DoD awards $5.56B for up to 1.25M COVID-19 therapeutic doses from Regeneron

Contract Overview

Contract Amount: $5,565,000,000 ($5.6B)

Contractor: Regeneron Pharmaceuticals Inc

Awarding Agency: Department of Defense

Start Date: 2021-01-12

End Date: 2022-07-31

Contract Duration: 565 days

Daily Burn Rate: $9.8M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PRODUCTION OF THERAPEUTIC IN SUPPORT OF NATIONAL EMERGENCY RESPONSE TO CORONAVIRUS 2019 (COVID-19): IN SUPPORT OF OPERATION WARP SPEED (OWS), THE GOVERNMENT IS PURCHASING UP TO 1,250,000 DOSES OF THE EMERGENCY USE AUTHORIZATION (EUA) THERAPEUTIC.

Place of Performance

Location: TARRYTOWN, WESTCHESTER County, NEW YORK, 10591

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $5.57 billion to REGENERON PHARMACEUTICALS INC for work described as: PRODUCTION OF THERAPEUTIC IN SUPPORT OF NATIONAL EMERGENCY RESPONSE TO CORONAVIRUS 2019 (COVID-19): IN SUPPORT OF OPERATION WARP SPEED (OWS), THE GOVERNMENT IS PURCHASING UP TO 1,250,000 DOSES OF THE EMERGENCY USE AUTHORIZATION (EUA) THERAPEUTIC. Key points: 1. Significant investment in critical medical countermeasures for national emergency. 2. Sole-source award to Regeneron Pharmaceuticals Inc. raises competition concerns. 3. High value contract necessitates robust oversight to ensure fair pricing and delivery. 4. Focus on biological product manufacturing for pandemic response.

Value Assessment

Rating: questionable

The contract value of $5.56 billion for up to 1.25 million doses suggests a per-dose price of $4,452. This is a high price point, though potentially justified by the emergency nature and R&D involved. Benchmarking against similar emergency therapeutic procurements is difficult due to the unique circumstances of COVID-19.

Cost Per Unit: $4,452

Competition Analysis

Competition Level: sole-source

The contract was awarded on a sole-source basis, likely due to the urgency of the national emergency and the specific therapeutic developed by Regeneron. This limited competition may have impacted price discovery, potentially leading to a higher cost than if multiple vendors were considered.

Taxpayer Impact: Taxpayers are funding a critical national security need, but the lack of competition could mean a less efficient use of funds compared to a competitive process.

Public Impact

Ensures availability of a critical therapeutic for national emergency response. Supports Operation Warp Speed's mission to accelerate medical countermeasures. Potential for significant public health impact through treatment availability.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price negotiation.
High per-unit cost requires careful monitoring.
Contract duration extends well into post-emergency period.

Positive Signals

Addresses critical need for COVID-19 therapeutics.
Supports a key government initiative (Operation Warp Speed).

Sector Analysis

This contract falls within the Healthcare sector, specifically biological product manufacturing. The spending benchmark for such emergency therapeutic procurements is highly variable, influenced by R&D costs, production scale, and the urgency of the public health crisis.

Small Business Impact

This contract was not awarded to small businesses. The scale and nature of this procurement, involving advanced biological manufacturing for a national emergency, typically favor large, established pharmaceutical companies.

Oversight & Accountability

Given the significant value and sole-source nature, robust oversight is crucial. This includes monitoring delivery schedules, quality control, and justification for the pricing. The Department of the Army, under the Department of Defense, is responsible for administering the contract.

Related Government Programs

Biological Product (except Diagnostic) Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award
High per-unit cost
Lack of small business participation
Extended contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.57 billion to REGENERON PHARMACEUTICALS INC. PRODUCTION OF THERAPEUTIC IN SUPPORT OF NATIONAL EMERGENCY RESPONSE TO CORONAVIRUS 2019 (COVID-19): IN SUPPORT OF OPERATION WARP SPEED (OWS), THE GOVERNMENT IS PURCHASING UP TO 1,250,000 DOSES OF THE EMERGENCY USE AUTHORIZATION (EUA) THERAPEUTIC.

Who is the contractor on this award?

The obligated recipient is REGENERON PHARMACEUTICALS INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $5.57 billion.

What is the period of performance?

Start: 2021-01-12. End: 2022-07-31.

What was the justification for the sole-source award, and were alternative therapeutic options considered?

The sole-source award was likely justified by the urgent need to secure a specific, already-developed therapeutic under Operation Warp Speed. While alternative therapeutic development was ongoing across the industry, Regeneron's product may have been at a more advanced stage for immediate procurement. A thorough review of the justification documentation would be needed to confirm the specific rationale and alternatives assessed.

How does the per-unit cost compare to similar emergency therapeutic procurements, and what factors contribute to this price?

The per-unit cost of $4,452 is exceptionally high, reflecting the significant R&D investment, complex manufacturing processes for biologics, and the emergency context. Benchmarking is difficult as few comparable large-scale emergency therapeutic procurements exist. Factors include the cost of clinical trials, specialized production facilities, and the government's willingness to pay a premium for rapid access during a crisis.

What mechanisms are in place to ensure the effectiveness and timely delivery of the therapeutic doses?

The contract likely includes specific milestones for production and delivery, quality assurance requirements, and potentially penalties for non-compliance. The Department of the Army's contracting officers would be responsible for monitoring these aspects. Regular reporting from Regeneron on manufacturing progress and clinical data would also be part of the oversight process.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Biological Product (except Diagnostic) Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W15QKN21R0047

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 777 OLD SAW MILL RIVER RD, TARRYTOWN, NY, 10591

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: $5,565,000,000

Exercised Options: $5,565,000,000

Current Obligation: $5,565,000,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline