[Federal Register: April 12, 2005 (Volume 70, Number 69)]
[Proposed Rules]
[Page 19045-19051]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12ap05-32]
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GENERAL SERVICES ADMINISTRATION
48 CFR Parts 538 and 552
[GSAR 2005-G501]
RIN 3090-AI06
General Services Acquisition Regulation; Federal Agency Retail
Pharmacy Program
AGENCY: Office of the Chief Acquisition Officer, General Services
Administration (GSA).
ACTION: Proposed rule.
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SUMMARY: The General Services Administration (GSA) is proposing to
amend the General Services Acquisition Regulation (GSAR) to add a new
subpart and clause required by the Department of Veterans Affairs (VA),
consistent with Congressional intent under Section 603 of the Veterans
Health Care Act of 1992 (VHCA) that certain Federal agencies (i.e., VA,
Department of Defense (DoD), Public Health Service (including the
Indian Health Service), and the Coast Guard) have access to Federal
pricing for pharmaceuticals purchased for their beneficiaries.
GSA is responsible for the schedules program and rules related to
its operation. Under GSA's delegation of authority, the VA procures
medical supplies under the VA Federal Supply Schedule program. VA and
DoD seek this amendment. This new subpart adds a clause unique to the
virtual depot system established by a Federal Agency Retail Pharmacy
Program utilizing contracted retail pharmacies as part of a centralized
pharmaceutical commodity management program. At this time, only DoD has
a program in place, and the rule would facilitate DoD's access to
Federal pricing offered on Federal Supply Schedule (FSS) pharmaceutical
[[Page 19046]]
contracts for covered drugs purchased by DoD and dispensed to TRICARE
beneficiaries through retail pharmacies in the TRICARE network.
DATES: Interested parties should submit comments in writing on or
before June 13, 2005 to be considered in the formulation of a final
rule.
ADDRESSES: Submit comments identified by GSAR case 2005-G501 by any of
the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Agency Web Site: http://www.acqnet.gov/GSAM/gsamproposed.html.
Click on the GSAR case number to submit comments. E-mail: gsarcase.2005-G501@gsa.gov. Include GSAR case
2005-G501 in the subject line of the message.
Fax: 202-501-4067.
Mail: General Services Administration, Regulatory
Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann
Duarte, Washington, DC 20405.
Instructions: Please submit comments only and cite GSAR case 2005-
G501 in all correspondence related to this case. All comments received
will be posted without change to http://www.acqnet.gov/far/ProposedRules/proposed.htm
, including any personal information
provided.
FOR FURTHER INFORMATION CONTACT The Regulatory Secretariat (VIR), Room
4035, GS Building, Washington, DC 20405, (202) 208-7312, for
information pertaining to status or publication schedules. For
clarification of content, contact Ms. Kimberly Marshall at (202) 219-
0986, or by e-mail at kimberly.marshall@gsa.gov. Please cite GSAR case
2005-G501.
SUPPLEMENTARY INFORMATION:
A. Introduction
Under the General Services Administration (GSA) Schedules (also
referred to as Multiple Award Schedules and Federal Supply Schedules)
Program, 41 U.S.C. 259(b) and 40 U.S.C. 501, GSA establishes long-term
Governmentwide contracts with commercial firms to provide access to
over four million commercial services and products that can be ordered
directly from GSA Schedule contractors or through the GSA Advantage!
\TM\ online shopping and ordering system.
GSA Schedules offer customers direct delivery of millions of state-
of-the-art, high-quality commercial services and products at volume
discount pricing. All customers, even those in remote locations, can
order the latest technology and quality services and products,
conveniently, and at most-favored customer prices. GSA Schedules also
offer the potential benefits of shorter lead-times, lower
administrative costs, and reduced inventories. When using GSA
Schedules, ordering activities have the opportunity to meet small
business goals, while promoting compliance with various environmental
and socioeconomic laws and regulations.
The General Services Administration has delegated the
responsibility for certain Federal Supply Schedules to the Department
of Veterans Affairs (VA). This includes Federal Supply Classification
(FSC) Group 65, which includes pharmaceuticals and drugs. Federal
agencies and certain other organizations are eligible to purchase
pharmaceuticals and drugs from VA supply schedules.
B. Background
1. The Federal Agency Retail Pharmacy Program Supply Schedule
clause. These changes will allow VA to revise its schedule contracts to
accommodate the ordering needs of Federal agencies, i.e. DOD, VA, the
Public Health Service (including the Indian Health Service), and the
Coast Guard, pursuant to 38 U.S.C. 8126, through virtual depot systems.
These depot systems will use contracted retail pharmacies as part of
the centralized pharmaceutical commodity management program. DoD's
TRICARE Retail Pharmacy Program is the first such virtual depot system
and will be the prototype for future systems. This rule will allow
Federal agencies to take advantage of FSS pricing and receive a refund,
where appropriate, from drug manufacturers for sales to those agencies
through the retail pharmacy network virtual depot system, for their
beneficiaries.
