# Presentation: 411155

## 2009 PharmaceuticalPublic Law Year End Process

## Presentation Objectives

- Ensure Accuracy and Completeness of Data
- Ensure Understanding of Statutory and Contractual Requirements
- Ensure smooth transition from 2008 FSS prices to 2009 FSS prices

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## Agenda

**First Year Calculation**

**End of the Year Update Process**

**Dual Prices**

**Agenda**

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## Presented by: Cheryl Ward-Roberts

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## Introduction

**Public Law 102-585 ****§ 603:  Veterans Health Care Act (VHCA) of 1992**
- Effective January 1, 1993
- Imposed pricing calculations
- Requirements for affected vendors
- Master Agreement (MA)
- Pharmaceutical Pricing Agreement (PPA)
- Interim Agreement, if applicable
- FSS Contract

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**Notes:**
Letter contract that is an interim agreement
Authority provided by FAR 16.603-2
Pursuant to Sect. 603 of Public Law 102-585
Establishes a “binding commitment” when immediate performance is required
Created to allow sufficient time to negotiate and award a new FSS contract

## Federal Ceiling Price (FCP)

**Pricing calculations**
- 76% of Non-FAMP less additional discount
- Establish Federal Ceiling Price (FCP)
- Subsequent year – based on CPI-U (Consumer Price Index – Urban)

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## Who is eligible?

**The Big 4**
- Department of Veterans Affairs (VA)
- Department of Defense (DoD)
- Public Health Services (PHS) including Indian Health Service
- U.S. Coast Guard

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## Who is eligible?

- State Veteran Homes with sharing agreements with the VA and have elected options 2, 3 or 4 (VHA IL 10-99-001)
_**http://www.va.gov/vastorenac/**_
- Division of Immigration Health Services (DIHS) purchasing drugs for use in their clinics (10/19/01). DIHS is funded by PHS.

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## Who is eligible?

**DIHS Authorized Sites**
- Agency List of facilities:
_**http://www.inshealth.org/Facilities/OurLocations.shtm**_
- VA Prime Vendor Database list:
_**http://www1.va.gov/oamm/oa/nac/ncs/pharmpv.cfm**_
- See the column “Class” for code DIHS

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## Who is eligible?

**FAR 51 Delegation **
- Contractor use of Government Sources of Supply
- Cost Reimbursement contracts
- Written Authorization
**Clause I-FSS-103(e)(2) “Scope of Contract”**
- Not obligated to accept orders
- Encouraged to accept orders

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**Notes:**

Big 4 agency can authorize contractor to use FSS under a cost reimbursement contract allowing contractor to access Big 4 prices

Contractor is not obligated to accept orders received from activities outside of the Executive Branch of the Federal Government; however, the Contractor is encouraged to accept orders from such Federal Activities.

## What Drugs are Covered?

**Sole source and multi-source innovator drugs**
- Requires a prescription
- Marketed under an original New Drug Application (NDA) approved by FDA
**Biologics marketed under a FDA license**
**Authorized Generics**
- Drugs marketed as “generic” which are marketed under an NDA

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## Covered Drug Manufacturer Obligations

**Signify adherence to statutory requirements by signing**
- Master Agreement (MA) (Evergreen)
- Pharmaceutical Pricing Agreement (PPA) (Addendum A to PPA revised each year)
**Make available on FSS each of its covered drugs**

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## Penalties for Non-Participation

- A manufacturer of a covered drug that fails to enter into a MA and does not offer the product on the FSS suffers a significant economic penalty.
- Such manufacturer may not be paid by “Big Four”, Medicaid or PHS grantees for any drug or biological

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## Presented by: Cheryl Ward-Roberts

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## First Year Calculation

- 2009 1st Year of Contract – PL Purpose
- No Dual Calculation, CPI-U limiter
- .76 x NFAMP – Additional Discount

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## First Year Calculation

**Solicitation is open & continuous**
**Contract effective date varies**
**Designated 1st year of contract for Public Law calculation**
- 2009, 2014, 2019, etc.
- Without regard to actual contract effective date or performance period

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**Notes:**
Statute requires recalculation of FCP during first year of a multi-year contract

VA interpretation considering Open & Continuous nature of FSS

Managing 1st year of 300 contract impossible

Designated first year as 2009, 2014, 2019 and so
	without regard to actual start date of contract

Contracts awarded in 2008 will have 1st year in 2009 for purposes of calculating FCP.

