McKesson Takes Over VA Contract From AmerisourceBergen May 10
Executive Summary
AmerisourceBergen will serve the Department of Veterans Affairs pharmaceutical prime vendor contract through May 9 at a fee of cost minus 5%
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AmerisourceBergen will serve the Department of Veterans Affairs pharmaceutical prime vendor contract through May 9 at a fee of cost minus 5%. McKesson will take over the VA contract May 10, 45 days after a court rejected ABC's challenge to retain the business. U.S. Court of Federal Claims Judge Lawrence Margolis ruled against ABC March 25. From April 1 (when McKesson was set to take on the contract) through May 9, ABC will provide VA with wholesale distribution services at cost minus 5% - the same price bid by McKesson. The fee represents a significant decrease to the cost minus 2.8% currently paid to Amerisource. ABC said it has no plans to appeal the judge's decision. Amerisource previously called McKesson's bid "irresponsible" (1 (Also see "McKesson/VA Contract Is Cost-5%; “Irresponsible,” Amerisource Says" - Pink Sheet, 12 Jan, 2004.), p. 31). VA announced in December that McKesson would replace ABC as its prime vendor for medical centers, outpatient clinics and consolidated mail outpatient pharmacies. At the time, McKesson attributed the contract award to its automated ordering technology and dispensing (2 (Also see "McKesson Takes VA Contract From Amerisource, Cites Technology As Reason" - Pink Sheet, 5 Jan, 2004.), p. 14). ABC filed a lawsuit under seal Jan. 21 seeking to overturn the award to McKesson and asserting that VA did not adequately review the Amerisource bid. In reply, McKesson contended that price was the most important factor in the VA bid process, equal to past/current performance and technical approach combined (3 (Also see "VA Wholesaler Dispute: McKesson And ABC Head To Court In March" - Pink Sheet, 1 Mar, 2004.), p. 8). March 11 arguments in the case were closed to the public. However, ABC was expected to argue that VA did not take into account the cost savings associated with using the wholesaler's established infrastructure. Amerisource's VA contract was originally set to expire on March 31, but was temporarily extended by court order. However, the order stipulated that the company must apply McKesson's winning bid price to the contract after April 1 for the balance of the extension. Margolis issued his final ruling under seal; a redacted version of the opinion is expected to be published after March 29. |