In general, Federal pricing of pharmaceuticals refers to discounts
(Federal Ceiling Prices (FCPs)) available from manufacturers under
Section 603 of the Veterans Health Care Act (VHCA) of 1992 (38 U.S.C.
8126), and Federal Supply Schedule (FSS) prices under the VA Federal
Supply Schedule program. The VHCA requires drug manufacturers to enter
into a Master Agreement with VA under which a Pharmaceutical Pricing
Agreement is executed establishing a discount for covered drugs
obtained by VA, DoD, the Public Health Service (including the Indian
Health Service), and the Coast Guard purchased by these Federal
agencies under depot contracting systems or listed on the FSS.
Specifically, this rule adds a new subpart to the GSAR on Federal
Agency Retail Pharmacy Program (subpart 538.XX) and a new clause,
Federal Agency Retail Pharmacy Program Supply Schedule (GSAR 552.238-
XX) for those Federal Agency Retail Pharmacy Programs determined by the
VA Secretary to qualify as a ``depot'' contracting system as set forth
in 38 U.S.C. 8126.
This rulemaking assists the ongoing reengineering of the TRICARE
Pharmacy Benefits Program (TPBP), consistent with the Congressional
actions and DoD's prior rulemaking described below. This rulemaking is
consistent with the authority provided by 38 U.S.C. 8126 to acquire
drugs at the statutorily provided discount through use of a depot
contracting system.
Pursuant to the Federal Agency Retail Pharmacy Program clause, the
drugs for beneficiaries will be deemed to be ordered by the Federal
agencies through the FSS contract solely for the purposes of pricing,
delivery, and scope of coverage, but does not confer rights for any
other purpose. The Federal agencies will obtain refunds on covered
drugs purchased through the retail pharmacy network by those agencies
and dispensed to beneficiaries. The drug manufacturer will base the
refund on the difference between a benchmark price, consisting of
either the manufacturer's actual sales price to the wholesaler or
retail pharmacy chain when known and auditable or non-FAMP (non-Federal
average manufacturer price) and the Federal Supply Schedule price (the
Federal Ceiling Price or FSS negotiated price, whichever is lower).
The Federal Agency Retail Pharmacy Program Supply Schedule clause
in this rule refers to a VA clause, ``Industrial Funding Fee and Sales
Reporting (JUL 2003)(Variation''). This clause is available at the
following website: http://www.va.gov/oamm/nac/fsss/.
2. The TRICARE Pharmacy Benefits Program (TPBP) of the Department
of Defense. This rule is required by DoD in order to reengineer its
TRICARE Pharmacy Benefits Program. DoD is directed by statute (title
10, United States Code, chapter 55) to provide an improved and uniform
health care benefits program in order to create and maintain high
morale in the uniformed services. TRICARE is DoD's comprehensive health
care program for over 9.3 million beneficiaries--active duty Service
members and their families, as well as retirees and their families and
survivors--and includes a robust pharmacy benefit that gives
beneficiaries the option of obtaining drugs from military treatment
facilities, by mail order, or through retail
[[Page 19047]]
pharmacies. The TRICARE pharmacy website is at http://www.tricare.osd.mil/pharmacy/.
The TRICARE Pharmacy Benefits Program
uses the VA supply schedules, among other vehicles.
Section 703 of the National Defense Authorization Act for FY 1999
(Public Law 105-261) required the Secretary of Defense to plan a
``system-wide redesign of the military and contractor retail and mail-
order pharmacy system of the Department of Defense by incorporating
'best business practices' of the private sector.'' In addition, section
701 of the FY 2000 National Defense Authorization Act (Public Law 106-
65) enacted 10 U.S.C. 1074g, which directed the Secretary to
``establish an effective, efficient, integrated pharmacy benefits
program.''
DoD has reengineered the TPBP to meet these Congressional
requirements. The redesign of the TPBP was the subject of public
rulemaking (see 69 FR 17035, April 1, 2004) and is codified at 32 CFR
Section 199.21.
One key goal of the reengineering effort is to extend Federal
pricing of pharmaceuticals to prescriptions filled for TRICARE
beneficiaries by retail pharmacies in the TRICARE network. DOD has
taken advantage of the statutory pricing authority with respect to
drugs purchased and dispensed through the TRICARE mail order pharmacy
program and military hospitals. DoD is now in a position to extend
Federal pricing to the TRICARE retail pharmacy network. As a result of
reengineering, DoD is able to link DoD's drug purchases from network
pharmacies to the manufacturer of the purchased drug, including those
manufacturers with FSS contracts.