## Presented by: W.R. (Bob) Satterfield, III
			   Christine Szrom

**	****	****	****   ****Christine Szrom**

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## Year-end Public Law Updates

**Need to meet established deadlines to ensure January 1st effective date**
- Due dates outlined in PBM’s October letter
- Reiterated in NAC’s November 1st letter
**Update FSS pricelist to incorporate pricing updates**

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## Year-end Public Law Timeline

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**Notes:**
PBM cut off for submission of NFAMP data is 17 November 2008 because the 15th falls on a Saturday.

## Year-end Public Law Updates

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## Web-Based Initiative

**Short-term**
- Contractor continue to submit NFAMP to PBM in specified excel format (by November 15, 2008)
- PBM to provide NAC with product/price data including 2009 FCP
- NAC to provide contractor with spreadsheets to be populated for modification
- NAC provides approved product/price to PBM

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**Notes:**
PBM due date this year is 11/17/2008 because 11/15/08 is a Saturday.

## Web-Based Initiative

**Long-term **
- Web-based submission of NonFAMP Data
- Approval of all pharmaceuticals contract pricing

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**Completing your Public Law 2009 spreadsheet.**
**Introduction of new modification format**
**Action specific**
**Associated spreadsheets**
**Introduction of FSS Pharmaceutical Website**
**Pharmaceutical Team Home Page**
**65IB Page**
**42-2A, Public Law Page***

**E-Process & Modifications**

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## Information Highway

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## New Price Change Process

- On or around November 15th, **extract** current item and FCP information from PBM database to the DrugItem database
**Generate** spreadsheets containing current prices and FCP information, by contract
- Contracting officer selects spreadsheet and emails to vendor as part of the negotiation process

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## New Price Change Process

- Vendor updates the spreadsheet with the current pricing information and returns it to the CO
- CO initiates the contract modification and obtains a modification number.
- The **PharmUpload application** is used to effect the change to the DrugItem database
- PBM extracts changes from the DrugItem database back into the PBM database

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## Workload Analysis

**Taking a look at the numbers...**
- Average Modification Actions Processed: 240
- Modification Actions Processed during PL: 663 (November/December 2007)
- Contracts updated in 2007: 220
- Line items uploaded in 2007: 11,375

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## Dual Prices

**Impact of First Year**
- Price change not subject to Maximum FSS Price
- EPA Clause applicable
- Price Reduction Clause/Tracking Customer Applies
- Note: If Dual (Non-Big 4) price less than FCP, Dual price becomes FSS price for all authorized users

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**Notes:**
Maximum FSS Prices  = FSS + CPI-U dual calculation. Only have to perform single calculation of .76 x NFAMP (non-federal average mfg price) less additional discount.

## Dual Prices

**2nd & Subsequent Year (i.e. 2010-2013)**
- Maximum FSS Price is applicable
- EPA Clause is applicable
- Price Reduction/Tracking Customer applies

- .

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**Notes:**
Maximum FSS Price = FSS price + CPI-U dual calcuation

## Dual Price (Incorporation)

**Dual (non-Big 4) Election Form (on file)**
**Negotiations are subject to FSS policy**
**Goal is to receive pricing better than/equal to MFC**
**Disclosure of CSP**
- MFC
- Actual sales data
- Commercial sales agreements, if
- 	necessary to support position

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## Dual Price (Incorporation)

- Actual commercial sales (Substantial)
- Standard commercial customers (e.g. GPOs)
- Wholesaler buy-in or initial purchases don’t count unless they are historically your only commercial customers
- Tracking Customer Ratio is math based (no 1:1 concession)
- Dual Price will not be awarded unless the Government can determine the price is fair & reasonable
- Dual Price will not be negotiated if FCP is Provisional

