Manufacturers Failed to Make Some Drugs Available to Government Agencies at a Discount as Required

Submitting OIG:

Report Description:

The Veterans Health Care Act of 1992 mandates that manufacturers discount drugs they sell to VA, the Department of Defense (DOD), the Public Health Service, and the Coast Guard. The OIG conducts individual audits of manufacturers that have self-disclosed potential noncompliance. This review, however, was conducted to proactively determine the number of covered drugs that manufacturers did not make available as required and the possible reasons. The OIG found manufacturers did not make 22.8 percent of drugs covered by the law available at a discount. This resulted in an estimated $28.1 million in overcharges to VA and the DOD. The OIG recommended better communicating to manufacturers about exemptions and familiarizing them with the law.

Date Issued:

Wednesday, September 20, 2023

Agency Reviewed / Investigated:

Department of Veterans Affairs

Submitting OIG-Specific Report Number:

22-01624-143

Component, if applicable:

Veterans Health Administration

Location(s):

Agency-Wide

Type of Report:

Review

Questioned Costs:

Funds for Better Use:

$28,100,000

Number of Recommendations:

Report updated under NDAA 5274:

View Document:

Attachment	Size
VAOIG-22-01624-143.pdf	4.08 MB

Additional Details Link:

https://www.va.gov/oig/publications/report-summary.asp?id=5343

Recommendation Number	Recommendation Status	Significant Recommendation
01	Open	Yes
The associate executive director of the VA National Acquisition Center, in conjunction with the chief consultant at VA Pharmacy Benefits Management Services issue guidance clarifying that allergens are exempt from the public law and include how the determination was reached.
02	Open	Yes
The associate executive director of the VA National Acquisition Center, in conjunction with the chief consultant at VA Pharmacy Benefits Management Services formalize and communicate the process for manufacturers to request exemptions.
03	Open	Yes
The associate executive director of the VA National Acquisition Center, in conjunction with the chief consultant at VA Pharmacy Benefits Management Services formalize the internal process for granting exemptions.
04	Open	No
Establish a procedure for monitoring covered drugs identified in this report as not commercially sold.
05	Open	No
Develop a procedure to monitor covered drugs identified in this report as newly launched to ensure they have an established ceiling price, and make certain they are made available on the Federal Supply Schedule at the end of the 75-day period.
06	Open	Yes
The associate executive director of the VA National Acquisition Center, in conjunction with the chief consultant at VA Pharmacy Benefits Management Services request that noncompliant manufacturers identified by the Office of Inspector General conduct a self-audit and submit their findings for remediation.
07	Open	No
Engage with the Food and Drug Administration to ensure that when manufacturers request new national drug codes, they are made aware of the public law requirements.
08	Open	Yes
The associate executive director of the VA National Acquisition Center require contracting staff at the National Acquisition Center to conduct a covered drug check for all of a manufacturer’s drugs when any pharmaceutical Federal Supply Schedule proposal or product addition modification is submitted.

Recommendation Number

Recommendation Status

Significant Recommendation

Additional Details

Open

Yes

The associate executive director of the VA National Acquisition Center, in conjunction with the chief consultant at VA Pharmacy Benefits Management Services issue guidance clarifying that allergens are exempt from the public law and include how the determination was reached.

Open

Yes

The associate executive director of the VA National Acquisition Center, in conjunction with the chief consultant at VA Pharmacy Benefits Management Services formalize and communicate the process for manufacturers to request exemptions.

Open

Yes