Marci Anderson, VAOIG

Mark Myers, VAOIG

May 10, 20171

Federal Government Processes

and Standards

VA Structure and Best Practices

• Procurement in VA is not centralized.

• Contracts and task orders are awarded by the

Office of Acquisition, Logistics, and Construction

or by the various VA administrations, the largest

being the Veterans Health Administration.

May 10, 20172

May 10, 20173

FY 2017 VA Contract Spend to Date

(04/03/2017)

FY2016: $22.32 Billion, 217,602

transactions

VHA is SAO Central, East, & West

Combined

OFFICE OF ACQUISITION AND

LOGISTICS

May 10, 20174

Funded through VA Supply Fund which is a

revolving fund

Office of Acquisitions provides overall policy

for VA’s acquisition operations

Major units:

Acquisition Resource Service (ARS)

Acquisition Operations Service (AOS)

Denver Acquisition and Logistics Center (DALC)

National Acquisition Center (NAC)

Technical Acquisition Center (TAC) (IT

procurements)

May 10, 20175

OALC Org Chart

FTE: 1205

NAC ORGANIZATIONAL CHART

6

National

Acquisition

Center

FSS Service

Denver

Acquisition &

Logistics

Center

Business

Resource

Service

National

Contract

Service

May 10, 2017

FSS Service

7

Vacant

Director FSS Service

708-786-4957

James Booth (A)

Deborah Zuckswerth(B)

Chief, Med/Surgical

James: 708-786-5223

Deborah: 708-786-5128

Bob Satterfield

Chief, Services

708-786-4955

Diana Lawal

Chief, Pharm/Dental

708-786-4949

Christine Szrom

Chief, Program Mgmt & Resource Support

708-786-4936

May 10, 2017

National Contract Service

8

Steven Thomas

Director National Contract Service

Frank Zacchigna

Chief, High Tech Medical Equipment

Division

Ronald Jenkins

Chief, Medical/Surgical

Program

Fran DeRosa

Chief, Pharmaceutical

Division

May 10, 2017

PHARMACY BENEFITS

MANAGEMENT SERVICES (PBM)

May 10, 20179

Oversees the formulary for the entire VA system

Manages pharmaceuticals and pharmaceutical-related policies Drug safety and efficacy evaluations

Pharmacologic management algorithms Criteria for drug use

Evidence-based practices promote, optimize, and assist VA providers with the safe and appropriate use of pharmaceuticals

Allow formulary decisions that can result in substantial cost savings

Standardize generic agents as well as specific drugs and drug classes for National Contracts

Established an outcomes research section to undertake quality-improvement and safety initiatives that ultimately monitor and determine the clinical impact of formulary decisions

Responsible for processing non-FAMP data to produce FCPs Authority to make covered drug determinations

PBM CENTRAL OFFICE

May 10, 201710

Michael A. Valentino -Chief Consultant for Pharmacy Benefits Management Services, Department of Veterans Affairs Central Office

Responsible for planning and directing Drug benefit design

Formulary management and pharmaceutical contracting

Automated prescription fulfillment

Professional pharmacy practice

Emergency pharmacy services

Drug therapy policy development

Virginia S. Torrise, Pharm. D. - Deputy Chief Consultant - PBM Professional Practice and Clinical Informatics VA’s formulary committees

Pharmacy residency training

Adverse drug event reporting

Medication safety reviews

Recruitment and retention initiatives

Emergency pharmacy preparedness and pharmacy informatics development

PBM HINES

May 10, 201711

Joseph J. Canzolino, R. Ph. – Deputy Chief Consultant - Formulary Management Pharmacy Benefits Management Services VAMedSafe/Outcomes Research Emergency Pharmacy Service.

Jennifer Zacher, Pharm. D. - Assistant Chief Consultant - PBM/EPS Management of VA National Formulary initiatives Advisor to the National Acquisitions Center on Pharmacy

Issues Emergency Preparedness

Ted Karnezis, RPh, Pharm. D. - Public Law Database Manager Management of Public Law Prices

VA Office Inspector General

Office of Contract Review

12

Roy Fredrikson

Deputy Counselor to the IG

Mark Myers

Director

Healthcare Resources Division

202-461-4633

Karen Summers

Manager

Healthcare Services Pre-Awards

202-461-4652

Gary Petrovich

Manager

Public Law Compliance

202-461-4654

Joseph Houston

Manager

Pharmaceutical FSS Pre-Awards

202-461-4643

Michael Grivnovics

Director

FSS Division

202-461-4656

Kim McKeithen

Manager

FSS Pre-Awards (non-

Pharmaceutical)

202-461-4644

Ayhan Akbel

Manager

FSS Post-Awards

202-461-4651

Ernest Goebel

Manager

Construction

202-461-4561

May 10, 2017

OFFICE OF CONTRACT

REVIEW

May 10, 201713

Performs Pre- and Post-Award reviews of FSS

contracts awarded and administered at the

NAC

Pre-Award reviews are requested by and are

advisory to the Contracting Officer. All

pharmaceutical offers with estimated contract

values over $5 million will be subject to a Pre-

Award review.

Primary objective is to determine whether

CSP disclosures are accurate, complete and

current and whether the offered price is

reasonable.

OFFICE OF CONTRACT

REVIEW

May 10, 201714

Post-Award Reviews - compare disclosure

data with sales transaction data to

determine:

compliance with PL 102-585 section 603

billing at correct prices

compliance with FSS contract clauses including:

price adjustment clause, price reduction clause,

payment of IFF

COORDINATION OF NAC, PBM,

AND OIG

May 10, 201715

Preaward Reviews

NAC and OIG review CSPs and pricing schedules

OIG obtains current FCPs from PBM (if covered drugs are offered)

OIG conducts review and issues report to CO

CO negotiates contract with OIG advice as needed.

