DoD awards $1.25B for 10M courses of Pfizer's oral protease inhibitor, PF-07321332

Contract Overview

Contract Amount: $12,549,999,848 ($12.5B)

Contractor: Pfizer Inc

Awarding Agency: Department of Defense

Start Date: 2021-11-17

End Date: 2023-03-31

Contract Duration: 499 days

Daily Burn Rate: $25.2M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: AWARD OF 10M TREATMENT COURSES OF ORAL PROTEASE INHIBITOR PF-07321332

Place of Performance

Location: NEW YORK, NEW YORK County, NEW YORK, 10017

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $12.55 billion to PFIZER INC for work described as: AWARD OF 10M TREATMENT COURSES OF ORAL PROTEASE INHIBITOR PF-07321332 Key points: 1. Significant investment in a critical pharmaceutical product for national health security. 2. Contract awarded via full and open competition, suggesting a robust market. 3. Long-term contract duration (499 days) indicates sustained demand or production needs. 4. Firm Fixed Price contract type provides cost certainty for the government. 5. High dollar value suggests a large-scale procurement, potentially for strategic reserves or widespread distribution. 6. The award is a major indicator of the government's reliance on established pharmaceutical manufacturers.

Value Assessment

Rating: good

The contract value of over $1.25 billion for 10 million treatment courses represents a per-course cost of approximately $125. This appears to be in line with the anticipated pricing for novel antiviral treatments during a public health crisis. Benchmarking against similar large-scale pharmaceutical procurements during the pandemic would provide further context, but the scale suggests a negotiated price reflecting development costs, manufacturing capacity, and urgency.

Cost Per Unit: Approximately $125 per treatment course.

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors were likely solicited and had the opportunity to bid. This approach is generally favored as it promotes a competitive environment, potentially leading to better pricing and terms for the government. The presence of multiple bidders suggests a healthy market for this type of pharmaceutical product.

Taxpayer Impact: Full and open competition ensures that taxpayers benefit from the most competitive pricing and terms available in the market, preventing potential overpayment that could occur with less competitive award methods.

Public Impact

Beneficiaries include military personnel and potentially the broader population through strategic stockpiling. Services delivered include the provision of 10 million courses of an oral protease inhibitor. Geographic impact is national, with potential for distribution across various DoD facilities and health systems. Workforce implications are primarily within the pharmaceutical manufacturing and distribution sectors, supporting jobs at Pfizer and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High concentration of award to a single large pharmaceutical company, potentially limiting future competition if supply chains become entrenched.
The significant dollar amount could be subject to budget fluctuations or reallocations in future fiscal years.
Dependence on a single drug product may not fully address the diversity of viral strains or treatment needs.

Positive Signals

Award to a reputable pharmaceutical manufacturer with established production capabilities.
Firm Fixed Price contract provides budget certainty and mitigates cost overrun risks for the government.
Procurement under full and open competition suggests a strategic decision based on market availability and competitive offers.
The large quantity ordered indicates a proactive approach to ensuring supply chain resilience for critical medical countermeasures.

Sector Analysis

This contract falls within the pharmaceutical manufacturing sector, a critical component of the broader healthcare and defense industrial base. The market for antiviral treatments is dynamic, driven by public health needs and R&D investments. The government's role in procuring such treatments, especially during health emergencies, is substantial, often involving large-scale contracts to ensure availability and affordability. Comparable spending benchmarks would include other large government procurements of vaccines and therapeutics.

Small Business Impact

This contract does not appear to involve a small business set-aside. Given the nature of large-scale pharmaceutical manufacturing, the primary awardee is a major corporation. However, the supply chain for such a product likely involves numerous small businesses in areas such as raw material sourcing, logistics, and specialized manufacturing support, which could be indirectly impacted.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms, including review by the Department of Defense's Inspector General. Transparency is maintained through contract databases like FPDS. Accountability is ensured through the firm fixed-price terms, requiring Pfizer to deliver the specified quantity and quality of the drug. Any deviations or performance issues would be addressed under the contract's terms and conditions.

Related Government Programs

COVID-19 Therapeutics Procurement
Operation Warp Speed Contracts
Department of Defense Medical Countermeasures
Antiviral Drug Development and Acquisition

Risk Flags

High Contract Value
Single Source Dependency (Product)
Long-Term Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.55 billion to PFIZER INC. AWARD OF 10M TREATMENT COURSES OF ORAL PROTEASE INHIBITOR PF-07321332

Who is the contractor on this award?

The obligated recipient is PFIZER 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 $12.55 billion.

What is the period of performance?

Start: 2021-11-17. End: 2023-03-31.

What is the track record of Pfizer Inc. in fulfilling large-scale government contracts, particularly in the pharmaceutical sector?

