TITLE:  Bristol-Myers Squibb Company, B-294944.2, January 18, 2005
BNUMBER:  B-294944.2
DATE:  January 18, 2005

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   Decision

   Matter of:   Bristol-Myers Squibb Company

   File:            B-294944.2

   Date:              January 18, 2005

   Alex D. Tomaszczuk, Esq., and Jack Y. Chu, Esq., Shaw Pittman, for the
protester.

   Melbourne A. Noel, Jr., and Philip S. Kauffman, Esq., Department of
Veterans Affairs, for the agency.[1]

   Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Agency's use of a price evaluation scheme in a pharmaceutical procurement
that compares prices for two drugs on a per-tablet basis is
unobjectionable where the record shows that the optimal dosing level for
both drugs is a single pill taken once daily, and where the agency has no
valid data for estimating other dosing levels of these drugs, and does not
expect other dosing levels to be ordered in significant quantities.

   DECISION

   Bristol-Myers Squibb Company (BMS) protests the terms of request for
proposals (RFP) No. RFP-797-NC-04-0016, issued by the Department of
Veterans Affairs (VA) for Angiotensin II Receptor Antagonists, also known
as Angiotensin II Receptor Blockers (or ARBs), for the treatment of
patients with both hypertension and type 2 diabetes mellitus with
nephropathy.  The ARB selected in this procurement will be the only ARB
designated on the VA's National Formulary for treatment of the condition
described above.  BMS argues that the RFP's price evaluation approach will
not identify the proposal that will provide the actual lowest price to the
government.

   We deny the protest.

   BACKGROUND

   The RFP here was released on August 23, 2004, and anticipates award of a
fixed-price, indefinite-quantity contract for a base period of 1 year,
with up to four 1-year options.  On its face, the RFP limited this
competition to two ARBs--Irbesartan (manufactured by BMS and Sanofi,
marketed as Avapro(R)) and Losartan (manufactured by Merck, marketed as
Cozaar(R)).  As indicated above, the RFP also advised that these drugs
were being purchased for the treatment of hypertension and type 2 diabetes
mellitus with nephropathy, and that the successful offeror's drug would be
the only ARB listed on the formulary for treatment of this condition.[3]

   Prior to the release of the RFP here, doctors from the VA's Pharmacy
Benefits Management (PBM) Section, together with the VA's Medical Advisory
Panel (MAP)--a panel of 13 physicians throughout the VA and the Department
of Defense--prepared a Drug Class Review of all available ARBs.  Agency
Report (AR) at 2.  This Drug Class Review was first completed in 2003, was
revised in June 2004, and is appended to the RFP (as Attachment C).  Id. 
Using the findings of the Drug Class Review, the VA's PBM and MAP doctors
prepared a second document explaining the VA's purchasing approach for
ARBs.  This document--also appended to the RFP (as Attachment D)--is
entitled, "Medical Determination of Minimum Needs for VA National
Formulary Selection of an [ARB]," hereinafter the "Medical Needs
Determination." 

   The VA's Medical Needs Determination reflects several decisions related to
the dispute in this protest.  Specifically, the document explains that
ARBs are not the VA's preferred method of treating simple
hypertension--i.e., hypertension not accompanied by complications such as
heart failure or diabetic nephropathy.  See Medical Needs Determination at
1, 3.  In fact, the Determination advises that there are four different
classes of antihypertensive medications, several of which should be tried
prior to prescribing an ARB for simple hypertension.  Id. at 3; see also
AR, Tab 4 (e-mail from PBM Section to the CO, and others, dated Sept. 16,
2004, explaining the hierarchy of treatment for simple hypertension).[4] 
As a result, while the VA concedes there may be some usage of ARBs to
treat patients with simple hypertension, that is not the purpose of this
procurement.

   Instead, the VA has decided to purchase ARBs for two discrete conditions: 
(1) hypertension with diabetic nephropathy (the instant procurement), and
(2) heart failure (which is being procured simultaneously via a different
RFP).  Medical Needs Determination at 1.  The Determination advises that
since these ARBs are being procured to treat other specific conditions (as
opposed to simple hypertension), the "selection of an ARB does not require
evaluation based on its use in patients with hypertension."  Id. at 3. In
further elaboration of this point with respect to the instant procurement,
the Determination document explains that the most important factor in 
evaluating the benefits of an ARB in patients with hypertension and diabetic 
nephropathy are hard outcomes including a reduction in the composite endpoint 
of doubling baseline serum creatinine, end stage renal disease (ESRD), or 
all-cause mortality in patients with hypertension and type 2 diabetes 
mellitus (DM) and nephropathy.

