VA PHARMACEUTICAL PRIME VENDOR PPV PROGRAM

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VA PHARMACEUTICAL PRIME VENDOR (PPV) PROGRAM
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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).

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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.

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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.

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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

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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)

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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

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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.

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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.).

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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

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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, Natl.
  Contract, BPA, etc.).
• Vendor must have a commercial agreement with
  McKesson.
• The NAC blocks non-prime vendor or open market
  products from PV distribution.

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PHARMACEUTICAL PRIME VENDOR PROGRAM

• Websites
• PPV
• http//www1.va.gov/oamm/oa/nac/ncs/pharmpv.cfm
• PBM
• http//www.pbm.va.gov/PBM/prices.htm
• PPV Points of Contact
• German Arcibal 708-786-7663
• Senior Contract Specialist
• german.arcibal_at_va.gov
• Susan Proctor
  708-786-5174
• Contract Specialist
• susan.proctor_at_va.gov

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VA MEDICAL SURGICAL PRIME VENDOR

• NAC Industry Day 2007

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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

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MSPV Defined

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

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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

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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

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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

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Benefits to Product Contractors

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

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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

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Medical Surgical Prime Vendor Program

• QA
• Points of Contact
• Ronald E. Jenkins, Assistant Director and
  Contracting Officer
• [phone]
• [phone] (fax)
• Ron.jenkins2_at_va.gov
• Tim Richards, Contract Specialist
• [phone]
• [phone] (fax)
• Timothy.richards_at_va.gov

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VA PRIME VENDOR PROGRAMS

• SUBSISTENCE FOODSERVICE SUPPLIES

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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

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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

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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

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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.

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Subsistence Prime Vendor Program

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

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Subsistence Prime Vendor Program

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

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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)

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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

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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

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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

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Thank You!