V-A WHOLESALER DEMONSTRATION PROJECT CONTRACTS AWARDED

Executive Summary

V-A WHOLESALER DEMONSTRATION PROJECT CONTRACTS AWARDED to Harris Wholesale, Alco Health Services and McKesson in September and will take effect on Nov. 1. The contracts will test the use of wholesalers as "prime vendors" for nearly $ 60 mil. in pharmaceuticals used by a total of 33 Department of Veterans Affairs medical centers across the U.S. The arrangement covers all drugs used for inpatients at the medical centers or dispensed to outpatients at affiliated clinics, but not drugs dispensed at outlying, free-standing V-A facilities. The contracts are for one year with an option to renew for another two years. The demonstrations could serve as an entree for wholesalers into the V-A program, which historically has handled drug distribution itself. V-A will evaluate the project by comparing the cost and ease of obtaining products for the 33 test sites versus 33 other V-A centers serving as control sites. Harris won two contracts -- one covering the Southwest region worth an estimated $ 11 mil. in annual V-A sales, and another covering the Northeast worth $ 14 mil. Alco's contract covers 10 centers in the Midwest and will steer an estimated $ 22 mil. to the company. McKesson will handle $ 10 mil. in business at five centers in the Northwest. According to the companies, any pre-existing V-A contracts negotiated with manufacturers for price discounts will be honored under the demonstration projects. McKesson said it plans to install its "Econolink" computerized order-entry system in the centers covered by its contract. With Econolink, a V-A employee will place an order electronically; the products selected are immediately reserved from McKesson's inventory and delivered the next day.