   Id. at 2.  These benefits led to the decision to limit this procurement to
Irbesartan and Losartan, rather than any of the other ARBs--all of which
are considered effective in lowering blood pressure, and all of which are
approved by the Food and Drug Administration for the treatment of
hypertension.  Id. at 3-4.   

   As initially issued, the RFP's pricing schedule identified three strengths
of Irbesartan (75 mg., 150 mg., and 300 mg.) and three strengths of
Losartan (25 mg., 50 mg., and 100 mg.).  Next to each strength of each
drug, the RFP also identified a percentage weighting factor.  The schedule
anticipated entry of a per-tablet price for each strength, which was to
be multiplied by its percentage weighting factor and totaled.  RFP at 2,
31.  Award was to be made to the responsible offeror with "the lowest
overall total aggregate weighted price."  Id. at 31.

   As initially filed, BMS argued that the RFP's pricing schedule should also
include a weighting for the average number of tablets to be taken per
patient per day--an approach that the VA had used in past procurements. 
Without such a weighting, BMS argued, an offeror whose ARB is generally
dosed once daily--as BMS's ARB is dosed--will be disadvantaged when forced
to compete on a price-per-tablet basis with an offeror whose ARB is
dosed more than once daily.  Specifically, BMS pointed out that the VA
could choose a medication that costs less per tablet, but pay more per day
for treating VA patients.

   During the course of this protest, the VA twice amended the pricing scheme
initially identified in the RFP.  In the second change to this scheme (the
first change is no longer relevant), the VA adopted what it terms a "flat
pricing approach."  In essence, the VA removed any use of percentage
weighting, required offerors to provide the same price per tablet
regardless of tablet strength, and advised that award would be made to the
offeror with the lowest tablet price.  RFP amend. 5 at revised pages 2,
31. 

   DISCUSSION

   The central issue in this protest--as initially filed, and as extended to
the most recent revisions to the RFP--is that the solicitation's price
evaluation scheme will not result in selection of the offeror that will
have the lowest cost during performance.  Underlying this challenge is an
assumption that different patients will need different dosing levels so
that the price of treatment will not be captured by a per-tablet price.

   The Competition in Contracting Act requires that agencies consider the
cost to the government in evaluating competitive proposals.  41 U.S.C. S
253a(b)(1)(A), (c)(1)(B) (2000); Health Servs. Int'l, Inc.; Apex Envtl.,
Inc., B-247433, B-247433.2, June 5, 1992, 92-1 CPD P 493 at 3-4. 
While it is up to the agency to decide upon an appropriate and reasonable
method for proposal evaluation, it may not use an evaluation method that
produces a misleading result.  Id. at 4.  The method chosen must include
some reasonable basis for evaluating or comparing the relative costs of
proposals, so as to establish whether one offeror's proposal would be more
or less costly than another's.  SmithKline Beecham Corp., B-283939, Jan.
27, 2000, 2000 CPD P 19 at 4-5. 

   Since a discussion of the relative cost of treating patients with these
drugs requires a discussion of dosing levels, we note first that BMS and
the VA agree that if the dosage of both drugs will always be the standard
dosage recommended for the treatment of diabetic nephropathy[5]--i.e., one
300 mg. tablet once daily for Irbesartan, and one 100 mg. tablet once
daily for Losartan[6]--then the RFP's pricing methodology is sound.  This
is because the optimal dosing level for both drugs to treat this condition
is contained in a single pill to be taken once daily.  AR at 4 (citing
prescription insert data included by BMS and Merck with their respective
drugs); BMS Supp. Comments, Dec. 14, 2004, at 2.

   In essence, the VA's decision not to include any form of weighting for the
different doses of these drugs reflects its assumption that the most
likely-used dosage--i.e., the standard dosage recommended for the
treatment of diabetic nephropathy--can be compared on a one-pill to
one-pill basis.  In addition, the VA is asserting that this one-to-one
comparison is preferable to weighting the different doses based on
previous usage data, which it argues is not helpful here because it
reflects the usage of ARBs prior to their inclusion on the VA's National
Formulary, and prior to the formulary's limitation on the use of ARBs to
the treatment of diabetic nephropathy.

   BMS contends, however, that some subset of the VA's ARB usage will be at
dosing levels different from those recommended for the treatment of
diabetic nephropathy, and that the RFP's price evaluation scheme ignores
this fact.  Specifically, BMS argues that the VA's assumed one-to-one
comparison overlooks the different dosages used when the VA's doctors
prescribe an ARB for the treatment of simple hypertension, as well as in
certain other situations.  To remedy this situation, BMS contends that the
VA should be required to include a tablet multiplication factor in the
price evaluation scheme.  

