VA Should Examine Options to Expand Retail Pharmacy Drug Discounts

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.