HHS awards $40M contract for Oseltamivir Phosphate to Alvogen, Inc. for Strategic National Stockpile

Contract Overview

Contract Amount: $40,000,000 ($40.0M)

Contractor: Alvogen, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2019-09-30

End Date: 2024-08-06

Contract Duration: 1,772 days

Daily Burn Rate: $22.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: DELIVER OSELTAMIVIR PHOSPHATE TO THE STRATEGIC NATIONAL STOCKPILE

Place of Performance

Location: MORRISTOWN, MORRIS County, NEW JERSEY, 07960

State: New Jersey Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $40.0 million to ALVOGEN, INC. for work described as: DELIVER OSELTAMIVIR PHOSPHATE TO THE STRATEGIC NATIONAL STOCKPILE Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract duration of 1772 days indicates a long-term supply need. 3. The firm-fixed-price structure aims to control costs for the government. 4. Awarded by the Office of Assistant Secretary for Preparedness and Response (ASPR), highlighting its role in public health preparedness. 5. The product is Oseltamivir Phosphate, a critical antiviral medication. 6. The delivery location is the Strategic National Stockpile, emphasizing national health security.

Value Assessment

Rating: good

The contract value of $40 million over approximately 4.8 years for a critical pharmaceutical is within a reasonable range for such a supply agreement. Benchmarking against similar large-scale pharmaceutical procurements for national stockpiles would provide a more precise value-for-money assessment. The firm-fixed-price contract type helps mitigate cost overrun risks for the government, ensuring predictable expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The number of bidders is not specified, but this procurement method generally fosters price discovery and encourages competitive pricing. The government likely received multiple proposals, allowing for selection of the best value offer.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically leads to lower prices and better terms due to the pressure of multiple bidders vying for the contract.

Public Impact

The primary beneficiaries are the citizens of the United States, who gain access to a critical antiviral medication during public health emergencies. The service delivered is the supply of Oseltamivir Phosphate, essential for treating influenza. The geographic impact is national, as the medication is destined for the Strategic National Stockpile. This contract supports the pharmaceutical manufacturing sector and ensures supply chain resilience for essential medicines.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations in the pharmaceutical market impacting long-term value.
Dependence on a single contractor for a critical supply could pose a risk if production is interrupted.

Positive Signals

Award through full and open competition suggests a competitive market for this pharmaceutical.
Firm-fixed-price contract provides cost certainty for the government.
Long contract duration ensures sustained availability of the medication for the stockpile.

Sector Analysis

The pharmaceutical preparation manufacturing sector is characterized by high R&D costs, stringent regulatory requirements, and significant market competition. Contracts for essential medicines, particularly for national stockpiles, are crucial for public health preparedness and national security. Spending in this area is often driven by government assessments of potential health threats and the need for readily available countermeasures. Comparable spending benchmarks would involve looking at other large-scale procurements of antivirals or vaccines for strategic reserves.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the nature of pharmaceutical manufacturing and the scale of this award, it is likely that larger, established pharmaceutical companies were the primary bidders. Subcontracting opportunities for small businesses may exist within the supply chain for raw materials or specialized services, but this is not explicitly detailed in the award information.

Oversight & Accountability

The Office of Assistant Secretary for Preparedness and Response (ASPR) within HHS is responsible for this contract. Oversight would involve monitoring delivery schedules, quality control, and adherence to contract terms. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Strategic National Stockpile
Antiviral Medication Procurement
Public Health Emergency Preparedness
Pharmaceutical Supply Chain Management

Risk Flags

Potential for supply chain disruption
Contractor performance risk
Quality control assurance

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $40.0 million to ALVOGEN, INC.. DELIVER OSELTAMIVIR PHOSPHATE TO THE STRATEGIC NATIONAL STOCKPILE

Who is the contractor on this award?

The obligated recipient is ALVOGEN, INC..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Office of Assistant Secretary for Preparedness and Response).

What is the total obligated amount?

The obligated amount is $40.0 million.

What is the period of performance?

Start: 2019-09-30. End: 2024-08-06.

What is the historical spending pattern for Oseltamivir Phosphate by the Department of Health and Human Services?

Analyzing historical spending for Oseltamivir Phosphate by HHS requires accessing detailed procurement data over several fiscal years. This would involve searching databases like FPDS-NG for contracts awarded to various vendors for this specific drug. Key metrics to examine would include the total dollar amount spent annually, the number of contracts awarded, the average contract value, and the primary contractors. Understanding past spending can reveal trends in demand, pricing, and the government's reliance on specific suppliers. It can also highlight any significant shifts in procurement strategy or budget allocation for this critical medication, potentially influenced by public health events or changes in stockpiling policies.

How does the awarded price per unit for Oseltamivir Phosphate compare to market rates or previous government purchases?

Determining the precise price per unit requires dividing the total contract value ($40 million) by the total quantity of Oseltamivir Phosphate to be delivered. This information (total quantity) is not provided in the current data. Once the quantity is known, this unit price can be benchmarked against publicly available market prices for Oseltamivir Phosphate (e.g., from pharmaceutical distributors or industry reports) and compared to historical government contract prices for the same or similar products. Significant deviations from market rates or historical averages could indicate either exceptional value or potential overpricing, warranting further investigation into the specific terms, quality, and delivery requirements of the contract.

What are the specific risks associated with relying on Alvogen, Inc. for this critical pharmaceutical supply?

Risks associated with relying on Alvogen, Inc. for Oseltamivir Phosphate include potential supply chain disruptions (e.g., manufacturing issues, raw material shortages, geopolitical events affecting their production facilities), quality control failures leading to non-compliant batches, financial instability of the contractor, or potential for price gouging if competition proves less robust than anticipated. Furthermore, dependence on a single supplier for a critical medication can be risky if unforeseen demand surges or if the contractor faces regulatory actions that impact their ability to produce or deliver. The government's mitigation strategies would likely involve robust contract oversight, performance monitoring, and potentially maintaining backup suppliers or alternative sources.

What is the track record of Alvogen, Inc. in fulfilling government pharmaceutical contracts, particularly for the Strategic National Stockpile?

Assessing Alvogen, Inc.'s track record requires a review of their past performance on federal contracts, specifically those related to pharmaceutical supply and emergency preparedness. This involves examining contract databases for previous awards, delivery performance history (on-time delivery, quality compliance), any past disputes or contract terminations, and overall customer satisfaction ratings if available. A history of successful, timely, and high-quality deliveries would indicate reliability, while past issues could raise concerns about their capacity or commitment to fulfilling this current $40 million contract. Specific attention should be paid to any prior experience with supplying the Strategic National Stockpile or similar government health initiatives.

How effective are the current oversight mechanisms in ensuring the timely and quality delivery of Oseltamivir Phosphate under this contract?

The effectiveness of oversight mechanisms for this contract relies on the established procedures within the Office of Assistant Secretary for Preparedness and Response (ASPR). These typically include regular performance reviews, site visits to manufacturing facilities (if applicable), quality assurance checks, and monitoring of delivery schedules against contract milestones. The firm-fixed-price nature of the contract provides some leverage, but active government monitoring is crucial. Effectiveness can be gauged by the absence of delivery delays, quality rejections, or contract disputes. Robust oversight ensures that taxpayer funds are used appropriately and that the Strategic National Stockpile is adequately provisioned with a reliable supply of Oseltamivir Phosphate.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Pharmaceutical Preparation Manufacturing

Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 8312019

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Alvogen Group Inc. (UEI: 963294397)

Address: 44 WHIPPANY RD STE 300, MORRISTOWN, NJ, 07960

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: $40,000,000

Exercised Options: $40,000,000

Current Obligation: $40,000,000

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 75A50119D00035

IDV Type: IDC

Timeline