This week, President-elect Donald Trump raised questions regarding the federal government’s bidding process for pharmaceuticals. The Presidential-elect’s questions lead the Coalition to remind the procurement community of the critical issue driving unnecessary costs and other inefficiencies in the government’s purchase of products, including pharmaceuticals, and services: notwithstanding the statutory requirement to utilize commercial terms and conditions to the maximum extent practicable, the acquisition system has devolved into a process-laden, “other-than-commercial” environment that increases costs, limits competition, and raises barriers to entry for commercial firms. As currently structured, the VA Multiple Award Schedule Program is such an environment.
The VA MAS program accounts for $14 billion in annual purchases, of which, pharmaceuticals account for $11 billion. As currently structured, the VA MAS program operates under outdated pricing policies (from the 1980’s), a significant number of non-commercial terms and conditions, and burdensome evaluation and award processes. As a result, it typically takes up to three years to award a new VA MAS contract and up to a year to modify a pre-existing contract. The result is limited access to new medical technologies/capabilities, increased costs, and reduced competition. It does not have to be this way.
For their part, Coalition healthcare members have been ready to help the VA reengineer the program to deliver cost effective, best-value medical support for veterans. To that end, on July 1, 2016, the Coalition submitted to VA a white paper assessing the current pricing policies and negotiation practices, and it recommended process improvements to create a more commercial-like model to reduce costs and provide timely access to medical products, services, and solutions, including pharmaceuticals. On September 6, 2016, those Coalition healthcare members followed up with a set of “quick-fixes” for the program. At this point, however, the VA has not moved forward to address the outdated pricing framework and revitalize the VA MAS program.
The VA MAS program has great potential as a cost-effective method of providing pharmaceuticals, as well other medical products and services critically needed by our nation’s veterans. To acquire best value, pharmaceuticals and other commercial medical products and services for our veterans, the VA, consistent with the Federal Acquisition Streamlining Act (FASA), must utilize, to the maximum extent practicable, commercial terms, conditions, and practices.
In light of the foregoing, the main culprit is the process and not a particular industry sector. As in the past, Coalition members stand ready to work with the VA, and the government generally, to revitalize commercial item contracting through the VA MAS program and bring best value medical support to our veterans.