   The record here supports the protester's premise that some portion of the
VA's ARB use will be at dosing levels different from the standard
recommended dose for treating diabetic nephropathy.  That, in turn,
supports the contention that the possible use of different dosing levels
could have an adverse effect on the pricing methodology's usefulness for
predicting actual costs.  Nonetheless, based on our understanding of the
ways in which different dosing levels (and different tablet strengths)
could be used, we have no reason to believe that this influence renders
unreasonable the RFP's pricing approach.  SmithKline Beecham, supra, at
5. 

   Our conclusion is premised on the following possible reasons for using the
ARB selected with this procurement at dosages different from those
recommended for the treatment of diabetic nephropathy:  (1) the VA doctor
is prescribing an ARB for the treatment of simple hypertension and is
doing so either improperly (in disregard of the VA's guidance), or is
doing so properly (after trying other classes of drugs for the treatment
of simple hypertension and finding them ineffective or not
well-tolerated); or (2) the VA doctor has just started prescribing an ARB
regimen for the treatment of diabetic nephropathy and the patient is still
"ramping up" to the recommended optimal dosing levels, or the patient is
proving unable to achieve the target dosage recommended for the optimal
treatment of diabetic nephropathy. [7]

   With respect to the first possibility--the use of the formulary ARB for
the treatment of simple hypertension--the VA's guidelines do not recommend
the use of an ARB for simple hypertension.  As mentioned earlier, the VA
prefers diuretics and beta blockers, then ACE inhibitors, and then ARBs
for treatment of this condition.  AR, Tab 4 (e-mail from PBM Section to
the CO, and others, Sept. 16, 2004).  Based on these restrictions, we find
reasonable the VA's conclusion that there will not be any significant use
of the selected ARB to treat simple hypertension.[8] 

   With respect to the second possibility--the use of less than full dosages
for new patients properly receiving an ARB who are ramping up to the
target level, or the use of less than full dosages for patients who prove
unable to achieve the target dosage levels--the VA explains that, as yet,
it has no data on how many patients will fall in this category.  Without
this data, we know of no reason that the VA should be required, at this
juncture, to estimate what percentage of patients will not be able to
achieve the target dose strengths of these drugs for treatment of diabetic
nephropathy.  Not only does the prior VA data not address this particular
subset of patients being treated for diabetic nephropathy, but the data
does not even indicate the specific condition for which patients received
an ARB.  VA Supp. Filing, Dec. 9, 2004, at 2.

   To the extent that the pricing approach here reflects an estimate that, by
far, the most likely dose of these ARBs is the dose the manufacturers
themselves recommend for the treatment of diabetic nephropathy--which all
parties agree permits a one-to-one price comparison of these drugs--and to
the extent that the VA does not have adequate data to support a different
approach, we see nothing unreasonable in the RFP's revised pricing
methodology.[9]  There is no requirement that estimates in a solicitation
be absolutely correct; rather, they must be based on the best information
available and present a reasonably accurate representation of the agency's
anticipated needs.  Bristol-Myers Squibb Co., B-275277, Feb. 5, 1997,
97-1 CPD PA 60 at 6; see also Lederle-Praxis Biologicals Div., Am.
Cyanamid Corp., B-257104 et al., Aug. 22, 1994, 94-2 CPD PA 205 at 5.

   In addition, we think some portion of the challenge here relates to
judgments made by the VA not related to the pricing methodology in this
RFP--i.e., the decision not to include an ARB on the formulary for the
treatment of simple hypertension, and the decision not to identify ARBs as
the first, second, or third line of defense for the treatment of simple
hypertension.  These are matters of medical judgment we will not
second-guess in our bid protest forum.  See GlaxoSmithKline, B-291822,
Apr. 7, 2003, 2003 CPD PA 77 at 5. 

   In conclusion, we note that the procurement here (together with its sister
procurement for an ARB to treat heart failure) is the first listing by the
VA of an ARB on its national formulary.  To the extent that more useful
dosing data is developed over the life of this contract, the VA may want
to consider using that data in future procurements.  In the meanwhile, BMS
has not shown that the judgments underlying the agency's per-tablet
pricing scheme are not reasonably accurate, or are inaccurate to such an
extent that consideration of only the VA's past prescribing patterns would
have yielded more accurate estimates of the agency's needs.  See
Bristol-Myers Squibb Co., supra. 

   The protest is denied.

