Merck & Company, Inc., B-295888, May 13, 2005

B-295888 May 13, 2005 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Merck & Company, Inc. protests the actions of the Department of Defense's (DOD) TRICARE Management Activity in announcing its first review of pharmaceutical agents for inclusion in the newly-implemented, statutorily-based TRICARE uniform formulary. To announce its review--which will include the angiotensin II receptor blocker (ARB) drug class, within which Merck manufactures an agent known as Losartan--TRICARE posted on its website an open letter to pharmaceutical manufacturers (dated December 22, 2004) explaining how it would assess the cost effectiveness of individual pharmaceutical agents in making formulary determinations. We deny the protest. View Decision B-295888, Merck & Company, Inc., May 13, 2005 Decision Matter of: Merck & Company, Inc. File: B-295888 Date: May 13, 2005 Deneen J. Melander, Esq., and Steven A. Alerding, Esq., Fried, Frank, Harris, Shriver & Jacobson LLP, for the protester. Lynn T. Burleson, Esq., TRICARE Management Activity, Department of Defense, for the agency. Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Government Accountability Office has jurisdiction to review a protest challenging the terms of a quotation request for a possible blanket purchase agreement which is being used by the Department of Defense's TRICARE Management Activity (pursuant to its statutory authority to establish a pharmacy benefits program, including a uniform formulary) to inform, and then implement, a TRICARE formulary determination. 2. Decision by the TRICARE Management Activity to consider the cost of pharmaceutical agents obtained by TRICARE beneficiaries at retail pharmacies participating in TRICARE's retail pharmacy network as part of its review of cost effectiveness undertaken to determine whether to add a pharmaceutical agent to the uniform formulary is reasonable where the statutory authorization for the pharmacy benefit program requires the agency to consider the cost effectiveness of pharmaceutical agents as part of any such determination, and where the record shows that more than half of TRICARE's expenditures for pharmaceutical agents are incurred for prescriptions filled by beneficiaries at such retail pharmacies. 3. Protester's assertion that the agency is unreasonably obtaining quotations applicable to only two of the venues where TRICARE beneficiaries can have their prescriptions filled (military treatment facilities and the mail order pharmacy), and is using what is, in essence, a plug number unique to each company ( i.e. , the Federal Ceiling Price applicable to certain types of purchases from the Federal Supply Schedule) for its assessment of the costs that will be incurred in purchasing each agent from participating retail pharmacies (the third venue where prescriptions can be filled) is denied where the agency reasonably decided that it should consider the costs of pharmaceutical agents obtained by beneficiaries at such pharmacies; where the Secretary of the Department of Veterans Affairs has determined that the Federal Ceiling Price applies to TRICARE retail pharmacy purchases; and where the Federal Ceiling Price will be the actual price paid by TRICARE if the Secretarial determination, which is being challenged by certain pharmaceutical manufacturers, remains in place. 4. Protester's argument that a request for blanket purchase agreement price quotations improperly fails to identify the relative importance of clinical and cost effectiveness that will be used by the TRICARE Pharmacy & Therapeutics Committee to select pharmaceutical agents for inclusion on the uniform and basic core formularies is denied where the request is consistent with the statutory scheme, which does not identify the relative importance of these two considerations, and which reserves for the discretion of health care professionals the decision about which agents will be included on the formulary, and where, even though this request is limited to vendors submitting quotations for pharmaceutical agents included on their Federal Supply Schedule contracts, there is no requirement in the request that vendors select a particular configuration of their offered products. DECISION Merck & Company, Inc.