scores, claims processing accuracy and timeliness, and adherence to clinical guidelines. Regular performance reviews against these KPIs would be crucial for ensuring contract effectiveness and value.
How does the pricing structure of this contract compare to industry standards for similar Pharmacy Benefit Management services?
The firm fixed price structure provides predictability. To assess its competitiveness, one would compare the per-prescription costs, administrative fees, and rebate retention arrangements against benchmarks from other government or large commercial PBM contracts. Without specific pricing details, a definitive comparison is difficult, but the full and open competition suggests a market-driven price.
Industry Classification
NAICS: Finance and Insurance › Agencies, Brokerages, and Other Insurance Related Activities › Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds
Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1717 W BROADWAY, MADISON, WI, 53713
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $72,958,000
Exercised Options: $72,958,000
Current Obligation: $72,958,000
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HT940214D0003
IDV Type: IDC
Timeline
Start Date: 2015-01-01
Current End Date: 2024-03-01
Potential End Date: 2024-03-01 00:00:00
Last Modified: 2025-04-26
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