Department of the Army awards $1.1B contract for SARS-COV-2 therapeutic, highlighting significant investment in pandemic preparedness

Contract Overview

Contract Amount: $1,107,934,203 ($1.1B)

Contractor: Astrazeneca Pharmaceuticals LP

Awarding Agency: Department of Defense

Start Date: 2020-09-30

End Date: 2023-07-01

Contract Duration: 1,004 days

Daily Burn Rate: $1.1M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: SARS-COV-2 THERAPEUTIC AZD7442

Plain-Language Summary

Department of Defense obligated $1.11 billion to ASTRAZENECA PHARMACEUTICALS LP for work described as: SARS-COV-2 THERAPEUTIC AZD7442 Key points: 1. The contract represents a substantial commitment to securing critical medical countermeasures against viral threats. 2. A firm-fixed-price structure suggests predictable costs for the government, though potential for cost overruns exists. 3. The award was made under full and open competition, indicating a robust market for such pharmaceuticals. 4. The duration of the contract (over 1000 days) points to a long-term need for the therapeutic. 5. The specific product, AZD7442, suggests a focus on a particular class of antiviral treatments. 6. The significant dollar amount underscores the high cost associated with developing and procuring advanced medical supplies.

Value Assessment

Rating: good

The $1.1 billion contract for SARS-COV-2 therapeutic AZD7442 awarded to AstraZeneca Pharmaceuticals LP appears to be a significant investment in pandemic preparedness. Benchmarking this specific therapeutic's value is challenging without direct comparisons to similar government procurements of this exact drug. However, the firm-fixed-price nature of the contract provides cost certainty for the government. The overall value proposition hinges on the therapeutic's efficacy and the government's strategic need for such a countermeasure in the face of ongoing or potential future viral threats.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple qualified vendors had the opportunity to bid. The presence of 6 bidders indicates a competitive market for this type of pharmaceutical product. This level of competition is generally favorable for price discovery and potentially leads to more favorable pricing for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: The full and open competition process likely resulted in a more competitive price for taxpayers, ensuring that the government obtained the therapeutic at a reasonable cost relative to market capabilities.

Public Impact

The primary beneficiaries are individuals requiring treatment for SARS-COV-2 infection, potentially including military personnel and the general population depending on distribution. The service delivered is the provision of a specific therapeutic agent (AZD7442) to combat the SARS-COV-2 virus. The geographic impact is likely national, given the Department of Defense's role in national security and public health preparedness, with potential for wider distribution. Workforce implications may include roles in pharmaceutical manufacturing, distribution, clinical administration, and research related to the therapeutic's effectiveness and deployment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for over-reliance on a single therapeutic, necessitating diversification of antiviral procurement strategies.
Long-term storage and maintenance costs for a large quantity of pharmaceuticals could be substantial.
Efficacy of the therapeutic against evolving viral strains needs continuous monitoring.
Dependence on a single manufacturer, AstraZeneca, could pose supply chain risks if their production is disrupted.

Positive Signals

Proactive investment in critical medical countermeasures demonstrates strong pandemic preparedness.
Firm-fixed-price contract provides cost predictability for the government.
Full and open competition suggests a healthy market and potentially competitive pricing.
Awarding to a known pharmaceutical entity like AstraZeneca implies a level of established quality and manufacturing capability.

Sector Analysis

The pharmaceutical preparation manufacturing sector is characterized by high research and development costs, stringent regulatory oversight, and significant market potential, especially for treatments addressing global health crises like COVID-19. The global market for COVID-19 therapeutics has seen substantial investment and competition. This contract fits within the broader defense and public health strategy of maintaining a robust supply of medical countermeasures, aligning with government efforts to bolster national biodefense capabilities. Comparable spending benchmarks would involve other large-scale government procurements of antiviral or therapeutic agents.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Given the scale and nature of pharmaceutical manufacturing and procurement, it is unlikely that small businesses would be primary awardees for such a large-scale, specialized contract. Subcontracting opportunities for small businesses might exist in areas such as logistics, distribution, or ancillary services, but the primary manufacturing and supply would likely be handled by the prime contractor or its large-scale partners.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of the specified therapeutic. Transparency is facilitated by the contract award notice, which is publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract execution.

Related Government Programs

COVID-19 Therapeutics Procurement
Biodefense and Pandemic Preparedness Programs
Department of Defense Medical Materiel Contracts
Pharmaceutical Supply Chain Management
Antiviral Drug Development and Acquisition

Risk Flags

Evolving Viral Strains
Therapeutic Efficacy Over Time
Supply Chain Reliability
Long-Term Storage Costs
Market Competitiveness of Therapeutics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.11 billion to ASTRAZENECA PHARMACEUTICALS LP. SARS-COV-2 THERAPEUTIC AZD7442

Who is the contractor on this award?

