HHS Awards $13.4M for On-Demand Pharmaceuticals to McKesson Corporation

Contract Overview

Contract Amount: $13,448,125 ($13.4M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2024-08-28

End Date: 2026-08-09

Contract Duration: 711 days

Daily Burn Rate: $18.9K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PHARMACEUTICAL AND MEDICAL/SURGICAL PRODUCTS TO BE ORDERED ON AN AS NEEDED BASIS

Place of Performance

Location: CHINLE, APACHE County, ARIZONA, 86503

State: Arizona Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $13.4 million to MCKESSON CORPORATION for work described as: PHARMACEUTICAL AND MEDICAL/SURGICAL PRODUCTS TO BE ORDERED ON AN AS NEEDED BASIS Key points: 1. Significant contract value of $13.4M for essential pharmaceutical supplies. 2. McKesson Corporation, a major player, secures the award. 3. Potential risk of price fluctuations due to 'as needed' ordering. 4. Focus on pharmaceutical preparation manufacturing sector.

Value Assessment

Rating: good

The contract is for pharmaceutical preparations, a competitive market. Benchmarking against similar 'as needed' contracts for pharmaceuticals would provide further insight into pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a robust price discovery process. The 'as needed' nature allows flexibility but requires careful monitoring of order volumes.

Taxpayer Impact: Taxpayer funds are being used for essential medical supplies, with competition aiming for cost-effectiveness.

Public Impact

Ensures availability of critical medications for the Indian Health Service. Supports healthcare services in Arizona through reliable supply chains. Potential for cost savings through competitive bidding on essential drugs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for overspending with 'as needed' ordering.
Reliance on a single large supplier.

Positive Signals

Awarded under full and open competition.
Addresses critical healthcare needs.

Sector Analysis

This contract falls within the Pharmaceutical Preparation Manufacturing sector, which is vital for public health. Spending benchmarks in this sector often vary based on the specific drugs and quantities required.

Small Business Impact

The data does not indicate specific participation or subcontracting opportunities for small businesses in this award.

Oversight & Accountability

The 'as needed' nature of the contract requires diligent oversight to ensure efficient use of funds and prevent unnecessary purchases.

Related Government Programs

Pharmaceutical Preparation Manufacturing
Department of Health and Human Services Contracting
Indian Health Service Programs

Risk Flags

Potential for price volatility due to 'as needed' ordering.
Lack of specific small business participation noted.
Contract duration of over two years.
High contract value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $13.4 million to MCKESSON CORPORATION. PHARMACEUTICAL AND MEDICAL/SURGICAL PRODUCTS TO BE ORDERED ON AN AS NEEDED BASIS

Who is the contractor on this award?

The obligated recipient is MCKESSON CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Indian Health Service).

What is the total obligated amount?

The obligated amount is $13.4 million.

What is the period of performance?

Start: 2024-08-28. End: 2026-08-09.

What is the average unit price for key pharmaceuticals under this contract compared to market rates?

Analyzing the average unit price for specific high-volume pharmaceuticals against current market rates is crucial. This comparison will reveal if the 'as needed' structure is yielding competitive pricing or if there's an opportunity for better deals through bulk commitments or alternative suppliers for frequently ordered items.

What are the potential risks associated with an 'as needed' ordering system for pharmaceuticals?

An 'as needed' system carries risks of price escalation if demand surges unexpectedly or if McKesson adjusts prices between orders. There's also a risk of over-ordering or under-ordering, leading to potential waste or shortages. Effective inventory management and regular price reviews are essential to mitigate these risks.

How does this contract contribute to the overall effectiveness of healthcare delivery for the Indian Health Service?

This contract is vital for ensuring the consistent availability of necessary pharmaceuticals, directly impacting the effectiveness of healthcare services provided by the Indian Health Service. Reliable access to medications is fundamental for patient treatment outcomes and the overall operational efficiency of healthcare facilities.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6555 STATE HIGHWAY 161, IRVING, TX, 75039

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $13,448,125

Exercised Options: $13,448,125

Current Obligation: $13,448,125

Actual Outlays: $13,448,125

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36W79720D0001

IDV Type: IDC

Timeline