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Indian Health Service The Federal Health Program for American Indians and Alaska Natives


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Administrative Delegations


PHS-380.3

Subpart PHS 380.3-Acquisition of Drugs and Medical Supplies

PHS 380.301 Scope of subpart

This subpart provides policies and procedures pertaining to the acquisition of drug products and medical supplies by PHS or PHS's contractors.

PHS 380.302 Acquisition of drugs.

PHS 380-302-l  Policy.

  1. Drugs shall be acquired at the lowest possible price consistent with acceptable standards of identity, strength, quality, purity, safety and effectiveness, and with due regard for the welfare of the patient and the Professional judgment of the prescriber.

  2. Contracting activities shall ensure that drugs are acquired by generic name on a competitive basis whenever it is possible to obtain therapeutically effective drugs of established quality.  However, the Professional judgment of the prescriber to request drugs by brand name or house designation must be recognized when the best interest of the patient requires it.  Similarly scientific investigators have the prerogative to request drugs having end product characteristics considered necessary for the conduct of research or investigations.

  3. Prior to taking any acquisition action, the contracting officer shall ensure that the requested drug Products are not available from mandatory sources such as Federal Supply Schedules.

Part 103-26 of the HHS Materials Management Manual describes sources of supply for drugs,

PHS 380.302-2  Solicitation and contract requirements

The contracting officer should consider including statements similar to the following in solicitations and resultant contracts pertaining to drug products

  1. The offeror (contractor) guarantees that all requirements established by the food and Drug Administration, HHS, have been met.  These requirements include: plant sanitation, manufacturing, packaging, labeling, identification, strength, purity, safety, and effectiveness.

    NOTE The contracting officer may want to cite the applicable references pertaining to the FDA requirements.

  2. The offeror (contractor), by signing this document, guarantees / warrants that any applicable shelf life requirements have been met and the furnished drugs are free from defects.

  3. The Government reserves the right to inspect the manufacturer's plant and premises during normal operating hours

    NOTE FDA will normally conduct the inspection when requested, but may request to be reimbursed for the services.

  4. The offeror (contractor) agrees to submit either a comprehensive, certified analysis on each lot of drugs at the time of delivery of the drugs, or a comprehensive list of specifications met by the drugs along with a certificate of analysis, or other suitable documentation, verifying that the drugs meet the appropriate standards,

  5. The offeror (contractor) claims it is not currently listed as a disqualified bidder or offeror for drugs by any Federal agency or department.

  6. The offeror must set forth full,accurate, and complete information as required by this solicitation including attachments.  The penalty for making false statements in offers is prescribed in 18 U.S.C. 1001.

  7. If the offeor (prime contractor) plans to use it or uses) a subcontractor or secondary manufacturer for the furnishing of any or all the drug products under the resultant contract, the name and address of the subcontractor or secondary manufacturer is to be furnished the contracting Officer, along with the drug lots affected.  The prime contractor shall ensure that the subcontractor or secondary manufacturer complies with the above stated requirements.

PHS 380-303  Acquisition of controlled drugs

  1. Controlled drugs include narcoits and dangerous drugs identified by the Drug Enforcement Administration (DEA), Department of Justice, in the regulations implementing the Comprehensive Drug Abuse Prevention and Control Act of 1970 (Title 21 CPR Chapter II).

  2. The DEA issues a Controlled Substances Inventory List which provides general information pertaming to the ordering of controlled drug products and the use of specific order forms.  The local DEA regional office should be contacted to receive the list and instructions regarding registering and, ordering forms, as well as other matters concerning the handling and processing of controlled drugs- Sections 103-27.6204(a)(2) and 103 -27.8302(b) of the HHS Material Man agement Manual pmvide information on issuing, shipping, and safeguarding controlled drugs.

  3. Contracting officers shall ensure that requests for contracts or pur chase requests are supported by the required DEA form prior to initiation of any action.

PHS 380.304  Effectiveness of drug products

PHS 380.304-1  General.

  1. The National Academy of Sciences National Research Council (NASNRC) has established effectiveness classifications for the indication of drug products, based upon the following Criteria:
    1. Factual information that is freely available in scientific literature:

    2. Factual information that is available fmm the Food and Drug Administration, the manufacturer, or other sources; and

    3. Experience and informed judgement of the members of NAS-NRC panels;

  2. The indications mentioned in the following categories refer to "the effect the drug purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the proposed labeling."  That is, the indications are the claims noted in the labeling of a given drug product
    1. Catagory A - Effective.  For the presented indication, the drug is effective on the basis of the criteria cited in PHS 380.304-1(a)-above

    2. Category B - Probably Effective.  For the indication presented, effectiveness of the drug is probable on the basis of the criteria cited in PHS 380.304-l(a) but additional evidence is required before it can be assigned to Category A.

    3. Category C - Possibly Effective.  In relation to the indication in question, there is llttle evidence of effectiveness under any of the criteria cited in PHS 380.304-l (a).  The possibility that additional supporting evidence might be developed should not be ruled out, however.