In particular, the redesigned TPBP leverages new technology to
create a centralized commodity management system as required under the
VHCA for a depot contracting system. As previously stated, the VHCA
requires drug manufacturers to enter into a Master Agreement with VA
under which a Pharmaceutical Pricing Agreement is executed establishing
a discount for covered drugs purchased by VA, DoD, the Public Health
Service (including the Indian Health Service), and the Coast Guard
under depot contracting systems or listed on the FSS. All drug
manufacturers that signed a Master Agreement and Pharmaceutical Pricing
Agreement with VA were advised by letter signed by the Acting Executive
Director, VA National Acquisition Center, dated October 14, 2004 (which
letter is hereby incorporated by reference), that the VA Secretary had
determined that DoD's TRICARE Retail Pharmacy Program was a centralized
pharmaceutical commodity management system that met the definition of
``depot'' contracting system as set forth in 38 U.S.C. 8126. While that
letter authorized DoD to obtain Federal Ceiling Prices for drugs
purchased through the TRICARE retail pharmacy network after September
30, 2004, this rule will extend FSS pricing to such drugs.
Pursuant to the terms of a contract awarded by DoD, a commercial
pharmacy benefits manager (PBM) will provide a retail pharmacy network
for the DoD TRICARE Management Activity. The PBM will issue payment
with Government funds for prescriptions dispensed by retail network
pharmacies to TRICARE beneficiaries. DoD will provide manufacturers
with itemized data on covered drugs purchased through TRICARE retail
network pharmacies in order to obtain appropriate refunds on covered
drugs delivered to TRICARE beneficiaries.
DoD will use the reporting and audit capabilities of the Pharmacy
Data Transaction Service (PDTS) to verify beneficiary eligibility,
authorize prescription payments, and validate the refund owed to the
Government.
The PBM contractor has no role in DoD's process for obtaining
refunds based on FSS prices (whether Federal Ceiling Prices or
negotiated lower FSS prices) already established by VA. Nor is DoD's
payment to the PBM contractor related, either directly or indirectly,
to Federal pricing of pharmaceuticals dispensed to TRICARE
beneficiaries by network pharmacies.
Congress has anticipated the extension of Federal pricing to the
redesigned TPBP. In the Defense Appropriations Act for FY 2005 (Public
Law 108-287), Congress decreased the funding in the Defense Health
Program account to reflect savings generated from the application of
Federal pricing to the TRICARE pharmacy program. In addition, Senate
Report No. 108-260, accompanying the proposed National Defense
Authorization Act for Fiscal Year 2005, S. 2400, reiterates an
expectation for savings and recommends further decreases to TRICARE
program funding. The report (page 313) states:
The budget request reflected $172.0 million in savings related
to the use of federal pricing for retail pharmaceuticals in fiscal
year 2005. The committee understands that the funding in the defense
health program request did not reflect anticipated savings for
retail pharmaceuticals beginning in June 2004, when federal pricing
authorized by the Secretary of Veterans Affairs under title 38,
United States Code, is applied in a new retail pharmacy program.
Accordingly, the committee recommends a decrease of $44 million in
the defense health program account.
It should be noted that the effective date in the aforementioned
committee report has been extended to October 1, 2004.
3. The Department of Veterans Affairs. The General Services
Administration is promulgating this rule also to assist efforts by the
Department of Veterans Affairs to provide medical care and associated
services to veterans of Operation Iraqi Freedom (OIF) and Operation
Enduring Freedom (OEF), as well as to provide more efficient access to
newly written prescriptions for veterans currently receiving medical
care at locations where VA pharmacy services are not immediately
available. Such venues primarily include Community Based Outpatient
Clinics (CBOCs). As is the current practice, refills would be handled
at VA's consolidated mail outpatient pharmacies (CMOPs).
As some portion of OIF and OEF veterans will be returning from
combat areas to their homes in locations where VA pharmacy services are
not immediately available, VA is currently contemplating how to meet
the needs of these returning soldiers for timely, high-quality and
cost-effective prescription services. Based upon the July 29, 2004, VHA
report, ``Analysis of VA Health Care Utilization Among Veterans of
Operation Iraqi Freedom and Operation Enduring Freedom'', approximately
27,571 (16 percent) of the 168,528 separated OIF veterans and 5,113 (11
percent) of the 45,880 separated OEF veterans identified by VA based on
data provided by DoD, have sought VA health care since they were
deployed. VA believes that contractual arrangements whereby VA pays for
new prescriptions at Federal prices in community settings will allow VA
to meet its obligations to its existing patients, as well as newly
enrolled OIF and OEF beneficiaries, in a cost-effective and timely
manner.
In the future, it is likely that VA will make use of this rule to
provide prescription services to beneficiaries authorized to receive
services under one or more of the following programs: VA's CHAMPVA, VA
Fee Program, Spina Bifada Health Care Program, Children of Women
Vietnam Veterans Program, or other contracted medical care programs.
While VA does not currently have contractual arrangements in place to
immediately take advantage of this rule, it is actively engaged in the
preparatory work to solicit for such contracts.