The obligated recipient is ASTRAZENECA PHARMACEUTICALS LP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $1.11 billion.

What is the period of performance?

Start: 2020-09-30. End: 2023-07-01.

What is the track record of AstraZeneca Pharmaceuticals LP with government contracts, particularly in pharmaceutical development and supply?

AstraZeneca Pharmaceuticals LP, a subsidiary of the global biopharmaceutical company AstraZeneca PLC, has a history of engaging with government entities, including the U.S. government, for the supply of pharmaceuticals. Their involvement in the development and supply of COVID-19 vaccines and therapeutics, such as the one specified in this contract (AZD7442, also known as Evusheld), has been significant. While specific contract details beyond this award are not provided, their established presence in the pharmaceutical industry suggests a capacity for large-scale production and adherence to regulatory standards. Government agencies often contract with established pharmaceutical companies for critical medical supplies due to their existing infrastructure, research capabilities, and regulatory compliance track record. Further analysis would require examining past performance reviews and other contract awards to assess reliability and quality consistently.

How does the $1.1 billion contract value compare to other government procurements for similar SARS-COV-2 therapeutics?

The $1.1 billion contract value for the SARS-COV-2 therapeutic AZD7442 is substantial and reflects the high cost associated with developing, manufacturing, and procuring advanced medical countermeasures during a global health crisis. Comparing this exact value to other similar procurements is complex due to variations in the specific drugs, quantities, contract types, and the timing of awards relative to the pandemic's progression. However, numerous large-scale contracts were awarded by various government agencies (e.g., Department of Health and Human Services, Department of Defense) for COVID-19 vaccines and therapeutics, often in the hundreds of millions to billions of dollars. For instance, contracts for monoclonal antibody treatments and antiviral medications from other manufacturers also reached significant figures. The $1.1 billion for AZD7442 is within the range of major government investments aimed at securing a diverse portfolio of effective treatments to combat the pandemic.

What are the primary risks associated with a long-duration contract (1004 days) for a pharmaceutical product like AZD7442?

A primary risk with a long-duration contract for a pharmaceutical product is the potential for the therapeutic's efficacy to diminish over time due to viral evolution. SARS-COV-2 has demonstrated a capacity for mutation, which could render existing treatments less effective against new variants. Another risk involves the shelf-life and storage requirements of the medication; maintaining optimal conditions for a large quantity of pharmaceuticals over several years can incur significant costs and logistical challenges. Furthermore, market dynamics can shift, with newer, potentially more effective or cost-efficient treatments emerging, making the contracted product less competitive or necessary. Finally, there's a risk of supply chain disruptions affecting the manufacturer's ability to deliver consistently over the contract period, impacting the government's preparedness.

How effective has AZD7442 (Evusheld) been in clinical trials and real-world application against SARS-COV-2, and how does this inform the contract's value?

AZD7442 (Evusheld), a long-acting antibody, was developed by AstraZeneca to prevent COVID-19 in individuals who are immunocompromised or otherwise at high risk of an inadequate response to vaccination. Clinical trials demonstrated its efficacy in reducing the risk of symptomatic SARS-CoV-2 infection. However, its effectiveness against certain variants, particularly Omicron subvariants, became a concern, leading to its Emergency Use Authorization (EUA) being revoked by the FDA in early 2023 for treatment and later for prevention due to reduced efficacy against circulating strains. This evolving efficacy landscape directly impacts the contract's value proposition. While the initial investment was based on promising data, the subsequent decline in effectiveness against dominant variants means the therapeutic may not fulfill its intended purpose as anticipated, raising questions about the long-term utility and value derived from the $1.1 billion expenditure.

What is the historical spending pattern for pharmaceutical preparations by the Department of the Army, and how does this award fit within that trend?

The Department of the Army, like other branches of the military and federal health agencies, consistently spends significant amounts on pharmaceutical preparations to maintain the health and readiness of service members and to support national biodefense initiatives. Historical spending patterns typically show substantial investments in vaccines, antibiotics, antivirals, and other critical medications. The COVID-19 pandemic spurred a dramatic increase in spending on SARS-COV-2 specific therapeutics and vaccines across the government. This $1.1 billion award for AZD7442, while large, is indicative of the heightened focus and investment in pandemic preparedness and response that characterized federal spending during and immediately following the acute phases of the pandemic. It aligns with a trend of prioritizing advanced medical countermeasures against emerging infectious diseases.

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

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Astrazeneca PLC

Address: 1800 CONCORD PIKE, WILMINGTON, DE, 19803

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: $1,107,934,203

Exercised Options: $1,107,934,203

Current Obligation: $1,107,934,203

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline