# Presentation: 802647

## VA PHARMACEUTICAL PRIME  VENDOR (PPV) PROGRAM 

## PHARMACEUTICAL PRIME VENDOR  PROGRAM

- Awarded to McKesson Corporation under Contract         V797P-1020 on December 31, 2003.  PPV contract performance started on May 10, 2004.
- The PPV contract covers the Continental US, Hawaii, Puerto Rico, Alaska, Virgin Islands, the Philippines, and Saipan**.**
- The contract includes a base performance period of 2 years and three option periods with 2 years each (currently under the first option period).

## PHARMACEUTICAL PRIME VENDOR PROGRAM 

**Brief Scope**
- The contract requires McKesson to maintain sufficient inventories of supplies and to distribute drug/ pharmaceutical items and any other contracted items that are dispensed through Pharmacy Service with actual therapeutic purposes.
- Products include brand name and generic drugs, nutritional/dietary supplements, blood products, test strips, test sets, reagents, and limited** **cosmetic products.

## PHARMACEUTICAL PRIME VENDOR PROGRAM

**Brief Scope**
- Product prices for the products sold through the PPV program are established through various Federal Supply Schedule contracts (FSS), VA National Contracts, Basic Ordering Agreements (BOA), and other government contracts/agreements.
- McKesson also distributes a limited number of medical/surgical items for outpatient pharmacy dispensing** **only.

## PHARMACEUTICAL PRIME VENDOR PROGRAM

**Participants**
**	**
**	****Mandatory for VA facilities****	**
- 7 Consolidated Mail Outpatient Pharmacies (CMOPs)  (the biggest customer)
- VA Medical Centers (VAMCs), Outpatient Clinics and Satellite pharmacies
- Other Government Agencies (OGAs)
- Download List of PPV participants:
- 	_[http://www1.va.gov/oamm/oa/nac/ncs/pharmpv.cfm](http://www1.va.gov/oamm/oa/nac/ncs/pharmpv.cfm)_

## PHARMACEUTICAL PRIME VENDOR PROGRAM 

**Other Government Agency (OGA) Facilities**
- Health & Human Services (HHS)
- Indian Health Service (IHS)
- Bureau of Prisons (BOP)
- Dept. of Immigration Health Service (DIHS)
- Dept. of Homeland Security (DHS)
- Public Health Service (PHS)
- Howard University (HOW)
- State Veterans Homes (SVH)

## PHARMACEUTICAL PRIME VENDOR PROGRAM 

**Other Government Agencies (OGAs)**
- 	**Indian Health Service (IHS)**
- Entitled to Big4 pricing
- 9 Federal National or Regional IHS Supply Service Centers (NSSC, RSSC)
- Facilities under the PPV program include Tribal and Urban Health Clinics
- A Tribal facility must have affiliation with a Federal IHS to have PPV access

## PHARMACEUTICAL PRIME VENDOR PROGRAM 

**State Veterans Homes (SVH)**
- SVHs must have an approved and executed Sharing Agreement with a VA Medical Center to be entitled to FSS prices.
- A Sharing Agreement is needed to participate in the PPV program.
- Without the Sharing Agreement, the SVH is entitled to “FSS like prices on covered drugs” only.

## PHARMACEUTICAL PRIME VENDOR PROGRAM

**State Veterans Homes (SVH)**
- 	**Under the PPV, SVHs operate under two scenarios****:**
- Option 1- SVH orders directly, receives delivery and makes direct payment using state funds.
- Option 2- SVH orders are approved by the VA Medical Center.  SVH receives the delivery but the VA receives the invoice and makes the payment.
- Since the VA authorizes the orders and pays for the products, Option 2 SVHs are entitled to VA prices (Big4, National Contracts, BPA, etc.).

## PHARMACEUTICAL PRIME VENDOR PROGRAM 

**PPV PRICES**
- McKesson is required to provide customers with the contract prices established through the Federal Supply Schedule Program, National Contracts, Blanket Purchase Agreements and other Federal Government Contract prices.
- Pharmacy Benefits Management (PBM) maintains the price database.  The PBM database is the only authorized source that McKesson is required to use for product prices. ** **
- McKesson downloads the prices nightly from the Pharmacy Benefits Management (PBM) website.
- PBM Website**:  **
- 	_[http://www.pbm.va.gov/PBM/prices.htm](http://www.pbm.va.gov/PBM/prices.htm)_

## PHARMACEUTICAL PRIME VENDOR PROGRAM 

**How Products Become Part of The PPV**
**Program**
- Vendor must participate in the PV distribution.
- Coded PV “T” in the PBM price files** **
- Products must be under contract (FSS, Nat’l. Contract, BPA, etc.).
- Vendor must have a commercial agreement with McKesson.** **
**The NAC blocks non-prime vendor or open market products from PV distribution**.

## PHARMACEUTICAL PRIME VENDOR PROGRAM

**Websites**
**	****PPV****	**
**	**_**[http://www1.va.gov/oamm/oa/nac/ncs/pharmpv.cfm](http://www1.va.gov/oamm/oa/nac/ncs/pharmpv.cfm)**_
**	****PBM  **
**	**_**[http://www.pbm.va.gov/PBM/prices.htm](http://www.pbm.va.gov/PBM/prices.htm)**_
**PPV Points of Contact:**
- 	German Arcibal 		708-786-7663
-      Senior Contract Specialist
- 	_[german.arcibal@va.gov](mailto:german.arcibal@va.gov)_
- 	Susan Proctor                        708-786-5174
-      Contract Specialist
*     *_[susan.proctor@va.gov](mailto:susan.proctor@va.gov)_

## VA MEDICAL SURGICAL PRIME VENDOR 

**NAC Industry Day 2007**

## Medical Surgical Prime Vendor Program (MSPV) 

- Best-Value, Requirements-Type Contracts
- Product Prices Separate From the Prime Vendor Distribution Fee
- Product Prices Established by Federal Government Contracts
**FSS**
**BPAs**
**BOAs**
**VA National and Local Contracts**
**Sales Under the Prime Vendor Program For FSS and BPA Products Considered FSS Sales**

##          MSPV Defined

- Primary Distribution Channel
- Provider of Comprehensive Product Lines
- Shortens Logistics Pipeline
- Partnership With MSPVs

##        MSPV Program Overview 

- Five-Year Contracts, If All Options Are Exercised
- Inclusion of Medical/Surgical and Related Consumable Items
- Next-Day Deliveries
- Separate Levels of Effort for Conventional and Just-In-Time Deliveries

## MSPV Program Overview (cont.)

- Fill-Rate Requirements
- Delivery F.O.B. Destination
- Net 15 Days Prompt Payment
- “Common Use” Items
- Pharmaceutical Use
- Med/Surg Use

## Product Contractor Participation

- Participation Determined by FSS Contractors Prior to FSS Contract Award
- Non-Participating Contractors May be Included After Award
- FSS Contract Modification Required
- Participation is MSPV Program Specific
- All VA Facilities Given Equal Access to All Participating Product Suppliers
- Non-Participation by Product Contractors Affects Customer Product Availability

##         Benefits to Product Contractors

- Consolidates Shipping Locations
- Reduces Invoice & Receivables Processes
- Reduces Customer Service Support
- Market Exposure

##       Product Contract Prices

- MSPVs Invoice Medical Centers at the Federal Government Prices From:
- FSS Contracts
- National Standardization
- VISN and Medical Center Contracts
- Product Contract Prices:
- Pricing Data Electronically “Pulled” For FSS and National Standardization Contracts Participating (as Product Suppliers) in the MSPV Program
- Availability of Pricing Information:
- Prices Provided Electronically on the 1st and the 15th of Each Month
-  Authoritative Source for Product Prices:
- VA MSPV Database
_**[www.va.gov/vastorenac](http://www.va.gov/vastorenac)**_

## Medical Surgical Prime Vendor Program

- Q&A
- Points of Contact:
- Ronald E. Jenkins, Assistant Director and Contracting Officer
- (708) 786-4929
- (708) 786-5256 (fax)
- Ron.jenkins2@va.gov
- Tim Richards, Contract Specialist
- (708) 786-4959
- (708) 786-5256 (fax)
- Timothy.richards@va.gov

## VA PRIME VENDOR PROGRAMS

**SUBSISTENCE & FOODSERVICE SUPPLIES**

## Subsistence Prime Vendor Program

***Successful VA Contracting Tool ***
***for Over 11 years!***
- SPV-1 Contract 1996-2001
- SPV-2 Contract 2001-2007
- SPV-3 Contract 2007-2012
***VA Partnering with Foodservice Industry***

## Subsistence Prime Vendor Program

_**SPV Goals**_
**Reliable, Accurate Deliveries**
**Broad Variety - High Quality Products**
**Consistent Product Availability**
**Easy Electronic Order/Reporting System**
**Reduced Procurement Costs**
**Reduced Labor Time**
**Reduced On-Hand Inventory**

## Subsistence Prime Vendor Program

_**SPV  Cost Saving Terms**_
**Minimize Number of Deliveries**
**Maintain Minimum Drop Size $1000**
**Define Pricing Terms and Calculations **
**Control Pricing Changes**
**Maximize Volume Purchasing**
**Implement Deviated Manufacturer Pricing Agreements**
**No Credit Cards**

## Subsistence Prime Vendor Program

- Differs from Other VA Prime Vendor Programs
- Product Prices are not fixed through FSS, BPA,
- or other National Contract Vehicle
**Exception:** The National Dietary Supplement & Tube Feeding Contract of Approximately 45 Items Incorporated into SPV Contract for Delivery.

## Subsistence Prime Vendor Program

- Differs from Other VA Prime Vendor Programs
- 	2.  One National Contract –
- 				One Distributor Nationwide

## Subsistence Prime Vendor Program

- Differs from Other VA Prime Vendor Programs
-    3.  Distribution Fees Vary by Area of Country and    			Product Category

## Subsistence Prime Vendor Program

- Differs from Other VA Prime Vendor Programs
-   4.  Product Pricing Agreements with Manufacturers        through Prime Vendor –
- Procurement Plus Standardization Program (PPL)

## Subsistence Prime Vendor Program

- Small Business Consideration - I
- Fresh Bread
- Fresh Milk
- Fresh Produce
- Set aside for local Small Business contracting or purchasing.
- Approximately $2.1 Million in Purchases in FY06 to Small Business

## Subsistence Prime Vendor Program

- Small Business Consideration - II
- Prime Vendor required to have a Small Business Plan for sub-contracting including all categories of small businesses.
- Reviewed Annually for Compliance
- Approximately $1.2 Billion in Purchases from Small Businesses through Prime Vendor

## Subsistence Prime Vendor Program

- Annualizing at $150 Million in Total Purchases
- 154 VA Medical Centers
- 163 VA Canteen Service Retail Cafeterias
- 100 Other Government Agencies (OGAs)
- (Army & Navy Hospitals,
- Indian Health Service Hospitals &
- State Veteran Homes)
- COST AVOIDANCE for FY06: $25,120,161

## Thank You!

**Thank You!**