HHS Awards Virginia Firm $354 Million to Manufacture Essential COVID-19 Medicines

In a surprise move, HHS has awarded a new Virginia-based company a $354 million contract to produce active pharmaceutical ingredients (APIs) and finished drugs to create a new Strategic Active Pharmaceutical Ingredients Reserve.

Phlow is partnering with Civica Rx, AMPAC Fine Chemicals and Virginia Commonwealth University's Medicines for All Institute to manufacture chemical ingredients, APIs and finished dosage forms of more than a dozen medicines, primarily to treat hospitalized COVID patients.

Eric Bovim, a spokesperson for the company, said Phlow bid for the contract “like everybody else.” But he declined to give details of the bidding process and referred questions to HHS, which did not respond to requests for comment.

The four-year contract may be expanded to $812 million contract over 10 years, BARDA said. That’s a stunningly large contract for HHS, which has partnered with private firms in the past on some manufacturing contracts, but rarely at that level. Moderna received a $483 million contract for its candidate coronavirus vaccine in April (DID, April 13).

Phlow was incorporated in January of this year and received an initial $6 million contract from HHS’s BARDA in April to produce essential medicines for COVID-19 patients.

Phlow, which is led by Eric Edwards — co-founder of novel drug developer Kaléo in Richmond, Va. — who served in senior roles at Kaléo until 2019, brings some controversy to the contracts. Kaléo has drawn scrutiny in recent years for its pricing practices. A Senate investigation in November 2018 found that the company artificially inflated prices for its Evzio naloxone autoinjector between 2014 and 2017.

The company ignored industry experts’ recommendations to set prices for the injector between $250 to $300 per unit, increasing the price to $4,100, a Senate report found (DID, Nov. 19, 2018).

Kaléo was also the subject of congressional scrutiny for raising the price of Auvi-Q, an EpiPen competitor to $4,500 per two-per pack. — Jordan Williams