   Anthony H. Gamboa

   General Counsel

   ------------------------

   [1] Merck & Co., Inc., the manufacturer of one of the drugs at issue in
this procurement, intervened in this protest on a limited basis, pursuant
to our discretionary authority at 4 C.F.R. SA 21.3(j) (2004).

   [2] A formulary is a list of prescription drugs, grouped by therapeutic
class, which a health care organization prefers that its physicians
prescribe.  Drugs are chosen for a formulary on the basis of their medical
value and price.  The formulary system seeks to standardize drug use,
ensure availability and consistency of the product for nationwide usage,
increase the continuity of care, standardize the process for evaluating
the safety and efficacy of drugs, and manage cost growth.  Schering Corp.,
B-286329.3, B-286329.4, Feb. 2, 2001, 2001 CPD PA 19 at 2 n.2; VA Health
Care:  VA's Management of Drugs on its National Formulary, 
(GAO/HEHS-00-34, Dec. 14, 1999) at 4.

   [3] For ease of reference, the remainder of this decision will refer to
the medical condition of type 2 diabetes mellitus with nephropathy as
"diabetic nephropathy."

   [4] This e-mail explains:

   As for uncomplicated hypertension, the Criteria for Use refers to the
guidelines that state that diuretics and beta-blockers are the preferred
agents.  If there is a contraindication to these drugs then an ACE
[angiotensin-converting enzyme inhibitors, often referred to as "ACE
Inhibitors"] may be considered preferred therapy.  After considering the
use of the drugs in these three drug classes (diuretics, beta-blockers,
and ACEs) the provider may choose to treat the patient with an ARB.  The
Criteria for Use does not recommend any one ARB over another for the
treatment of uncomplicated HTN [hypertension].  Based on the treatment
guidelines there should be little use of ARBs for the treatment of
uncomplicated HTN.

   [5] The sentence above purposely shortens the compound phrase used by the
VA to describe the purpose of this formulary procurement.  Although this
solicitation indicates on its face that it is to procure ARBs "for
patients with hypertension and diabetic nephropathy," RFP at 1, the
Chairperson of the VA's MAP explains that "[t]his procurement is for an
ARB to prevent long-term complications in patients with type 2 diabetic
nephropathy, not to treat hypertension in patients with diabetes." 
Declaration of the MAP Chairperson, Dec. 29, 2004, at 4.  The Declaration
is consistent with the medical literature appended to the RFP, which does
not recommend the use of ARBs for the treatment of hypertension.  Medical
Needs Determination at 1, 3.  In addition, this medical literature does
not define the efficacy of these ARBs by their effect on
hypertension--both are assumed to work well for that condition; instead,
the efficacy of Irbesartan and Losartan was evaluated by measuring their
impact on indicators of nephropathy.  Id. at 2. 

   [6] VA Supp. Filing, Dec. 9, 2004, at 1.

   [7] The record here shows that when these drugs are being used for the
treatment of diabetic nepropathy, dosing for new patients is started at a
lower level and gradually increased to the appropriate long-term level for
optimal treatment.  AR at 4 (citing prescription insert data included by
both BMS and Merck with these drugs); VA Supp. Filing, Dec. 9, 2004, at
1-2.  The VA recognizes that some patients will not be able to achieve the
target dose strengths for these drugs, but does not have complete data on
how many patients will be unable to do so.  VA Supp. Filing, Dec. 9, 2004,
at 2.

   [8] We also recognize the possibility that some VA doctors will ignore
treatment guidelines and misuse the formulary by prescribing ARBs to treat
simple hypertension in patients whose medical condition does not warrant
the use of an ARB.  We know of no requirement, however, that the RFP's
pricing mechanism must anticipate improper use of the formulary. 

   [9] For the record, we note that BMS does not mount any separate challenge
to the solicitation's approach (first added by amendment 5 while the
protest was pending), of requiring offerors to propose the same price for
each of the three dosing levels identified for these drugs.  By letter
dated December 9, 2004, the VA advised BMS and our Office that it was
removing any weights from the price evaluation methodology, and procuring
these drugs on a "flat-pricing approach."  BMS commented on the VA's
proposed approach by letters dated December 14 and January 7.  The VA
issued amendment 5 on January 7.  BMS filed its views on the amendment
with our Office on January 13.  BMS's views--consistently expressed in all
three filings made after the VA's December 9 letter stating its intentions
to adopt a flat-pricing approach--concern the lack of weights in the
solicitation; BMS does not separately challenge the VA's decision to
require offerors to provide the same price for all three dosing levels. 
As a result, our decision addresses the lack of weightings, it does not
consider--nor have we received arguments that challenge--the agency's
decision to require the same price for all dosing levels.
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