WASHINGTON — Pharmaceutical companies were among the biggest advancers in an annual ranking of federal contractors by the Project on Government Oversight, an independent watchdog group, even though several have track records of “misconduct,” it said.
The federal government spent $637 billion on contracts in fiscal year 2021, of which pandemic-related contracts accounted for $54 billion, mostly for “drugs and biologicals” and “medical and surgical instruments, equipment, and supplies,” according to Government Accountability Office data compiled by POGO.
Vaccine makers that were already in the top 100 saw contract revenues soar. Pfizer jumped to number six from number 60 in the ranking, with a twelve-fold increase in its contract total to $14.1 billion from $1.2 billion the previous year. Moderna climbed to number nine from number 38 as revenue surged to $7.3 billion from $2.2 billion.
McKesson, which distributes pharmaceuticals and provides health information technology, and health insurance provider Humana ranked at seventh and 11th place, respectively.
Several big names in the pharmaceutical and biotechnology industries are among the 11 new entrants in the top 100, the report shows. Four major drug manufacturers landed in the top 50, receiving a collective total of $11.3 billion in contracts for COVID-19 vaccines and treatments: Regeneron Pharmaceuticals, Abbott Laboratories, Eli Lilly and AstraZeneca. Walgreen made the list for the first time with nearly $900 million in contracts to establish COVID-19 testing centers and to administer vaccines, POGO found.
“The COVID-19 pandemic dramatically changed federal contract spending patterns,” POGO said in its report.
Take, for example, the Pentagon. The U.S. Department of Defense went from spending the most on fixed wing aircraft in prior years to drugs and biologicals in 2021.
Overall, the top five federal contractors and their respective 2021 earnings were in the defense industry, lead by Lockheed Martin at $42 billion in revenue from the U.S. government, Boeing at $23 billion, Raytheon Technologies at $21 billion, General Dynamics at $20 billion and Northrup Grumman at $14 billion, according to data by POGO and USASpending.gov.
The same companies make up the top five in annual ranking of defense contractors by Defense News, which includes international sales in revenue totals.
Leidos and L3Harris round out the top 10 in the POGO list.
The COVID-19 pandemic created immediate, seemingly open-ended need for medicine, PPE and hospital equipment to stabilize the public health emergency and address ripple effects of mass unemployment and revenue losses by entertainment, travel and restaurant industries.
At the ready were pharmaceutical companies who already ranked among the top federal contractors and climbed higher as a result of the emergency demand.
What impact did Operation Warp Speed have?
Much of this influx came on the heels of Operation Warp Speed and the Biomedical Advanced Research and Development Authority — a federal interagency plan to expedite certification of vaccine doses, a process that takes at least a decade in normal times. The government invested $11 billion in rapid vaccine development and expansion of manufacturing capacity through these initiatives.
All of the pharma and biotech contractors new to the ranking have track records “replete with instances of proven or alleged misconduct,” according to the group.
Walgreens had 42 instances of proven or alleged misconduct, POGO said. The company, along with others in the database, has faced a legal issues related to the opioid crisis. To date, it has paid at least $763 million to resolve allegations over its alleged liability, according to the group.
Abbott paid $1.5 billion a decade ago to resolve federal criminal and civil investigations into its promotion and marketing of the anti-epileptic drug Depakote. Lilly and AstraZeneca have also incurred liabilities over their marketing practices, POGO said.
“As with Walgreens, many of the instances involving Abbott, Eli Lilly, and AstraZeneca did not include an admission of fault or liability,” it said.
Federal Times reached out for comment to Abbott, Eli Lilly and AstraZeneca. Walgreens said it would not provide a statement, and spokespeople for the others could not be reached by time of publication.
The pandemic spending contributed to the 20-year growth of the federal marketplace. Since 2001, the government’s annual contracting budget has nearly tripled.
The growth reflects “the post-9/11 defense buildup, the accelerated outsourcing of government functions and services to the private sector, massive federal economic stimulus programs, responses to several major natural disasters, and, of course, the COVID-19 pandemic,” POGO said.
Molly Weisner is a staff reporter for Federal Times where she covers labor, policy and contracting pertaining to the government workforce. She made previous stops at USA Today and McClatchy as a digital producer, and worked at The New York Times as a copy editor. Molly majored in journalism at the University of North Carolina at Chapel Hill.