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## Dual Prices & Provisional FCP

- Dual prices _*is not*_ permitted at Provisional FCP stage
- Mfg. is not obligated to offer drug at Provisional FCP
- Provisional FCP is based on a calculation that excludes sales data
- FSS Negotiations are based on the full disclosure of commercial sales practice (CSP) data from the offeror which includes sales history
- Determination that terms are fair & reasonable

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**Notes:**
Provisional FCP is based on a calculation that excludes sales data. Furthermore, the creation of this concept was done to benefit the manufacture and Government by having the covered drug available at product launch rather than 30-45 later.  By offering the product at provisional pricing, it is understood the pricing is to be available to all FSS users. Please remember, manufacturer is not obligated to offer covered drug until Temporary FCP or 30-45 days of sales.
More importantly and to the point, FSS policy requires that we base our negotiations on the full disclosure of commercial sales practice (CSP) data from the offeror which includes sales history. Contractors wishing to incorporate dual pricing under their contract must show that the NDC has substantial (significant) commercial sales to their standard commercial customers (e.g. GPOs, Hospitals, etc.). To ensure the negotiated terms and conditions are fair and reasonable, we needs to review CSP that the data is reflective of the mfg’s full commercial discounting policy which may not be born out of the first 30 days of sales activity or indicative by early commercial agreements with insignificant actual sales history.  
Please understand that the application of the public law pricing time frames is separate and distinct from the Government’s adherence to FSS policy of requiring significant sales data along with discount information to negotiate pricing. If we were not consistent in applying FSS policy in the past, we shall be going forward. Please be advised that if the covered drug lacks significant sales history at the Temporary FCP point, dual price may not be negotiated.

## Dual Prices & Provisional FCP

- 	Note:
- 	*If our office was not consistent in applying FSS policy in the past, we shall be going forward. Please be advised that if the covered drug lacks significant sales history at the Temporary FCP point, dual price may not be negotiated.*** **

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**Notes:**
Add – Reseller guidelines

## Things to Remember...

- Submit Modification Request to NAC by 12/5/2008
- Ensure corporate email system recognizes VA email fname.lname@va.gov to avoid returned emails or emails being classified as spam
- Ensure NAC CO has current point of contact and email address
- Address any FCP appeals to OGC immediately...do not delay submission of modification request

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**Notes:**
Letter of Explanation to OGC by 10/31/08
Extension of Filing – Request and Justification by 11/17/08

## Things to Remember...

- Letters explaining material changes to non-FAMP computation methods or any changes to “old non-FAMP”  are due to PBM by 10/31/2008
- Request to OGC & Policy Group for relief from non-FAMP anomalies need to be received by 10/31/2008
- Request to OGC for extension of non-FAMP due date must be received ASAP _*prior*_ to 11/17/2008

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**Notes:**
Letter of Explanation to OGC by 10/31/08
Extension of Filing – Request and Justification by 11/17/08

## Points of Contact

| Cheryl Ward-Roberts
Assistant Director
VA NAC - FSS Pharm/Dental
cheryl.ward-roberts@va.gov
708-786-5259
 | W. R. (Bob) Satterfield, III
Senior Contracting Officer
VA NAC - FSS Pharm/Dental
bob.satterfield@va.gov
708-786-4955
 | Mel Noel
Senior Contract Attorney 
VA Office of General Counsel
mel.noel@va.gov
708-786-5167
 |
| --- | --- | --- |
| Mark Myers
Division A Director
VA Office of Inspector General
mark.meyers@va.gov
202-565-4950

 | Marci Anderson
Senior Auditor
VA Office of Inspector General
marci.anderson@va.gov
910-346-5020
 | Ted Karnezis
PL Database Manager
VHA Pharmacy Benefits Mgmt
ted.karnezis@va.gov
708-786-4387 
 |

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## Thank You!

**Thank You!**

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