OIG coordinates with NAC Contracting Staff regarding any potential issues with offeror

Postaward Reviews

Can be initiated at the request of the CO, by the OIG, or in response to a voluntary disclosure

NAC and OIG will discuss unique issues

OIG report to CO with recommendations

OIG may obtain open market purchase data through PBM if a covered drug is not offered timely, or is removed from the schedule prematurely.

COORDINATION OF NAC, PBM,

AND OIG

May 10, 201716

Public Law Updates

PBM sends letter in October to contractors with

covered drugs

PBM reviews and calculates FCPs sends to

contractor for concurrence

PBM sends final FCPs to contractor and contracting

officer

If the contractor has concerns or disagrees with

final FCP, need to timely discuss and resolve with

PBM

Contractor submits modification request and CO

performs analysis (Max Cap and TC relationship)

Mod is processed for January 1 implementation

Best Practices

May 10, 201717

Understand what is required for submission for a

new contract, contract extension, FCP,

modification, price reduction and establish

policies, procedures, and processes that will:

Allow you to extract accurate, complete, and current

information needed to submit an offer or

modification, and calculate the FCP for each line

item.

Allow you to track information needed to ensure

contract compliance such as place of manufacture

and compliance with FDA laws and regulations.

Best Practices

May 10, 201718

Submit offers timely to ensure award at the time

you expect and before an existing contract

expires.

3 months or less in advance of your desired award

date will not be sufficient.

Allow at least one year for optimal results.

If you don’t get a response from the NAC, contact

them to determine the status.

Same goes for requests for modifications

Document progress, especially for addition for

covered drugs

Best Practices

May 10, 201719

Perform internal reviews periodically. If noncompliance issues are found, determine impact and if any, submit a voluntary disclosure to your CO with a copy to the OIG.

For offers that require a preaward review, follow-up with CO once the review is complete. No more than 60 days should pass between the completion of the review and the award of the contract/modification.

If the CO is not responsive, elevate concerns to the Chief and don’t hesitate to elevate to the Director level if necessary.

Disclose and negotiate. Don’t selectively disclose based on criteria of your choosing.

Single v. Dual Pricing

Ensure that you have the information needed to make

an informed decision whether to offer single or dual

pricing on the FSS for covered drugs.

May 10, 201720

Single v. Dual Pricing

May 10, 201721

“Covered drug” is a single-source or innovator multiple-source drug, marketed under a New Drug Application or a Biological License Agreement

Manufacturers must make VHCA “covered drugs” available for sale on an FSS contract at statutorily-capped pricing known as the Federal Ceiling Price (FCP) to be eligible for Medicaid and Medicare Part B reimbursement, and purchase by the “Big Four” Federal agencies: Big Four: VA, DoD, Public Health Service (PHS)

(including Indian Health Service) (IHS)), and Coast Guard

Other Government Agencies (OGAs) and other eligible FSS purchasers are not entitled to FCP, so VA allows manufacturers to decide whether to extend FCPs to the OGAs using the dual pricing option

Single v. Dual Pricing

May 10, 201722

Single Pricers Provide FCP (or lower) pricing to all FSS-eligible

purchasers as the FSS “contract price”

Maintain single price list

Dual Pricers Establish two prices:

Big Four price: capped at FCP

OGA: negotiated price that serves as the FSS “contract price”

Maintain two price lists

Single Pricing Pros and Cons

May 10, 201723

Pros: Simpler administratively: Only one price point to negotiate CSP disclosures will

be limited only to prices that are equal to or lower than

the FCP for offered products

Only one price list to maintain

Only one set of prices to monitor for compliance with the

Price Reductions Clause

Cons: Limitation on price increases Single pricing rules depress or inhibit increase in FCP in

dual calculation years

Dual Pricing Pros and Cons

May 10, 201724

Pros: Permits price increases and may limit other liabilities OGA price is usually higher than FCP

OGA price allows for FCP to increase more quickly over time relative to single pricers (OGA price is used as the FSS Max Cap in the FCP calculation)

Lower rebate liability under the TRICARE retail rebate program

Cons: More complicated administratively: Two price points to negotiate CSP disclosures will be more

involved to address FCP-based Big 4 price and the negotiated OGA price

Two price lists to maintain

Two sets of prices to monitor for compliance with the Price Reductions Clause

Dual Pricing – Considerations

May 10, 201725

Differential between MFC, Tracking Customer

Price and calculated FCP

Inflationary market could mean heavy

additional discounts which would favor dual

pricing

Deflationary market could mean there is a

potential for the Tracking Customer price to

become the permanent FSS price

Applies to all 42-2A products on contract.

Overall benefit should be evaluated.

Making/Changing the Election

May 10, 201726

The single/dual election is made at the time of contract award

The election applies to all covered drugs on contract

Vendor Response Document, Page 12, includes instructions, considerations and election form.

Established single pricers can change to dual pricing at any time during the contract period (DML dated 11/1/2013) If a company changes its election (from single to dual) during

the life of the contract, new CSP forms must be submitted to negotiate an FSS price

Trade Agreements Act

May 10, 201727

All VA FSS and other national contracts (other than small business set-asides) include the Trade Agreements Act clause.

The contractor has the responsibility to identify the country of origin, not the CO or the purchaser.

For pharmaceuticals, maintain documents showing the country of origin for the API.

For non-manufacturers, ensure that your subcontracts to obtain the products includes a provision that requiring your suppliers (both direct and indirect) to certify that the products provided are Trade Agreements Act compliant.

Blanket non-availability determination for 42-2A items only.