[[Page 19048]]
CHAMPVA
CHAMPVA is a health care benefits program for--
Dependents of veterans who have been rated by the VA as
having a total and permanent disability;
Survivors of veterans who died from VA-rated service-
connected conditions, or, who at the time of death, were rated
permanently and totally disabled from a VA-rated service-connected
condition; and
Survivors of persons who died in the line of duty and not
due to misconduct and not otherwise entitled to benefits under DoD's
TRICARE program.
Under CHAPVA, VA shares the cost of covered health care services
and supplies with eligible beneficiaries. As is the current practice,
patients would continue to have a choice to refill their medications
through the VA CMOP under the Made-by-Mail program. For fiscal year
2004 (FY 04), there were 234,000 beneficiaries enrolled and 149,400
unique users for the CHAMPVA program.
VA Fee Program
The VA Fee program provides authorization for certain veterans to
receive community-based medical care, hospital care, home care, nursing
home care, and services when VA facilities are not available. Fee care
is governed by 38 U.S.C. 1703, 38 U.S.C. 1725, and 38 U.S.C. 1728.
Approved services are generally paid on a fee-for-service or contract
schedule. Authorization may be for brief or long-term episodes of care.
Spina Bifida Health Care Program
Spina Bifida Health Care Program provides benefits to Vietnam
veterans' birth children diagnosed with spina bifida and who are in
receipt of a VA regional office award for spina bifida benefits. Under
this program, VA assumes financial responsibility for medical service
and supplies related to the treatment of spina bifida, including
complications and associated conditions, excluding spina bifida
occulta. Spina bifida beneficiaries are not responsible for a cost
share. In FY 04, there were 1,164 beneficiaries enrolled and 689 unique
users for the Spina Bifida Health Care program.
Children of Women Vietnam Veterans Program
Children of Women Vietnam Veterans (CWVV) program provides benefits
for women Vietnam veterans' birth children diagnosed with one or more
covered birth defects as determined by the Denver VA regional office.
Under this program, VA assumes financial responsibility for medical
services and supplies related to the treatment of the covered birth
defects, including complications and associated conditions. CWVV
beneficiaries are not responsible for a cost share. In FY 04, there
were eight beneficiaries enrolled and no unique users for the CWVV
program.
4. The U.S. Public Health Service (including the Indian Health
Service). Although the U.S. Public Health Service/Indian Health Service
do not have current plans to establish a Federal Agency Retail Pharmacy
program, if and when the VA Secretary determines that such a program
initiated by these agencies qualifies as a ``depot'' contracting system
as set forth in 38 U.S.C. 8126, this rule would apply to that program.
C. Executive Order 12866
We have examined the impacts of the proposed rule under Executive
Order 12866. Executive Order 12866 directs agencies to assess all costs
and benefits of available regulatory alternatives and, when regulation
is necessary, to select regulatory approaches that maximize net
benefits (including potential economic, environmental, public health
and safety, and other advantages; distributive impacts; and equity). We
believe that this proposed rule is consistent with the regulatory
philosophy and principles identified in the Executive order. This
proposed rule is considered a significant regulatory action under the
Executive order.
D. Unfunded Mandates Reform Act
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires
that agencies prepare a written statement, which includes an assessment
of anticipated costs and benefits, before issuing ``any rule that
includes any Federal mandate that may result in the expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100,000,000 or more (adjusted annually for
inflation) in any one year.'' The current threshold after adjustment
for inflation is $115 million, using the implicit GDP deflator for
2003, the most recent year for which final data exist. This proposed
rule does not contain such a mandate.
E. Congressional Review Act
The Congressional Review Act (5 U.S.C. 804) requires that
regulations that have been identified as being major must be submitted
to Congress before taking effect. If implemented as proposed, this rule
is not a major rule under the Congressional Review Act.
F. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601-612), requires
agencies to analyze regulatory options that would minimize any
significant impact of a rule on small entities. This rulemaking assists
VA's efforts to revise its schedule to accommodate the ordering needs
of Federal agencies, i.e., DoD, VA, the Public Health Service
(including the Indian Health Service), and the Coast Guard, pursuant to
38 U.S.C. 8126, through virtual depot systems. At this time, only DoD
has a program in place, TRICARE Retail Pharmacy Program, that is
designed to work through a virtual depot system. The Coast Guard
utilizes the TRICARE Retail Pharmacy Program and, thus, is included in
the DoD TRICARE Retail Pharmacy Initial Regulatory Flexibility Analysis
discussion below.
The changes may have a significant economic impact on a substantial
number of small entities within the meaning of the Regulatory
Flexibility Act. However, this appears to be very unlikely. The Initial
Regulatory Flexibility Analysis is as follows:
Initial Regulatory Flexibility Analysis, GSAR Case 2005-G501, Federal
Agency Retail Pharmacy Program
This Initial Regulatory Flexibility Analysis has been prepared
in accordance with Section 603, Title 5, of the United States Code.
1. Description of the reasons why action by the agency is being
considered. This rule amends the General Services Acquisition
Regulation (GSAR) to add a new subpart and clause to complement
ongoing efforts by the Department of Defense (DoD) to reengineer its
TRICARE Retail Pharmacy Benefits Program, and the Department of
Veterans Affairs' (VA) plans to create a similar program. This is
consistent with Congressional intent under Section 603 of the
Veterans Health Care Act of 1992 (VHCA) that certain Federal
agencies (i.e., VA, DoD, Public Health Service (including the Indian
Health Service), and the Coast Guard) have access to Federal pricing
for pharmaceuticals purchased for their beneficiaries.
2. Succinct statement of the objectives of, and legal basis for,
the rule. Section 603 of the VHCA requires that certain Federal
agencies (i.e., VA, DoD, Public Health Service (including the Indian
Health Service), and the Coast Guard) have access to Federal pricing
for pharmaceuticals purchased for their beneficiaries. This rule
would facilitate DoD's access to Federal pricing offered on Federal
Supply Schedule (FSS) pharmaceutical contracts for covered drugs
purchased by DoD and dispensed to TRICARE beneficiaries through
retail pharmacies in the TRICARE network. It would also facilitate
access to the same Federal pricing for retail network pharmacy
programs instituted by the other agencies named in section 603. GSA
has overall responsibility for the schedules program and
[[Page 19049]]
rules related to its operation and have empowered VA, under a GSA
delegation of authority, to procure medical supplies under the VA
Federal Supply Schedule program. VA and DoD both seek this amendment
to the GSAR.
3. Description of and, where feasible, estimate of the number of
small entities to which the rule will apply. The changes may have a
significant economic impact on a substantial number of small
entities within the meaning of the Regulatory Flexibility Act, 5
U.S.C. 601 et seq., but this appears to be very unlikely because of
the research conducted (queries of the Central Contractor
Registration system database, as well as information provided
directly by DoD and VA officials).
It is estimated that the rule will apply to approximately two
dozen small businesses as a result of these changes. It should be
noted that more than half of these businesses have annual gross
sales exceeding $20 million, thus comparing very favorably with
their large business counterparts. Further, the high gross sales
figures of the small businesses in the pharmaceutical industry
indicates the reporting of sales and the payment of refunds to the
Federal agencies named in section 603 will have little significant
impact on them.
Since subcontractors are not required to be registered in CCR,
the total number of small businesses positively impacted may be
greater than this; but not significantly so, since subcontracting is
not common in the production of pharmaceuticals.
4. Description of projected reporting, recordkeeping, and other
compliance requirements of the rule, including an estimate of the
classes of small entities which will be subject to the requirement
and the type of professional skills necessary for preparation of the
report or record. The rule will impose a new three-step reporting/
recordkeeping requirement on all entities that hold VA Federal
Supply Schedule contracts (for FSC Group 65, which includes covered
pharmaceuticals and drugs), including small entities. The first step
is the reporting of VA schedule sales of covered drugs (under
section 603) under the TRICARE and other Federal agency retail
pharmacy programs. The second step is the calculation and the
payment of the refunds owed to DoD and other named Federal agencies
with similar programs. The third step is the calculation and payment
of the industrial funding fee owed to VA. This paperwork
justification covers the calculation of the refunds owed to DoD. The
types of professional skills necessary for the reporting/
recordkeeping and processing of payment is very minimal--
predominately spreadsheet and database operational skills which are
both essentially clerical. The recordkeeping and processing of
payment transactions can both be accomplished electronically, so the
effort to be expended on this is minimal.
5. Identification, to the extent practicable, of all relevant
Federal rules which may duplicate, overlap, or conflict with the
rule. This rule is to assist DoD in the final phase of implementing
the following: Section 703 of the National Defense Authorization Act
for FY 1999 (Public Law 105-261) which required the Secretary of
Defense to plan a system-wide redesign of the military and
contractor retail and mail-order pharmacy system of the Department;
and Section 701 of the FY 2000 National Defense Authorization Act
(Public Law 106-65) enacted 10 U.S.C. 1074g, which directed the
Secretary to establish an effective, efficient, integrated pharmacy
benefits program. This rule also facilitates access to the same
Federal pricing for retail network pharmacy programs instituted by
other agencies under section 603. There are no other known Federal
rules which may duplicate, overlap, or conflict with this rule.
6. Description of any significant alternatives to the rule which
accomplish the stated objectives of applicable statutes and which
minimize any significant economic impact of the rule on small
entities. There are no known alternatives to accomplish the stated
objectives to assist DoD's reengineered TRICARE Retail Pharmacy
Benefits Program and VA's planned retail pharmacy program, which
would further lessen any significant economic impact of the rule on
small entities. As stated previously, the economic impact is deemed
to be minimal.
The Regulatory Secretariat has submitted a copy of the IRFA to the
Chief Counsel for Advocacy of the Small Business Administration.
Interested parties may obtain a copy from the Regulatory Secretariat.
The Councils will consider comments from small entities concerning the
affected GSAR Parts 538 and 552 in accordance with 5 U.S.C. 610.
Interested parties must submit such comments separately and should cite
5 U.S.C 601, et seq. (GSAR case 2005-G501), in correspondence.
G. Paperwork Reduction Act
This rulemaking assists VA's efforts to revise its schedule to
accommodate the ordering needs of Federal agencies, i.e., DoD, VA, the
Public Health Service (including the Indian Health Service), and the
Coast Guard, pursuant to 38 U.S.C. 8126, through virtual depot systems.
At this time only DoD has a program in place, TRICARE Retail Pharmacy
Program that is designed to work through a virtual depot system. The
Coast Guard utilizes the TRICARE Retail Pharmacy Program; and, thus, is
included in the DoD TRICARE Retail Pharmacy Paperwork Burden discussion
below.
The discussion of information collection activities below applies
to the DoD TRICARE program. It is expected that other eligible agencies
will request additional collections of information specific to their
respective programs. At such time eligible agencies will request OMB
numbers for prospective collections and seek public comment.
Summary of Collection of Information: DoD is revising the
information collection requirements under current OMB control number
0720-0032. Specifically, under the revised collection of information,
respondents (drug manufacturers) will base refund calculation reporting
requirements on both the Federal Ceiling Price and the Federal Supply
Schedule Price, whichever is lower. Prior to this rulemaking, drug
manufacturers' reporting requirements addressed only the Federal
Ceiling Price.
Proposed Use of Information: DoD will use the reporting and audit
capabilities of the Pharmacy Data Transaction Service (PDTS) to
validate refunds owed to the Government.
Annual Reporting Burden: Public reporting burden for this
collection of information is estimated to average 8 hours per response,
including the time for reviewing instructions, searching existing data
sources, gathering and maintaining the data needed, and completing and
reviewing the collection of information.
The annual reporting burden is estimated as follows:
Respondents: There are approximately 300 drug manufacturers
responding to this collection.
Responses per respondent: 4
Total annual responses: 1,200
Preparation hours per response: 8
Total response burden hours: 9,600
H. Request for Comments Regarding Paperwork Burden
Submit comments, including suggestions for reducing this burden,
not later than June 13, 2005 to: DoD Health Desk Officer, OMB, Room
10102, NEOB, Washington, DC 20503, and a copy to the General Services
Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room
4035, Washington, DC 20405, and a copy to Colonel James Young, or Major
Travis Watson, TRICARE Management Activity, 5111 Leesburg Pike, Suite
810, Falls Church, VA 22041-3206 (703 681-0039).
Public comments are particularly invited on: whether this
collection of information is necessary for the proper performance of
functions of the DoD, and will have practical utility; whether our
estimate of the public burden of this collection of information is
accurate, and based on valid assumptions and methodology; ways to
enhance the quality, utility, and clarity of the information to be
collected; and ways in which we can minimize the burden of the
collection of information on those who are to respond, through the use
of appropriate technological collection techniques or other forms of
information technology.
[[Page 19050]]
Requester may obtain a copy of the justification from the Colonel
James Young or Major Travis Watson, TRICARE Management Activity, 5111
Leesburg Pike, Suite 810, Falls Church, VA 22041-3206 (703 681-0039).
Please cite OMB Control Number 0720-0032, GSAR case 2005-G501, Federal
Agency Retail Pharmacy Program, in all correspondence.
List of Subjects in 48 CFR Parts 538 and 552
Government procurement.
Dated: April 6, 2005.
David A. Drabkin,
Senior Procurement Executive, Office of the Chief Acquisition Officer,
General Services Administration.
Therefore, GSA proposes amending 48 CFR parts 538 and 552 as set
forth below:
1. The authority citation for 48 CFR parts 538 and 552 continues to
read as follows:
Authority: 40 U.S.C. 121(c).
PART 538--FEDERAL SUPPLY SCHEDULE CONTRACTING
2. Add Subpart 538.XX, consisting of sections 538.XX01 and
538.XX02, to read as follows:
Sec.
538.XX01 Scope.
538.XX02 Contract clause.
Subpart 538-XX--Federal Agency Retail Pharmacy Program
538.XX01 Scope.
This subpart prescribes a clause that applies to a retail pharmacy
program of any of the Federal agencies covered by Section 603 of the
Veterans Health Care Act (VHCA) of 1992, Public Law 102-585 (38 U.S.C.
8126). As described in 38 U.S.C. 8126(b), the Federal agencies include
the Department of Veterans Affairs (VA), Department of Defense (DoD),
Public Health Service (including the Indian Health Service), and the
Coast Guard.
538.XX02 Contract clause.