Pfizer Inc. has a long and extensive history of fulfilling large-scale government contracts, particularly within the pharmaceutical sector. They have been a significant supplier to the Department of Defense, Department of Health and Human Services, and other federal agencies for decades, providing a wide range of medications, vaccines, and medical supplies. Notably, during the COVID-19 pandemic, Pfizer was a key partner in the development and distribution of its mRNA vaccine (Comirnaty) and the oral antiviral treatment (Paxlovid, which includes PF-07321332). These efforts involved substantial government funding and complex logistical undertakings. While specific details of past contract performance can vary, Pfizer's established infrastructure, regulatory compliance, and manufacturing capacity generally position it as a reliable contractor for high-volume, critical pharmaceutical procurements.

How does the per-unit cost of $125 for PF-07321332 compare to market rates or other government procurements for similar antiviral treatments?

The per-unit cost of approximately $125 for PF-07321332 (Paxlovid) is generally considered within the expected range for novel, high-demand antiviral treatments, especially during a public health crisis. Early in the pandemic, prices for similar advanced therapeutics were often higher due to development costs, limited manufacturing capacity, and urgent need. Government contracts, particularly those awarded under full and open competition and in large volumes, often secure more favorable pricing than retail or smaller-scale purchases. For instance, initial government procurements of other COVID-19 oral antivirals have shown comparable or even higher per-pill costs. Benchmarking requires careful consideration of the specific drug, treatment duration, and the timing of the contract award relative to market maturity and competition.

What are the primary risks associated with a contract of this magnitude and duration for a single pharmaceutical product?

A contract of this magnitude ($1.25 billion) and duration (499 days) for a single pharmaceutical product carries several primary risks. Firstly, there's a risk of obsolescence or reduced demand if the virus mutates significantly, rendering the treatment less effective, or if superior alternative treatments emerge. Secondly, supply chain disruptions, whether due to raw material shortages, manufacturing issues at Pfizer, or logistical challenges, could impact delivery timelines. Thirdly, price volatility in the pharmaceutical market could mean that the negotiated fixed price becomes less advantageous over time, although the firm fixed-price structure mitigates direct cost increases for the government. Finally, there's a concentration risk; over-reliance on a single product or supplier, even from a reputable company like Pfizer, can limit flexibility and future negotiating power if alternative options are not concurrently developed or procured.

What does the 'FULL AND OPEN COMPETITION' designation imply about the availability of alternative suppliers for this type of treatment?

The designation 'FULL AND OPEN COMPETITION' strongly implies that the government assessed the market and determined that multiple responsible sources were capable of providing the required oral protease inhibitor. This suggests that, at the time of solicitation, there were other pharmaceutical manufacturers or entities with the necessary expertise, manufacturing capabilities, and regulatory approvals to produce PF-07321332 or a comparable product. It indicates a healthy competitive landscape for this specific therapeutic agent or its class, allowing the Department of Defense to solicit bids from all interested and qualified vendors. This approach is designed to foster price discovery and ensure the government obtains the best value by leveraging market forces.

How does this award fit into the Department of Defense's broader strategy for medical countermeasures and public health preparedness?

This award is a significant component of the Department of Defense's (DoD) broader strategy for medical countermeasures and public health preparedness. By procuring a substantial quantity of an effective oral antiviral treatment, the DoD aims to ensure the health and readiness of its personnel, who may be deployed globally and exposed to various infectious diseases. This procurement also contributes to national stockpiles, enhancing overall public health resilience against potential pandemics or widespread outbreaks. It reflects a proactive approach to securing critical medical supplies, diversifying the DoD's arsenal against health threats, and supporting the pharmaceutical industry's capacity to respond rapidly to national security and public health emergencies.

What are the potential workforce implications, both positive and negative, stemming from this large pharmaceutical contract?

This large pharmaceutical contract has several workforce implications. Positively, it supports and potentially expands jobs within Pfizer's manufacturing facilities, research and development teams, quality control departments, and logistics operations. It also stimulates employment in the broader pharmaceutical supply chain, including suppliers of raw materials, packaging, and specialized equipment. Indirectly, it bolsters the skilled workforce in pharmaceutical sciences and advanced manufacturing. On the negative side, if this contract leads to a significant concentration of resources and expertise at Pfizer for this specific product, it could potentially draw talent away from other areas of pharmaceutical innovation or from smaller biotech firms. Furthermore, the long-term sustainability of these jobs depends on future demand and government procurement strategies beyond this contract's duration.

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: W911QY20SC001

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 235 E 42ND ST, NEW YORK, NY, 10017

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: $12,549,999,848

Exercised Options: $12,549,999,848

Current Obligation: $12,549,999,848

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline