Breadcrumb

VA Should Examine Options to Expand Retail Pharmacy Drug Discounts

Report Information

Issue Date
Report Number
19-07281-105
VA Office
Veterans Health Administration (VHA)
Report Author
Office of Audits and Evaluations
Report Type
Review
Report Topic
Financial Management
Major Management Challenges
Stewardship of Taxpayer Dollars
Recommendations
2
Questioned Costs
$0
Better Use of Funds
$0
Congressionally Mandated
No

Summary

Summary
The VA Office of Inspector General (OIG) determined that the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) had not been given the authority to require drug manufacturers to make drugs available at discounted prices to VA if the same items had been dispensed to veterans through VA pharmacies. If CHAMPVA had this authority, VA could have saved about $69 million of the $181 million the CHAMPVA insurance program paid for retail pharmacy claims in FY 2018. VA is one of four federal agencies eligible by law to receive at least a 24 percent discount for prescription drugs purchased for its facilities and dispensed directly to patients. However, for prescription drugs purchased through retail pharmacies for CHAMPVA beneficiaries, VA pays the higher average contracted wholesale price because it does not have the authority to require drug manufacturers to provide the drugs at discounted prices. The OIG estimated VA could save about $345.1 million over the next five years if CHAMPVA had proper statutory authority, regulations, and processes to buy drugs through retail pharmacies at discounted prices. VA officials also identified the potential for other VA programs, in addition to CHAMPVA, to save money when purchasing drugs from retail pharmacies if VA was given authority to receive price discounts from drug manufactures for these purchases. The OIG recommended VA conduct a formal analysis to determine what steps are needed to require drug manufacturers to provide discounted prices for covered prescription drugs purchased through retail pharmacies to achieve parity with those purchased through VA pharmacies. It also recommended the under secretary collaborate with the Office of Regulatory and Administrative Affairs to pursue statutory or other changes needed to give VA the appropriate legal authority to purchase all prescription drugs through retail pharmacies at those discounted prices.

Open Recommendation Image, SquareOpenClosed and Implemented Recommendation Image, CheckmarkClosed-ImplementedNot Implemented Recommendation Image, X character'Closed-Not Implemented
No. 1
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
The OIG recommended the Under Secretary for Health conduct a formal analysis of VHA’s Office of Community Care prescription drug programs to determine what steps VA would need to take to require drug manufacturers to provide Big 4 prices for covered prescription drugs purchased for CHAMPVA and any other VA Community Care programs that use a retail pharmacy.
No. 2
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
The OIG recommended the Under Secretary for Health collaborate with the Office of Regulatory and Administrative Affairs and, if determined appropriate, pursue any proposed statutory or other changes needed to provide VA with the appropriate legal authority to purchase all prescription drugs through retail pharmacies at the Big 4 prices.
Total Monetary Impact of All Recommendations
Open: $ 0.00
Closed: $ 345,100,000.00