The contracting officer shall insert the clause at 552.238-XX,
Federal Agency Retail Pharmacy Program Supply Schedule, in solicitation
and schedule contracts for Schedule 65, Part I, Section B, to apply
only to orders for a Retail Pharmacy Program of the Department of
Veterans Affairs, Department of Defense, Public Health Service
(including the Indian Health Service), and the Coast Guard.
PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
3. Add section 552.238-XX to read as follows:
552.238-XX Federal Agency Retail Pharmacy Program Supply Schedule.
As prescribed in 538.XX02, insert the following clause:
FEDERAL AGENCY RETAIL PHARMACY PROGRAM SUPPLY SCHEDULE (DATE)
(a) This clause applies only to a Federal Agency Retail Pharmacy
Program administered by one of the Federal agencies described in
Section 603 of the Veterans Health Care Act (VHCA) of 1992 (38
U.S.C. 8126). When this clause applies, the FAR clauses 52.216-18,
52.216-19, GSAR clause 552.232-74, and FSS clauses I-FSS-103, and F-
FSS-202-G do not apply.
(b) The Federal Agency Retail Pharmacy Program procedures,
including pricing procedures, and those in this clause, are
consistent with 38 U.S.C. 8126. The Federal agency enters into
contracts with a commercial pharmacy benefits manager to provide a
retail pharmacy network. The pharmacy benefits manager will issue
payment with Government funds to the retail pharmacy for
prescriptions dispensed to the Federal agency beneficiaries. The
Federal agency will provide to FSS contractors itemized data on
covered drugs procured through the agency's retail network
pharmacies, in order to obtain appropriate refunds on covered drugs
delivered to the Federal agency's beneficiaries and subject to
Federal pricing. The drugs will be deemed to have been ordered by
the Federal agency through the FSS contract, for the purposes of
establishing price, delivery, and scope of coverage, but does not
confer rights for any other purpose. The Federal agency will obtain
refunds on covered drugs from FSS contractors based on the
difference between a benchmark price, consisting of either the
manufacturer's actual sales price to the wholesaler or retail
pharmacy chain when known and auditable or non-FAMP (non-Federal
average manufacturer price), and the Federal Supply Schedule price
(the Federal Ceiling Price or FSS negotiated price, whichever is
lower).
(c) Ordering. (1) All Federal agency network retail pharmacy
prescription orders for covered drugs are subject to the terms and
conditions of this contract. In the event of conflict between a
prescription order and this contract, the contract shall control.
(2) A Federal agency's instruction to its contracted or
subcontracted retail pharmacy to fill a prescription for a health
care beneficiary of the agency, under its virtual depot system for
centralized pharmaceutical management, shall be deemed to be an
order placed against this contract.
(d) Invoice payments. The time and method of payments to the
Contractor for FSS items deemed (for the purposes of establishing
price, delivery, and scope of coverage) to have been ordered by a
Federal agency through its contracted or subcontracted retail
pharmacies will be determined according to commercial agreements
between the FSS Contractor and such pharmacies or their authorized
Pharmaceutical Prime Vendors.
(e) Scope of contract worldwide. (1) This solicitation is issued
to establish contracts which may be used as sources of supplies or
services described herein for domestic and/or overseas delivery.
(2) Definition. Domestic delivery is delivery within the 48
contiguous states, Alaska, Hawaii, Puerto Rico, Washington, DC, and
U.S. territories. Domestic delivery also includes a port or
consolidation point, within the aforementioned areas, for orders
received from overseas activities.
(3) Contractor will provide domestic delivery only for Federal
agency retail pharmacy orders.
(4) The Contractor is obligated to accept orders received from
activities within the Executive branch of the Federal Government.
Federal beneficiary prescriptions for FSS-listed covered drugs that
are filled through a Federal agency's directly contracted or
indirectly subcontracted retail pharmacy, under the agency's virtual
depot system for centralized pharmaceutical commodity management,
will be deemed to constitute Executive branch orders, solely for the
purposes of establishing pricing, delivery, and scope of coverage,
but does not confer rights for any other purpose.
(f) Delivery prices. Prices offered must cover delivery of FSS
covered drugs to all Federal agency contracted or subcontracted
retail pharmacies (or to their authorized PPVs) for use in filling
prescriptions for such agencies' beneficiaries, as part of the
agencies' virtual depot system for centralized pharmaceutical
commodity management.
(g)Electronic Commerce. A Federal Agency Retail Pharmacy Program
will require a Contractor to receive and process refund requests
submitted according to the following procedures:
(1) On the 15th of the month following the end of each calendar
year quarter, the Federal Agency Pharmacy Benefits Office (PBO) will
generate and submit to each pharmaceutical manufacturer a
Utilization Flat File Layout Report for their products procured
during the prior quarter, based on National Council for Prescription
Drug Programs (NCPDP) Standards Version 03 Release 02 (or most
current version).
