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Medical and Professional Programs |
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Acrobat
 Acquisition of Medications
FROM: Interim Director SUBJECT:
Comments on the Proposed Modification of the Department of Veterans
Affairs' Thank you for the opportunity to provide comments on the proposed modification to the Department of Veterans Affairs' (V A) Pharmaceutical Prime Vendor (P P V) contract between the V A and AmerisourceBergen. The proposed contract modification, when signed by the V A and AmerisourceBergen, changes the current V A's P P V contract-setting terms and conditions under which Tribes can directly access services of the V A's P P V contract as they are now allowed to do under Section 450j(k) of the Indian Self-Determination and Education Assistance Act (I S D A), Public Law 93-638. Once the modification is approved and the Interagency Agreement between the V A and the Indian Health Service (I H S) is changed, each Tribe or Tribal organization opting to exercise the modification would sign a separate agreement with AmerisourceBergen. The I H S has consulted with Tribes and Tribal organizations regarding the proposed contract modification, and I have attached the resulting comments. Please contact Captain Robert E. Pittman, Principal Pharmacy Consultant, I H S, if you have questions or concerns regarding any of these comments. He can be reached on (301) 443-1190. Signed Charles W. Grim, D D S, M H S A
GENERAL COMMENTS The Pharmaceutical Prime Vendor (P P V) contract modification should state that each Tribe or Tribal organization choosing to exercise this option must sign a separate contract with AmerisourceBergen. The contract would reference the terms and conditions set out in the contract modification as the basis for Tribal direct-access to the V A's P P V services. It should also clarify that (1) in carrying out an Indian Self-Determination and Education Assistance Act (I S D A), Public Law 93-638, agreement, a Tribe is deemed an executive agency and part of the I H S for purposes of eligibility for the V A discount program under section 603 of the Veterans Health Care Improvement Act; and (2) the Tribe does not enter into a direct relationship with AmerisourceBergen as part of the Indian Health Service (I H S), thereby making the I H S liable for contract claims. The contract modification should clarify that it creates no contractual or other liability on the part of the I H S to AmerisourceBergen or the customer Tribe. The contract modification should contain a termination provision allowing a Tribe to terminate the direct-access relationship with AmerisourceBergen. The option to access the V A's P P V through the I R S remains available to the Tribe if the Tribe decides to terminate its direct-access relationship. SECTION 1 - PRICE OF GOODS The contract should specifically state that the "Average Monthly Volumes" apply to each delivery location rather than to each entity, since a Tribe may have more than one facility site and may expect to be able to pool the purchase dollars from these sites to reduce the distribution fee (even though medications are being sent directly to several different locations). The clause grandfathering in Tribes at a more favorable price should explicitly state that the Tribes that have been using an I H S intermediary will have the benefit of the I H S pricing and distribution fees. The clause should also detail the current I H S pricing, delivery-fees payment schedule, etc., into which these Tribes will be grandfathered. The modification should reference the V A's P P V contract sections that pertain to credit for medications not shipped (shortages) or damaged goods, and to prepayment terms. SECTION 2 - MINIMUM PURCHASES The I H S requests the V A and AmerisourceBergen to review the $5,000 per month minimum order for possible ways to reduce this amount so that smaller facilities can participate in the V A's P P V contract. There are concerns about the "refuse to ship" part in this section. As part of the 30-day written notification process informing a Tribe that the Agreement is being terminated, a statement should be added referring the Tribe to an intermediary that can place orders with the V A's P P V for the Tribe. SECTION 3 - DELIVERIES The modification needs to reference the V A's P P V contract or provide additional clarification about the delivery process for sites ordering less than $50,000 worth of medication per month. For example, if a site only has one delivery per week (orders between $5,000 and $15,000), will these orders be held until a certain day of the week, or can they be shipped immediately with future orders held for the following week? The clause grandfathering in Tribes at a more favorable delivery schedule should explicitly state that the Tribes that have been using an I H S intermediary will have the benefit of the I H S delivery schedule. The clause should also detail the current I H S delivery schedule. SECTION 4 - COST REPORTING No changes requested. SECTION 5 - PROPRIETARY SOFTWARE No changes requested. SECTION 6 - HARDWARE Reference the section of the V A's P P V contract that states the conditions under which the hardware is originally received. SECTION 7 - PROPRIETARY SOFTWARE/HARDWARE LIMITED WARRANTY Reference the V A's P P V contract sections that provide for fixing or replacing defective software or hardware beyond the warranty period. If there is a cost for replacement or for extending the warranty, it should be specified. SECTION 8 - ACCESS TO ORDERING MECHANISMS No changes requested. SECTION 9 - COMPLIANCE WITH LAW Add a reference to Section 105(k) of the Indian Self-Determination and Education Assistance Act, 25 United States Code (U. S. C.) 450j(k), in the first sentence. If there are additional reasons for terminating a contract or situations under which the V A's P P V would refuse to ship medication orders, they should be detailed or referenced in the contract. Appropriate sections in the V A's P P V contract need to be referenced identifying the process to appeal contract termination or the removal of any contract pricing. SECTION 10 - INDEMNIFICATION Tribes and Tribal organizations are concerned about the indemnification clause in the proposed modification. Some Tribes believe this clause exposes them to potentially high costs without defining what these costs are or limiting a Tribe's potential liability. Several Tribes believe this issue is covered by the Federal Tort Claims Act (F T C A) when a Tribe is carrying out its I S D A Agreement. The I H S believes the F T C A would not cover these issues. This section needs additional discussion. SECTION 11 - LIMITATION OF LIABILITY No changes requested. SECTION 12 - INSOLVENCY The Tribes need to be notified when the V A's P P V contractor is terminating the contract and withholding shipment of medications. Additionally, the Tribe needs to be referred to an I H S intermediary to ensure there is some means of acquiring the medication. SECTION 13 - INSURANCE By statute, Tribes and their employees carrying out contracts and compacts under the I S D A are deemed part of the Public Health Service for purposes of the F T C A, and the Federal Government would be substituted as the defendant with respect to claims cognizable under the F T C A. See implementing regulations at 25 C.F.R. Part 900, Subpart M. Section 13 requires professional liability insurance to protect AmerisourceBergen. While many Tribes contracting and compacting under the I S D A carry wraparound liability insurance that is supplemental to the F T C A coverage, we would like to discuss further whether Section 13 is necessary given the F T C A coverage. SECTION 14 - CUSTOMER QUALIFICATIONS No changes requested. SECTION 15 - ENTIRE AGREEMENT The only change requested is that "explanations" referenced in the original V A's P P V contract apply to this contract (for example, if a definition of "Diversion" is referenced, it also applies to the modification). SECTION 16 - SEVERABILITY No changes requested. SECTION l7 - WAIVERS No changes requested.
No changes requested.
While many Tribes expressed willingness to have disputes heard
in Federal or Tribal courts, none want disputes resolved under State
law in State courts. On the other hand, Section 19 would preclude
Tribal jurisdiction and provide that disputes between the parties
be governed by the laws of the United States and the State surrounding
the applicable customer's Tribal lands. While Federal jurisdiction
may be a compromise, the contract modification would authorize a
Tribal customer and AmerisourceBergen to enter into a private commercial
contract for Tribal direct-access to prime vendor services. Federal
jurisdiction and the application of Federal law to disputes under
such a contract is questionable; nor may the parties provide by
contract for Federal jurisdiction if it does not otherwise exist.
Rather than have this section prove a stumbling block to implementation
of a direct-access relationship, we suggest that jurisdictional
issues be discussed further and that binding arbitration be explored
as an option. Email your questions and comments to rpittman@hqe.ihs.gov. |