    4. Category D - Ineffective in relation b the indication in question,there is no acceptable evidence under any of the criteria cited in PHS 380.304-l(a) to support a claim of effectiveness.

PHS 380.304-2   Policy.

  1. It is PHS policy to not acquire drug products classified "ineffective" or "possibly effective" for use in its direct care programs.  However, there ate two exceptions to this policy:
    1. Drug products categorized as "in effective" and "possibly effective" may be acquired for use in the pursuit of approved clinical research products.

    2. Drug products categorized as "possibly effective" may be acquired when no alternate means of therapy with drug products in the "probably effective" or "effective" categories are available.

  2. This policy applies to similar drug products marketed by the same or other firms.

PHS 380.304-3 Procedures

  1. The contracting officer, prior to initiating action on a purchase request or request for contract for drug products, shall ensure that the items are screened against current lists of products identified by the Pharmacy Liaison Officer, Public Health Service, to determine whether acquisition of the items is prohibited,and that the individual actually performing the screening has annotated and initialed the request.

  2. When the request is received for a drug product which is allowable under the exceptions stated in PHS 380.304-2, the contracting officer shall ensure that the appropriate Justification is provided, that it is signed by the responsible program official, and that it is included in the contract or purchase request file.

  3. When the request for a restricted drug product cannot be resolved by the substitution of another item, the contracting officer shall consider the request as a deviation and process it in accordance with Subpart 301.4.

PHS 380.304-4 Distribution of information.

  1. The Pharmacy Liaison Officer, Public Health Service, has responsibility for distributing information on the effectiveness of drug products to the principal official responsible for acquisition.  The principal official responsible for acquisition will be advised by telephone of drug products classified as "ineffective" or "possibly effective" prior to publication in the Federal register and will be provided a monthly list of these drug products following publication in the Federal. Register.

  2. The principal official responsible for acquisition shall establish procedures for the distribution of information on the effectiveness of drug products and implement other controls necessary to assure compliance with the policy set forth in PHS 380.304-2.

PHS 380.305   Maximum allowable cost for drugs.

PHS 380.305-l   General

  1. The regulation entitled "Limltation on Payment or Reimbursement for Drugs," also known as the Maximum Allowable Cost or MAC regulation, is set forth in Part 19 to Subtitle A of Title 45 of the Code of Federal Regulations.

  2. The MAC regulation established departmental policies and procedures for determining allowable drug costs and, where applicable, dispensing fees to be used to establish:

    1. Reimbursement to providers and health maintenance organizations under the Medicare program;

    2. Reimbursement to States under State administered health, welfare, and social service programs: and

    3. Allowable costs under projects for health services.

PHS 380.305-2   Applicability

  1. This regulation implements the MAC regulation by establishing acquisition procedures consistent with the purpose and intent of the MAC regulation.

  2. This regulation applies to the direct acquistion of drugs by PHS and the acquisition or m supply of drugs by PHS contractors

  3. This regulation does not apply to the acquisition of drugs for research programs made by PHS and Its contractors.

PHS 380.305-3   Responsibilities.

  1. The program office which initiates the requirement is responsible for advising the contracting office as to the applicability of the MAC regulation to the proposed acquisition.

  2. The Pharmacy Liaison Officer, PHS, is responsible for distributing to the principal official responsible for acquisition of the MAC determination or data concerning the acquisition cost of drugs.  The MAC determination should be furnished within thirty days after publication as a final rule in the Federal Register.  Acquisition cost data should be furnished within thirty days after the effective date.

  3. The principal official responsible for acquisition shall establish procedures for disseminating MAC determinations and acquisition cost data and may initiate other actions necessary to ensure compliance with the requirements of this regualation.

PHS 380.305-4   Solicitation notification.

  1. The contracting officer shall ensure that all requests for proposals and invitations for bids which are subject to the provisions of the MAC regulation contain a notice worded substantially as follows:

    This acquisition is subject to the Maximum Allowable Cost (MAC) regulation set forth In Part 19 to Subtitle A of Title 45 of the Code of Federal Regulation.

  2. The contracting officer shall in clude the abblicable MAC determination or acquisition cost data in the RFP or IFB.

  3. The referenced solicitation notice, or a notice worded similarly to it, is required to be included in all applicable solicitations issued by the contractor or its subcontractors.

PHS 350-305-5 Contract requirements

  1. The contracting officer shall include a clause entitled "Maximum Allowable Cost for Drugs," reading substantially as the clause cited in PHS 352.288-3 in all contracts subject to the provisions of the MAC regulation.

  2. The contracting officer shall in corporate in all contracts subject to the provisions of the MAC regulation the applicable MAC determination or acquisition cost data furnished in the solicitation.

  3. The clause cited in PHS 352.280-3, or a clause worded substantially as that clause is required to be included in all applicable contracts awarded by the contractor or its subcontractors.

PHS 380.306  Acquisition of tax free and specially denatured alcohol.

  1. All orders for tax free and specially denatured alcohol shall be placed with the HRSA Supply Service Center, Perry Point, MD.  Orders shall be placed in accordance with the ordering instructions contained in the HRSA Medical Supply Catalog.


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