(i) The 15th was selected to enable reversals to clear within
the 10-day hold period.
(ii) NCPDP represents industry standards.
(iii) The Federal agency, VA, and industry (as a whole) will
establish an interface control document for the transmission and
file layout, to include the population of optional and conditional
data elements for standardization for all of industry.
(iv) Separate reports will be generated for purchases paid from
the Department of Defense's (DoD's) Accrual Fund and DHP account.
(2) Within the Utilization Flat File Detail Record (UD), the
product code identifier will be used by the Contractor to sum (grand
metric quantity) the total metric decimal quantity of individual
records of each product purchased by the Government
[[Page 19051]]
through individual Federal agency retail network pharmacies. The
grand metric quantity for each product will then be rounded down to
the nearest package size based on the product code identifier to
yield the total number of units procured by the Federal agency.
(i) The National Drug Code (NDC) number will be used to populate
the product code identifier. The NDC should correlate to the actual
product dispensed by the pharmacy, based on commercial best practice
and data integrity requirements demanded by health plans and other
insurers.
(ii) The Federal agency's Office of Program Integrity will be
notified of any pharmacies identified (by Government, industry, or
other means) as submitting fraudulent NDCs.
(iii) NDCs assigned by product repackagers will only be included
in the reports when the repackager NDC can be correlated to the NDC
of the originating product.
(3) Contractor Refund and Reporting Schedule. (i) The Contractor
shall complete refund calculations not later than 60 days following
the date of the quarterly UD Report.
(ii) The Contractor shall make refund payments so that such
payments are received by DoD not later than 70 days following the
date of the quarterly UD Report. At the time of refund payment, the
Contractor shall also send to the Federal Agency's Pharmacy Benefits
Office (PBO) a Reconciliation Report corresponding to the quarterly
UD Report and resulting refund payment.
(h) Resolution of Refund Data Disagreements. (1) If the
Contractor disagrees with the Federal agency data in the quarterly
refund request under paragraph (g) of this clause, the Contractor
shall provide prompt written notice to the PBO. Such notice shall be
received by the PBO no later than 10 business days after the
Contractor's discovery of the alleged error, but in no event no
later than one year after the date of the quarterly report
containing the alleged erroneous data. The notice shall include
specific identification of the alleged error(s) and the specific
reason(s) the Contractor believes the data to be in error, along
with all available documentation that supports the Contractor's
allegation(s).
(2) The Federal agency's PBO will initiate a prompt review of
the data following receipt of the notice and documentation provided
by the Contractor. The parties agree to use their best good faith
efforts to resolve any disagreement within 60 days of the PBO's
receipt of the Contractor's written notice. During this period, the
Contractor shall proceed diligently with performance of this
contract and will exhaust administrative remedies under this clause
prior to filing a dispute under the Disputes clause incorporated
into this contract. Performance includes remittance of any refund
due the Federal agency based upon the data provided by the PBO with
which the Contractor disagrees. If the written notice of
disagreement is resolved in favor of the Contractor, the Federal
agency shall reimburse the Contractor the amount of remitted refund
attributed to the error and simple interest on the reimbursed amount
at the rate determined in accordance with the Contract Disputes Act
of 1978, as amended (41 U.S.C. 601-603), from the date of receipt of
the Contractor's remittance of the refund in disagreement.
(3) If the Federal agency and the Contractor cannot resolve the
disagreement within 60 days following receipt of the Contractor's
written notice (and any time extensions mutually agreed to by the
parties), the Contractor shall have exhausted administrative
remedies under this clause and may proceed with disputes remedies
available under the Disputes clause and the Contract Disputes Act of
1978, as amended.
(i) Industrial Funding Fee and Sales Reporting. The Contractor
shall report all contract sales covered by this clause and pay the
Industrial Funding Fee (IFF) included therein, as required by VA's
variation of clause 552.238-74 of the contract, ``Industrial Funding
Fee and Sales Reporting (JUL 2003) (Variation''). All sales of
covered drugs made through retail pharmacies under this clause are
deemed to be reportable when the Contractor receives the quarterly
Utilization Flat File Layout Report(s) (or its functional
substitute), applies the appropriate FSS contract price (including
IFF) to the rounded total number of units of each covered product
purchased by the submitting agency (as shown on the Flat File
Report), and computes the total dollar sales of each product. These
sales are counted as FSS sales on the date the computations are
finished (for example, the results of computations finished on March
10 are reported 60 days after the end of the first calendar quarter,
on May 30). The grand total of all retail pharmacy sales (at the
appropriate FSS contract prices) under this clause computed during a
calendar quarter shall be included in the Contractor's quarterly
sales report to VA. That information and the resultant IFF shall be
provided to VA according to the timelines and procedures established
in 552.238-74.
(End of clause)
[FR Doc. 05-7270 Filed 4-11-04; 8:45 am]
BILLING CODE 6820-61-S