BNUMBER:  B-276362 
DATE:  June 6, 1997
TITLE: Pfizer, Incorporated, B-276362, June 6, 1997
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Matter of:Pfizer, Incorporated

File:     B-276362

Date:June 6, 1997

Kenneth B. Weckstein, Esq., and Shlomo Katz, Esq., Epstein, Becker & 
Green, P.C., for the protester.
Philip S. Kaufman, Esq., and Barbara J. Stuetzer, Esq., Department of 
Veterans Affairs, for the agency.
Paul E. Jordan, Esq., and Paul Lieberman, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

DIGEST

In solicitation for blanket purchase agreement under Federal Supply 
Schedule contracts, agency decision to use only price and 
price-related evaluation factors is unobjectionable where, prior to 
issuance of solicitation, agency reasonably determines that competing 
drugs are essentially technically equal.

DECISION

Pfizer, Incorporated protests the evaluation criteria in a request for 
quotation (RFQ) for a blanket purchase agreement (BPA) issued by the 
Department of Veterans Affairs (VA) for a drug class referred to as 
long-acting alpha blockers.  The solicitation was issued with 
evaluation criteria consisting only of price factors.[1]  Pfizer 
argues that the agency should have included technical criteria to take 
into consideration certain allegedly meaningful differences in the 
competing drugs.

We deny the protest.

BACKGROUND

This RFQ was issued as part of a broader program underway at VA to 
standardize pharmaceuticals and medical/surgical items in order to 
achieve concentrated buying power.  Since the Veterans Health 
Administration (VHA) expends approximately $1 billion on 
pharmaceuticals each year, the VA seeks to accomplish its "greater 
goals of quality care, access, customer service and cost efficiency" 
by creating "national formularies" for various drugs.[2]  In order to 
facilitate these goals, the VHA created a Pharmacy Benefits Management 
(PBM) section which, among other tasks, assists in the effort to 
create a national formulary.  To assist the PBM, a 10-member medical 
advisory panel (MAP) was created.  The MAP is composed of practicing 
VA physicians from various disciplines who serve 2-year terms.  The 
pharmacologic treatment guidelines developed by the MAP provide 
guidance for standardized research-based care across the VA.  
 
THE SOLICITATION

The long-acting alpha blockers which are the subject of this 
solicitation are used in the treatment of hypertension (HTN) and 
benign prostatic hyperplasia (BPH).  There are only two manufacturers 
of these drugs:  Pfizer, which manufactures doxazosin, and Abbott 
Laboratories, which manufactures terazosin; both companies have 
Federal Supply Schedule (FSS) contracts that encompass the drugs.  

The RFQ was issued pursuant to Federal Acquisition Regulation  sec.  
13.202(c)(3) and a clause in the companies' FSS contracts in which 
they agree to enter into BPAs.  See Intelligent Decisions, Inc., 
B-274626, B-274626.2, Dec. 23, 1996, 97-1 CPD  para.  19 at 5, recon. 
denied, B-274626.3, May 15, 1997, 97-1 CPD  para.  ___.  The RFQ, as 
originally issued, identified the VA's estimated volume in various 
doses of the drug.[3]  The RFQ provided that, in exchange for lower 
drug prices than those provided in the FSS contracts, the VA would 
give the selected drug national formulary status.  The firm receiving 
the BPA would be required to provide, at no additional cost, standard 
starter kits to facilitate conversion (switching) from the patient's 
current medication to the chosen one.  The BPA was to last from award 
to the end of December 1997.    
The solicitation provided that a BPA would be issued to the offeror 
meeting the RFQ's requirements, whose quote was most advantageous to 
the government and represented the best overall expected value.  The 
VA reserved the right to cancel the RFQ if the overall advantage of 
the quotations received was minimal and provided no significant cost 
savings (i.e., relative to the extant FSS prices).  The cost of 
switching was to be used in determining overall value only where there 
was merely a nominal pricing advantage of one quote over the other.  
Price was to be evaluated on the basis of a proposed aggregate price 
for all line items with additional consideration for scored 
tablets.[4]  No other evaluation criteria were set forth.  

Prior to the closing date, Pfizer submitted an offer and protested the 
terms of the solicitation, primarily arguing that the evaluation 
criteria were flawed.  Since various alpha blockers are not identical, 
Pfizer presumed that the VA intended to consider the differences in a 
technical evaluation but had improperly failed to disclose in the 
solicitation how it intended to evaluate them.  As noted above, after 
receiving the protest, the VA issued a revised version of the 
solicitation to make plain that it was an RFQ under which price was 
the only evaluation criterion.  The VA also clarified the format for 
making price quotes and provided an example of how it would evaluate 
scored tablets.  The revision set a new deadline for quotes.  After 
receipt of the revised RFQ, Pfizer advised the VA that its original 
submission would remain unchanged. 

DISCUSSION

Since the VA has made clear that price is the sole evaluation 
criterion, Pfizer's protest now focuses on differences between 
doxazosin and terazosin which it believes the agency should take into 
consideration in the evaluation.  First, Pfizer notes that its drug 
has a longer "half-life" in the patient's body, allowing for uniform 
once-daily dosing, while Abbott's drug "is often" administered twice 
daily.  Second, the initial dose of Pfizer's drug can be administered 
in the morning or evening, while it is recommended that the initial 
dose of Abbott's drug be taken at bedtime.  Third, Pfizer believes 
that its current 70-percent market share will translate into 
relatively higher switching costs if Abbott's product is selected.  
Fourth, Pfizer's starter/titration packs (used to switch a patient 
from one drug to another) contain 5 weeks of medication, while 
Abbott's contain only 3 weeks, allegedly making Pfizer's packs more 
economical.

The determination of an agency's minimum needs and the best method of 
accommodating them is primarily within the agency's discretion.  
Premiere Vending, B-256437, June 23, 1994, 94-1 CPD  para.  380 at 7.  
Agencies enjoy broad discretion in the selection of evaluation 
factors, and we will not object to the use of particular evaluation 
factors so long as the criteria used reasonably relate to the agency's 
needs.  Id.

The agency's Formulary Committee met in May 1996 to study a national 
formulary for alpha blockers.  They reviewed three available drugs, 
including doxazosin and terazosin, and the conditions that these drugs 
could effectively treat (HTN and BPH).[5]  The committee reviewed 
pharmacology, pharmacokinetics, precautions, toxicity, cost, and other 
issues related to the drugs.  The committee study included a review of 
more than 20 articles and reports on the drugs' uses, effectiveness, 
and side effects.  Some of these articles reported tests which 
directly compared doxazosin and terazosin and found them comparably, 
if not equally, effective and well tolerated in the treatment of HTN 
and BPH.  The committee noted that either doxazosin or terazosin could 
be chosen as the only long-acting alpha blocker on the formulary. 

In making its recommendations, the MAP reviewed the committee's 
report.  The MAP looked at efficacy, safety/administration, pharmacy 
factors, and cost.  As to efficacy, they found that both doxazosin and 
terazosin were effective for the management of HTN and BPH.  As to 
safety/administration they noted that the first-dose side-effect could 
be reduced by initiating therapy with the lowest possible dose.  They 
also noted that, while the pharmacokinetic profiles of the drugs 
differed, both were generally well tolerated by patients.  The MAP 
found that both doxazosin and terazosin had long elimination 
half-lives, making once-daily dosing possible to enhance patient 
compliance.  Since the MAP found doxazosin and terazosin equally 
efficacious and well tolerated, it recommended that cost be the basis 
for deciding which of the two drugs should be included on the national 
formulary. 

We have reviewed the evaluations of the committee and the MAP, and it 
is clear that they are consistent with the product and test reports on 
which they were based.  While the drug formulations solicited are not 
identical, the record makes clear that, after a detailed examination 
of product and test reports, the VA reasonably determined that the 
drugs are essentially equal for treatment of HTN and BPH.  Under these 
circumstances, the agency determination that price should be the 
determinative factor is unobjectionable, and this determination 
obviated the need for inclusion of any technical factors in the 
evaluation scheme.

Pfizer also expresses concern over the manner in which the agency 
planned to evaluate switching costs and cost savings due to use of 
scored tablets.  The record reflects that the committee and the MAP 
observed that doxazosin appeared slightly more expensive than 
terazosin, but was available in scored tablets.  However, they 
recognized that the patient's ability to split the tablets would have 
to be assessed to make this a cost savings issue.  The committee and 
the MAP also recognized that the issue of switching costs needed to be 
taken into consideration since there was no literature to which to 
refer for recommendations on dosing conversions.[6]

The RFQ incorporated both of these recommendations.  With regard to 
switching costs, the RFQ required that the firm holding the BPA 
furnish starter kits at no cost to the VA and provided for further 
evaluation of switching costs as a tie-breaker if the overall pricing 
advantage of one quote over the other was minimal.[7]  The evaluation 
scheme also provided for evaluation of scored tablets.  Since Pfizer's 
concerns were addressed by the agency in the MAP's review and in the 
evaluation scheme itself, we see no basis to conclude that the RFQ was 
flawed.  

Pfizer next argues that the MAP's conclusions were questionable 
because its members did not include a urologist.  Here, the MAP 
included nine doctors of medicine, all from different VA Medical 
Centers around the United States, who were specialists in internal 
medicine, neurology, psychiatry, pharmacology, geriatrics, nephrology, 
and emergency care.  In view of the MAP's responsibilities to review 
drugs for treatment of various conditions, the absence of a urologist 
provides no basis to conclude that the MAP was unqualified.  Moreover, 
the record reflects that the review regarding BPH was sent to the 
Chief of Urology for comment, and there is no evidence that the Chief 
had any disagreement with the MAP's conclusions or recommendations.  

Pfizer also argues that the VA's intention to select a single alpha 
blocker for the national formulary violates its mission to "provide 
complete medical and hospital service for the medical care and 
treatment of veterans."  In Pfizer's view, the formulary should 
include sufficient variety to ensure that doctors can fully exercise 
their medical judgment.  In this regard, Pfizer notes that the VA's 
Directive 10-95-065 states, as a matter of policy, that the process of 
standardizing medical supplies in VA did "not necessarily mean that VA 
would, or should, limit choice to a single product from a single 
source."

Pfizer's reliance on this statement in Directive 10-95-065 is 
misplaced.  The Directive provides that "[w]here practicable, 
standardization will result in a single award contract for quality 
products."  The Directive also gives the VA's National Acquisition 
Center (NAC), which issued the BPA solicitation, the responsibility to 
participate in product definition teams which would "determine whether 
it is in VA's best interest to award a single source contract or 
whether the degree of flexibility needed requires multiple similar 
products and/or suppliers."  If flexibility were needed, the group 
would specify the types of different features required and recommend 
an optimum number of suppliers.  Here, the NAC reviewed the findings 
of the committee and the MAP in preparing the solicitation.  As 
discussed above, the MAP performed a detailed review of the alpha 
blockers doxazosin and terazosin and concluded that the two drugs were 
equally effective for the treatment of HTN and BPH and reasonably 
concluded that price factors should be the only discriminators for 
selecting the national formulary.  The MAP's determination to utilize 
a single drug award reflects medical policies and judgments of the VA, 
an executive agency, the review of which is inappropriate for 
consideration under our bid protest function.  Bristol-Myers Squibb 
Co., B-275277, Feb. 5, 1997, 97-1 CPD  para.  60 at 9-10; IVAC Corp., 67 
Comp. Gen. 531, 534 (1988), 88-2 CPD  para.  75 at 4; Travenol Labs., Inc., 
B-215739; B-216961, Jan. 29, 1985, 85-1 CPD  para.  114 at 3.   

We further note that the VA explains that, where use of a drug which 
is not on the national formulary is required, there are procedures 
whereby the prescribing physician can obtain the appropriate 
medication.  Since the award of the BPA will have no effect on 
existing FSS contracts, VA physicians can still order these 
medications.[8]  Further the availability of another alpha blocker, 
prazosin, approved for treatment of HTN (but not BPH), will be 
unaffected by this BPA.

Finally, Pfizer contends, for the first time in its comments, that the 
issuance of a BPA at this time is irrational because the national 
formulary choice under the BPA will only be in effect until December 
1997, at which time a new BPA may be competed, creating the potential 
for another medication switch.  The duration of this BPA was apparent 
on the face of the RFQ, making any challenge to it a matter concerning 
an alleged solicitation impropriety.  Thus, Pfizer was required to 
file its protest on this ground prior to the closing time for receipt 
of proposals.  Bid Protest Regulations, 4 C.F.R.  sec.  21.2(a)(1) (1997).  
Here the initial closing date was March 3 and the revised closing date 
was April 4.  Since Pfizer did not raise this issue until it filed its 
April 10 comments, the issue is untimely and not for consideration.  
Moreover, as with the single-award issue discussed above, this issue 
is a matter within the VA's exercise of its medical policies and 
judgments which we will not consider.  Bristol-Myers Squibb Co., 
supra.

The protest is denied.

Comptroller General
of the United States

1. The solicitation was originally issued as a request for proposals 
and contained a section entitled "technical evaluation," which listed 
only price and price-related evaluation factors.  In response to 
Pfizer's protest, the VA amended the solicitation to make it an RFP, 
to entitle it a "blanket purchase agreement quote," and to delete the 
reference to a technical evaluation.

2. The term "national formulary" refers to the VA's selection of a 
limited number of common drug items for unrestricted use by any 
prescriber.  The selection of drugs for the national formulary is 
designed to standardize the VA's care for patients throughout its 
national network of medical care facilities and to reduce costs.

3. While Pfizer and Abbott both make 1 and 2 milligram (mg) doses, 
their larger doses differ.  For example, Pfizer makes 4 and 8 mg doses 
while Abbott makes 5 and 10 mg doses.  The revised solicitation 
provided separate blanks for the pricing of each manufacturer's 
individual doses.

4. Scored tablets could be broken to provide multiple doses from a 
single tablet.  The RFQ provided the estimated percentage usage of 
scored tablets and advised that only a small segment of the VA 
population used scored tablets.  

5. The third drug, prazosin, is also manufactured by Pfizer.  While 
effective in treating both HTN and BPH, it is approved by the Food and 
Drug Administration only for treatment of HTN.  Prazosin is widely 
available in generic formulations, making it much less expensive than 
doxazosin and terazosin.  Accordingly, prior to the issuance of this 
RFQ, the agency approved placement of prazosin on the national 
formulary.  The BPA solicited here is for long-acting alpha blockers, 
a category that does not include prazosin.

6. Part of this lack of information appears to be due to adverse 
effects associated with the body's adjustment to the first dose of 
either drug.  To alleviate this effect, initial doses of the drugs and 
switching are accomplished by starting the patient on the lowest 
possible dose of the new drug and "titrating" the doses upward until 
the optimal level is reached.

7. The agency states that it could not quantify the actual costs of 
switching, but it believed that the savings through a BPA discount 
would outweigh those costs.   Pfizer argues that this inability to 
quantify the value casts doubt on the evaluation scheme.  However, 
Pfizer has submitted no evidence suggesting what this cost would be or 
how it could be quantified.  Since it appears that the bulk of the 
switching costs would involve the cost of starter kits, which the firm 
receiving the BPA must provide at no charge to the VA, the VA 
reasonably decided to address switching costs only if the overall 
price difference between the quotes received was minimal.

8. Pfizer has also noted that Abbott's use of gelatin capsules for its 
drug may present religious dietary problems for some Jewish and 
Islamic veterans, a matter which is not addressed by the MAP or the 
RFQ.  To the extent this presents a problem, it can be resolved by the 
ability of VA physicians to order drugs which are not on the national 
formulary.